Burra has announced a full year price step-up of 6c/kg Fat and 15c/kg Protein (an average of 10.0 cents kg/MS) effective from the 1st of October 2016.
The step up will be applied retrospectively from 1st July and paid on the 15th of November with the October milk payments.
As advised at Supplier Meetings and in previous communication, Burra Foods opened the season with a responsible and sustainable Farm Gate Milk price reflecting the downturn in commodity values that had been occurring during the prior 18 months.
Burra saw FY17 as the opportunity to return to the traditional model of an opening Base Price followed by Step Ups and it is rewarding that we are able to deliver to that expectation.
Encouragingly, Burra has seen the GDT results improve by around 25% in the last 3 months as demand increases followed by a contraction of milk production in some key production countries. However, momentum has been lost in recent auctions, as buyers try to understand the milk production landscape going forward.
The $AUD continues to hold its ground against the $USD and has not shown any signs of weakening, so whilst we are optimistic about the remainder of the year, we also remain cautious about the speed and extent of the recovery.
Burra is conscious of the effects that reduced Farm Gate Milk price has had on cashflow, and this has influenced its decision to respond to stronger market prices quickly and announce a step up as early in the season as possible.