Burra Foods has announced it is offering the opportunity for new and existing Milk Supply Partners to receive a $0.40 per kilogram milk solids cash injection to start the 2017/18 season.
Grant Crothers, Burra Foods Chief Executive Officer, said that FY17 prices are unsustainable for the industry and positive signals are important for confidence. “Our Supply Partners have told us the current milk price is unsustainable and they are extremely tight for cash,” he said. “It has been two tough seasons – poor conditions in 2015/16 and a year of low prices in 2016/17 has been punishing.”
Mr Crothers believes it is an important step to promoting confidence for growth and investment on farm. “In total, it is a $10m commitment to our Supply Partners which is an investment in building a sustainable supply chain. Burra does not mind how Supply Partners spend the money, it is about them building a better business.”
To be eligible, Supply Partners will need to sign a three year supply agreement with Burra Foods and the $0.40/kg is a prepayment of a commitment bonus for doing so. There is no time limit to sign on and the offer is available to existing and new Supply Partners.
Mr Crothers is currently travelling in market, meeting with Burra customers and stakeholders. “I am delighted with the commitment and trust we have in key relationships that ends up with the milk we process consumed on a daily basis in our key markets,” he said.
“Milk consumption across Asia continues to grow, with each generation consuming more than the last. Current investments in capability and capacity at our Korumburra manufacturing facility and leveraging the expertise of our major shareholders is ensuring that Burra Foods is well placed to meet the growing need for milk ingredients.”
Mr Crothers said that Burra Foods is wanting to process around 350 million litres of milk next season, up from 300 million litres of milk this year and wants to see growth of existing Supply Partners complemented by new Supply Partners. “We are investing heavily in capacity to respond to market opportunity which will ultimately maintain our ability to pay a price premium for our milk supply partners,” he said.
According to Mr Crothers, Burra Foods is projecting improved farm gate milk prices in the 2017/18 year on the back of both a recovery and stabilization of commodity prices and an expectation of China demand returning. Opening prices are under review at the moment and will be announced in due course.
-Burra