Lion has announced competitive opening pricing for its direct milk suppliers in the southern region for the 2017/2018 season (1 July 2017 – 30 June 2018).
Lion’s farmgate milk pricing offer allows suppliers to lock in competitive fixed pricing over varying contract lengths in a compelling mix of reward and security.
Since 2013, Lion has offered suppliers in the southern region (Victoria, Tasmania and South Australia) a choice of fixed and variable farmgate pricing options for contracts over one, three or five years in length.
Lion’s offer delivers enhanced transparency, visibility and choice to help farmers to better manage market volatility and plan their businesses. Lion suppliers in the southern region have a choice of:
- variable pricing underpinned by a minimum pricing guarantee;
- fixed pricing for those who prefer a set and determined price; and
- an option to combine fixed and variable pricing.
The majority of southern region dairy farmers supplying Lion have chosen to secure all or part of their milk pricing for up to three years.
Lion’s southern region pricing for the 2017/2018 milk season based on standard 7.2% milk solids is as follows:
- Three year fixed price of $5.65 per kilo of milk solids, delivering a weighted average milk price of $5.79 per KG of milk solids;
- One year fixed price of $5.75 per kilo of milk solids, delivering a weighted average milk price of $5.89 per KG of milk solids and
- One year variable price of $5.40 per kilo of milk solids, delivering a weighted average milk price of $5.53 per KG of milk solids.
As a demand-driven business, Lion will always seek to meet any additional volume requirements from existing suppliers if possible, before going to market. Lion is currently seeking an additional 50 million litres of milk in northern Victoria for the 2017/2018 season.
Lion Dairy & Drinks Managing Director, Peter West, said: “Lion’s range of pricing options is designed to offer farmers as much choice as possible to help them manage market volatility and plan for their businesses.
“Our 2017/2018 opening pricing and contract options demonstrate our confidence in the dairy market and our commitment to build long term, mutually rewarding partnerships with suppliers. We will continue to focus on driving profitability in key dairy categories through our premium dairy brands and in ensuring sustainable returns through the supply chain.
“We listened to farmers when they told us about the impact volatility in the marketplace has on them. This led us to pioneer our flexible pricing model in the southern region several years ago. Since launching this model we have seen a strong take up from our southern farmers of fixed pricing options which we believe allows farmers to select the blend of risk and certainty that’s right for their business.”
Across Australia, Lion is investing around $200 million in its dairy and drinks manufacturing assets to improve efficiencies. This includes two projects which are expected to be finalised later this year – the $87million investment to transform its white milk and milk-based beverages manufacturing footprint across the Eastern Seaboard and a $43million investment to modernise our Bentley manufacturing site in Western Australia.