ram – Fixed Base Milk Price (FBMP) will allow suppliers to lock in a set monthly price for up to 70 percent of their expected milk solids production for the season.Fonterra Australia Managing Director Judith Swales said the programs would help give suppliers more certainty throughout the season and support their farm profitability.
“We know that farmers face lots of volatility – whether it’s a fluctuating milk price, unpredictable weather conditions, foreign exchange or varying costs for inputs like feed, water or energy. Our Fixed Base Milk Price program will let suppliers know exactly where they stand so they can plan for, and run, their farm business with more certainty.”
The details of each program are:
• Fixed Base Milk Price – lets suppliers lock in a set monthly FBMP price for a certain volume of their milk solids in a season. This program is open to all Fonterra Australia suppliers.
• Fonterra Australia is offering guidance (indicative only) as to what prices Fonterra Australia may be willing to buy certain volumes of milk solids through the Tender allocation process.
• Demand Level 1: Equivalent of $6.00-6.30 per kilogram of milk solids (kg/MS) weighted average farmgate milk price (including all incentives) for 3.8 million kg/MS (approximately 50 million litres), based on Fonterra Australia’s aggregate supplier production curve and best quality milk.
• Demand Level 2: Fonterra Australia may buy an additional 1.8 million kgMS (approximately 25 million litres), for a total of 5.6 million kgMS (approximately 75 million litres), under the Tender if it receives sufficient Applications at, or below, Demand Level 1 prices.
• Milk Price Range (“Range”) – lets suppliers set monthly minimum and maximum range prices for a certain volume of their milk solids in a season. This program is only offered on a pilot, trial basis.
• Cap & Earn (“C&E”) – delivers suppliers extra income (via the C&E Premium Payments) in return for setting monthly maximum C&E prices for a certain volume of their milk solids in a season. This program is only offered on a pilot, trial basis.
Bonlac Supply Chairman Tony Marwood said these programs will give farmers greater control and increase confidence by delivering suppliers a guaranteed margin and income.
“FBMP is great because it will let farmers manage their margins, stop worrying about milk price and get back to the business of farming. It will be especially useful for farmers who want more certainty and are planning to grow or expand their farm business.”
