The increases will collectively see over $10 million in additional payments back to the farmgate compared to a year ago.
Lion will also remove tier 2 pricing from all new Lion contracts on offer to ensure farmers benefit from the increase in price on every litre they produce.
In Far North QLD, Lion’s weighted price will increase to 59.3cpl. This change, applicable to all DFMC farmers supplying milk for Lion in Far North QLD, equates to an increase of approximately five cents per litre on Lion’s last season price.
In South East QLD and NSW, Lion’s weighted pricing will increase to 57cpl and 53.8cpl, a leading price in both markets. This equates to an increase of approximately 1 cent per litre on Lion’s opening price across these regions, and represents the highest pricing seen by suppliers in recent years.
“We know that many of our suppliers have been doing it tough in recent years and believe this increase will provide greater certainty and confidence for the future,” Lion agricultural procurement director, Murray Jeffrey said.
“We have great faith in the Northern dairy industry and want to continue to work closely with our partners to ensure farmers have a sustainable future, built on growth and growing value back into the industry.”
The increase is applicable to all DFMC farmers supplying Lion in Far North QLD and all Lion direct farmers in South East QLD and NSW.
The increases will come into effect from 1 July 2014.
Also from July, Lion will lose $300 million worth of contracts in two states, with Woolworths opting to go with different suppliers for its Select milk.
Woolworths’ $1-a-litre Select home-brand milk in Victoria is to be supplied by New Zealand-based Fonterra and in Western Australia, local supplier Brownes Dairies has landed the contract for local Select milk.
