Monday, 15 June 2020 12:37

Caught out?

Written by  Milking It

Was Fonterra caught napping in Australia?

Just two days after announcing its minimum price, Fonterra Australia was forced to increase the weighted average opening from AU$6.06/kgMS to AU$6.40/kgMS.

The move brings it into line with competitors Bega Cheese and Saputo Dairy Australia and is a new minimum rather than a step-up, locking in the price under the mandatory code.

Fonterra says it had kept in line with industry convention to open at a price lower than the full-year forecast, with the understanding that step-ups would be paid throughout the season where the market supports it.

But this wasn’t a step-up. Clearly the co-op’s suppliers expressed their unhappiness with the original opening price and Fonterra had to act fast.

The co-op is continuing to lose market share in the Australian raw milk market.

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