Content supplied by Synlait Milk
Synlait Milk has revised its forecast milk price for the 2015 / 2016 season from $5.00 per kgMS1 to $4.20 per kgMS.
Chairman Graeme Milne said the revision is driven by the sustained low global commodity prices since September 2015, and a view that the recovery will be slower than anticipated.
“Our previous forecast of $5.00 kgMS expected prices to recover somewhat by this stage in the season, however this hasn’t happened and our revised forecast reflects this,” said Mr Milne. “Similar to this time last year, there is still a lot of uncertainty. While our business is focused on value added products, global commodity pricing is the main driver behind the milk price that our suppliers receive.”
“European milk production is high following the removal of quotas last year. Low oil prices mean cheap feed for farmers in Europe, USA and China while demand for imported dairy commodities by China, the world’s largest importer, has declined as their local milk production has increased.” Mr Milne said.
Synlait will continue to monitor the situation and expects to revise the forecast milk price again in May 2016.
Managing Director and CEO John Penno said there is no doubt this year will be very tough for dairy farmers, with two straight years of unsustainably low milk prices. “It’s important that we continue to give our suppliers a clear and realistic idea of where the milk price is likely to end up. As always things may change, and we hope they do because it’s hard to run a dairy farm business in this environment,” said Mr Penno.
“More than half of our suppliers are now involved in our Lead With Pride™ and Special Milk programs. Each program offers a premium payment over and above the Synlait base milk price for differentiating milk on farm.”
“But it’s still very tough out there. We’re meeting with our suppliers in a few weeks to create a forum where their ideas and options around managing through this period can be shared. They’re not alone and we’re committed to supporting them where we can,” said Mr Penno.
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The history and level of payout levels for all dairy companies are here.
4 Comments
While our business is focused on value added products, global commodity pricing is the main driver behind the milk price that our suppliers receive.”
Is that an admission that they could pay more but choose to tie their payment to suppliers to the Fonterra milk price? Should they not be like Tatua and pay a price that reflects what they receive?
because they are owned by shareholders and not a coop like others.
so they run like a business buy low sell high pocket the profits, pay the shareholders a percentage, invest and grow so the company grows and everyone makes more
that's the problem with Fonterra the suppliers are the shareholders and want their money now
and everyone makes more
Not everyone makes more - from what I can see, shareholders have never been paid a dividend. Perhaps the milk price is at the expense of shareholders:
Our suppliers are an important part of our business and we’ve prioritised paying them higher advances and final payments for their milk, relative to our earnings, in what has turned out to be the first of probably two very challenging years on farm.
https://www.nzx.com/markets/NZSX/securities/SML/analysis
Contrary statement by Mr Milne in this article to that which was given to NZX?? Is all good at Synlait or are we seeing smoke and mirrors?
The real problem with Fonterra is DIRAs requirement that they have to take any and all milk offered it, whereas it's competition, with the exception of Westland, aggressively sticks to a closed door policy when ever it suits them. Fonterra does pay a dividend. ;-)
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