Dairy co-op working out the dollar details

06 Jan, 2001 03:01 PM

DAIRY farmers will wait have to until April or May before knowing the full extent of Challenge Dairy Co-operative's transport operations and pricing structure. The Co-op expects to become operational in February and, from this time until until June 30, prices have been announced as 18 cents a litre net for members and 18c/L less transport and volume charges for non-members. The April/May announcement will cover the time from June 30 on. Challenge Dairy Co-operative chairman Larry Brennen said the co-op had agreed with George Weston Foods (GWF) to pick up milk from all its Capel Dairy suppliers, regardless whether they were co-op members and irrespective of minimum volumes. He said a policy of minimum pick-up amount still had to be worked out and that, during the transition of taking over GWF's Capel Dairy Company and NFL's Boyanup plant, it would be "business as usual". Speaking at the co-op's recent inaugural annual general meeting, Mr Brennen said there would be no penalties for undersupply from delivery rights units (DRUs) during the settling-in period. After this time, at least six months' notice would be given before the introduction of any penalties. Short-term supplies in excess of DRU would be accepted by negotiation. In order to become a co-op member, dairy farmers have to buy a voting share at $1000 and pay $5000 for delivery rights on 100,000L or less. Extra DRUs cost seven cents a litre. Members can redeem their $1000 voting share on leaving the co-op, while delivery rights can be traded between members, subject to the co-op board's approval. George Weston Foods (GWF) Capel Dairy Company prime and surplus milk contracts, which are valid until the end of June, will be honoured by the co-op, which will provide cheese and butter premiums on 80 per cent of Capel suppliers' 1998-99 production. National Foods Ltd (NFL) will provide fresh milk premiums on 20 million litres of milk back to Capel, with the combined premiums expected to give former GWF suppliers who are co-op members an extra 4-6c/L. Co-op independent director John Booth said that, when the memorandum of understanding was put together in September, GWF had undertaken to pay a fixed price at the time of $200 a tonne more than the international price. He said this would underpin the minimum price the co-op was going to get for butter and cheese for the next two years. Mr Booth said the 20mL of while milk premiums NFL would pay to GWF suppliers through the co-op would not be spread evenly through each month. To a lesser extent, the same would apply for premiums GWF pays on cheese and butter sold. Funding for the co-operative is $10m gross from the State Government, an intended $1m from the Federal Government's DairyRAP scheme and a further $3.5m expected from dairy farmer delivery rights. ÿ


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