DAIRY farmers supplying Lion Dairy and Drinks directly in WA will continue to be paid more for their milk than those supplying Harvey Fresh and Brownes processors.
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Releasing its milk price structure for the next 12 months on Thursday last week, Lion said it would continue to pay its WA farmer suppliers a "competitively weighted average price" of 54.7 cents per litre for the 2016-17 season.
Lion claimed this was the "highest published price" offer to dairy farmers in WA.
The Lions' price per litre is just shy of the supposedly secret top price of 55c/L that Brownes is paying four of its major suppliers from the Harvey district under a two-year deal signed with a previous managing director.
As reported in Farm Weekly in early June, current Brownes managing director Tony Girgis has told the four their contracts would not be renewed when they expire on September 30 and their milk would not be collected after that date.
They have yet to find new homes for the estimated 10 million litres of milk a year they produce between them and face an uncertain future in the dairy industry.
The remainder of Brownes' suppliers are understood to be on contracts until June 30 next year and are paid about 44c/L for milk.
Most of Harvey Fresh suppliers are also understood to be on contract until June 30 next year and are paid about 50c/L for their milk, depending on time of year and quality.
Lion said it was also maintaining its existing payments offer to south east and far north Queensland dairy farmers who supply it directly, rather than through the Dairy Farmers Milk Co-operative, at 59.6 and 59.2c/L.
Its NSW direct suppliers will be offered a new price of 53.7c/L in what it described as a "clear sign of Lion's confidence in the NSW dairy industry and a concrete demonstration of our commitment to building secure and mutually rewarding partnerships with our farmers".
Southern region Victorian, Tasmanian and South Australian dairy farmers who supply Lion direct are offered a more complex range of fixed-term and fixed-price contracts.
Options offered last week included variable pricing underpinned by a minimum price guarantee, fixed pricing for up to three years and a combination of both.
Lion said its fixed-term contracts remained a popular choice and because of the "carry over" of past fixed-term contracts, it expects to pay most of its southern region farmers a net weighted average price of $5.67 per kilogram of milk solids over the next 12 months.
It said this represents a "premium" of 27 per cent over the forecast opening price offered by southern region "price setter" Murray Goulburn.
Lion's southern region three-year fixed price offer is $5.50/kg of milk solids, its one-year fixed price is $5.10/kg of milk solids and one year variable opening price is $5/kg of milk solids.
Those prices are based on standard 7.2pc milk solids, it said.
"Our 2016 opening pricing is a sign of Lion's confidence in the dairy market, and in our turnaround strategy," said Lion managing director Peter West.
"We continue to focus on driving profitability in key dairy categories through our premium dairy brands and market-leading innovation."
Lion has announced a $43 million three-year upgrade of its Bentley dairy processing plant.
It committed to investing $87m to upgrade its eastern States white milk and milk-based beverages' manufacturing.
Mal Gill
Wool and dairy writer for Farm Weekly.
Wool and dairy writer for Farm Weekly.
