Bega Cheese cuts farm gate milk price for 2016/17

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Bega Cheese retained it higher farm gate price when Fonterra and Murray Goulburn slashed theirs, but has reduced its price to $5 per for the year ahead. Bega Cheese retained it higher farm gate price when Fonterra and Murray Goulburn slashed theirs, but has reduced its price to $5 per for the year ahead. Bega Cheese retained it higher farm gate price when Fonterra and Murray Goulburn slashed theirs, but has reduced its price to $5 per for the year ahead.

Bega Cheese has released an opening farm gate milk price for the 2016/17 season of $5 per kg of milk solids, down from the $5.60 paid in 2015/16.


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Murray Goulburn and Fonterra dropped their prices from $5.60 to $4.75 in April for the 2015/16 season, while Bega Cheese kept it at $5.60 despite market pressure.

Fonterra and Murray Goulburn are expected to announce their prices for the financial year ahead at the start of next month and analysts expect theirs to be similar to Bega.

Meanwhile, the increasing popularity of private labels is causing dairy producers to increasingly vie for lucrative private-label contracts with large retailers, to ensure their ongoing success in the industry, according to business analysts at IBISWorld.

"Increasing numbers of private-label dairy products are contributing to a changing focus for dairy manufacturers," IBISWorld senior industry analyst Brooke Tonkin says.

"For players such as Murray Goulburn, which has won multiple major private-label contracts with Coles over the past two years, including a contract to produce private-label cheese previously held by Bega, the strategic focus is changing."

As a result, private-label contracts are expected to become increasingly important to the success of dairy manufacturers aiming to service the local market, according to analysts.

"An increasing number of private-label products will also drive diversification in dairy product manufacturing, as manufacturers eye products such as milk powder and cheese as alternatives to traditional dairy products," Tonkin says.

"For the producer, the trend towards private-label contracts also places companies in a good position for investment.

"Contracts like the milk and cheese private-label contracts won by Murray Goulburn provide an ongoing inflow of cash and give businesses the ability and confidence to invest in their production facilities over the long term."

 

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