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Collective Bargaining Group walks away from negotiating table

National Foods continues to offer Tasmanian dairy farmers a higher price than any other major milk buyer, including Fonterra and Cadbury.

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October 22, 2009

National Foods continues to offer Tasmanian dairy farmers a higher price than any other major milk buyer, including Fonterra and Cadbury.

National Foods’ General Manager Milk Sourcing and Inbound Logistics Murray Jeffrey said: “Before yesterday’s price increase from Fonterra, and based on our projections, National Foods was offering, on average, over three (3) cents per litre more than Fonterra. Even with the Fonterra price increase, this still leaves our farmers well ahead.

“We are now reviewing our minimum price guarantee in line with our contract commitments as a result of movements in the global commodity prices as reflected by Fonterra’s announcement.”

National Foods’ projections estimate that its suppliers will receive an average of around 32.7 cents per litre across the year. National Foods’ price schedule varies through the year as an incentive to farmers in the autumn and winter months.

“There is a lot of misinformation around the prices our farmers are being offered,” Mr Jeffrey said.

“We are well on track to exceed our commitment to our farmers to match Fonterra’s prices in the first half of this financial year and pay a premium in the current market of up of to six cents per litre in the second half.

“Last year, when the commodity price for milk was at an all-time high, the farmers’ bargaining collective insisted that we link milk prices to the global, or commodity, price and we agreed. At the moment there’s an international glut of milk, which has brought the global price of milk right down.”

As part of our commitment to the Tasmanian dairy industry, National Foods also buys some 30 million litres of surplus milk, which is processed into cheese and milk powder at a considerable loss for National Foods.

“National Foods remains committed to the Tasmanian dairy industry,” Mr Jeffery said. “We want to continue investing in Tasmania for the long term through partnerships with dairy farmers and our five manufacturing plants. We worked with our farmers to get them through the drought in 2007, and we hope to reach an understanding with Tasmanian farmers and navigate the economic cycle together.”

For more information:
Geoff Lynch
General Manager Corporate Affairs
03 9188 7616
0405 319 819
geoff.lynch@www.lionco.com