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Lion announces competitive opening price for the 2018/19 season

Lion Dairy & Drinks (Lion) has announced its opening pricing for its direct milk suppliers across key Australian dairying regions for the 2018/2019 milk season. This pricing is applicable from 1 July 2018.

Lion announces competitive opening price for the 2018/19 season

Monday 25 June 2018: Lion Dairy & Drinks (Lion) has announced its opening pricing for its direct milk suppliers across key Australian dairying regions for the 2018/2019 milk season. This pricing is applicable from 1 July 2018.

Murray Jeffrey, Agricultural Procurement Director for Lion Dairy & Drinks, said the range of pricing options was designed to offer farmers as much choice as possible to help them manage market volatility and plan for their businesses.

He said Lion was very mindful of drought conditions facing many of its NSW farmers and was sympathetic to the impact this was having on higher feed costs and farm profitability.

“It has been a very difficult season with some regions facing the driest periods in over 100 years.  Even the most resilient individuals are being tested this year,” Murray said.  

“We will be working with individual farmers closely and also offering our Personal Support Program to each supplier, their family and staff.”

Murray said Lion was committed to working with all its dairy suppliers on mutually beneficial partnerships and programs – this included continuing the roll-out of its unique sustainability program Lion Dairy Pride.

“In July, we’ll be releasing more information about the next round of Dairy Pride, which will include for our NSW farmers a total pool of $500K  in interest free loans, to be paid back over six months, and advice from leading consultants.”

In NSW and South East Queensland Lion is also giving farmers 12 months advance notice of a new payment model to come into effect for the 2019/2020 milk season which will reward suppliers for butterfat and cap the reward paid on protein. This model will take effect from FY2019/2020. This is an important change for Lion to make in a market milk state like NSW where Lion can use or sell excess butterfat, but not protein.

“Lion will be working closely with our suppliers to explain the new model. We intend to roll out a series of informative workshops where farmers can engage with leading animal nutritionists to assist in decision making around feeding systems and the resultant impacts on milk composition” Murray said.  

He added that Lion believed its milk price offer in each region provided a compelling mix of reward and security for suppliers.

“Our opening pricing for the FY2018/2019 is a sign of our confidence in the Australian dairy industry, and in our growth strategy. That strategy will see us continue to focus on driving profitability in key dairy categories with our premium dairy brands and market-leading innovation.”

Murray said Lion was the natural partner for dairy farmers who wanted to focus on growing value through nutritious, branded dairy products that delivered competitive returns and a sustainable future for the industry.

“Across Australia we are investing around $200m in our dairy and drinks manufacturing assets to improve efficiencies,” he said.  

“This significant investment signals our commitment to dairy and juice in Australia for the long term.” 

“It makes clear our intent to drive profitable growth in milk based beverages, white milk and our other key dairy categories as well as juice for the benefit of consumers, customers, farmers/growers, distributors and other local stakeholders.”

Murray said Lion believed sustainable dairy farmers underpinned a sustainable dairy business, high quality products, happy farmers and healthy cows.

“Our approach to milk procurement is based on offering farmers ‘three P’s’: competitive pricing and contract terms, partnerships for the long term, and a clear purpose and strategy built around growing profitable demand for dairy and ensuring sustainable returns through the supply chain,” he said.

“We are working hard to deliver compelling pricing, tenure and choice to farmers, underpinned by our focus on driving sustainable value back into the industry. Lion is committed to working with all its dairy suppliers on mutually beneficial partnerships and programs.”

There are almost 400 farmers supplying the Lion Dairy & Drinks business – this includes direct Lion suppliers and suppliers through the Dairy Farmers Milk Co-Operative (DFMC). 

-ENDS-

 

LION SOUTHERN REGION MILK PRICE CASE STUDIES FOR 2018/2019 MILK PRICE SEASON (From 1 July 2018)

SOUTHERN REGION (Victoria, Tasmania and South Australia)

  • 1 Year Fixed weighted average milk price of $6.10 per kg milk solids (MS) across our Southern farm base.
  • 1 Year weighted average Variable price of $5.82 per kg milk solids (MS) across our Southern farm base.
  • 3 Year weighted average Fixed price of $6.05 per kg milk solids (MS) across our Southern farm base.

Since 2013, Lion has offered its farmers in the Southern Region a choice of fixed and variable farm gate pricing options for contracts over 1, 3 or 5 years in length.

As part of this commitment, for the 2018/19 milk season Lion will continue to offer its Southern Region milk suppliers with contracts of varying lengths (1, 3 or 5 years) and a variety of fixed and variable pricing options.

Quote attributable to Murray Jeffrey:

“We know that many farmers choose to take up the opportunity to fix all or some of their milk price to provide certainty and to best suit their individual needs. In fact, 88% of our southern milk supply during the last two years has been fixed, which provides price certainty for both our farmers and our business.”

Lion has set our variable price having regard to an overall commodity price, and we will continue to take a more holistic view of the market dynamics in setting this price.

Lion is committed to building long term sustainable and mutually beneficial partnerships with our dairy suppliers, which is why we offer a variety of choices when it comes to milk price. We are proud that we can continue to offer our farmers a competitive price, as a result of our continued investment in the growth of leading dairy brands such as Dare Iced Coffee, Farmers Union Iced Coffee, Dairy Farmers, Pura, Big M, Yoplait, King Island Dairy and Tasmanian Heritage and South Cape specialty cheeses.

 

LION REGIONAL PRICING FOR 2018/2019 MILK PRICE SEASON (From 1 July 2018)

(New South Wales, South East Queensland and Western Australia)

Region

Weighted average milk price (cents/L)

New South Wales

51.0

South East Queensland

58.1

Western Australia

50.0

 

New South Wales

Lion Dairy & Drinks (Lion) is pleased to announce a weighted average milk price of 51.0cpl for our suppliers in New South Wales. This pricing is applicable from 1 July 2018.  This price is a 1cpl positive movement from last season.

Dairy farmers supplying Lion directly in NSW have a choice of one, three or five year contracts.

In New South Wales, Lion is in the final stages of an $87 million investment in its Wetherill Park dairy manufacturing site to create a milk based beverages hub for the eastern seaboard. This is on track to be finalised in the coming months.  We have also undertaken a $15 million investment at Chullora to create a state of the art distribution centre for our dairy and juice products.

 

South East Queensland

Lion Dairy & Drinks (Lion) is pleased to announce that we will pay a competitive weighted average milk price of 58.1cpl for our suppliers in South East Queensland.

We are working hard to deliver competitive pricing and tenure choices to dairy farmers, underpinned by our focus on driving sustainable value back into the industry. Farmers supplying Lion in SEQ have a choice of three or five year contracts.

 

Western Australia

Lion WA farmers have been certain in the knowledge of the coming F18/19 year’s pricing since March 2017, when we announced 2 years’ fixed pricing. We are further extending this price into F19/20.

Lion Dairy & Drinks (Lion) is pleased to announce that we will pay our direct suppliers in Western Australia a competitive weighted average milk price of 50.0pl.

In Western Australia, Lion is in the final stages of an investment of more than $40 million in its Bentley milk manufacturing site to completely modernise the factory. This is on track to be completed in the second half of 2018.

 

ABOUT LION

Lion is a leading beverage and food company with a portfolio that includes many of our region’s favourite brands.

We employ more than 7,000 people across Australia and New Zealand predominantly and take great pride in our local manufacturing footprint, which spans 34 sites – including large dairy farms, milk, cheese, yoghurt and juice sites, breweries, craft breweries, wineries, as well as venues and over 39 Liquor King retail outlets in New Zealand.

Lion is a company focused on long-term, sustainable growth. We have a clear 10 year strategy to transform our dairy and juice businesses and champion the nutritional credentials of our portfolio; reinvigorate our beer markets and contribute to vibrant and responsible drinking cultures; and build our presence in high-value categories in targeted Asian markets. To achieve this we invest in our core strategic assets – our people, brands, production facilities and supply chain.

 

For more information:

Elise Gare

External Relations Director, Lion Dairy & Drinks

Phone: +61 437 306 437

Email: elise.gare@lionco.com

 

Robyn Riley

External Relations Manager, Lion Dairy & Drinks

Mobile: +61 419 255 118

Email: robyn.riley@lionco.com