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Lion announces 2016/2017 milk pricing to help farmers manage market volatility L

Lion Dairy & Drinks (Lion) has today announced competitive opening pricing for direct milk suppliers for the 2016/2017 season (1 July 2016 to 30 June 2017).

Lion announces 2016/2017 milk pricing to help farmers manage market volatility L

30 June 2016:- Lion Dairy & Drinks (Lion) has today announced competitive opening pricing for direct milk suppliers for the 2016/2017 season (1 July 2016 to 30 June 2017). Detailed pricing for each region is outlined below.

Lion’s farm gate milk pricing offer compares favourably to competitors and Lion is confident that this pricing is a compelling mix of reward and security for dairy farmers.

Since 2013, Lion has offered its dairy farmers in the southern region (Victoria, Tasmania and South Australia) a broad range of fixed and variable farm gate pricing options for contracts of varying lengths (one, three or five years) that help farmers to better manage market volatility. Lion farmers have a choice of:  

  • variable pricing underpinned by a minimum pricing guarantee;
  • fixed pricing for those who prefer a set and determined price; and
  • an option to combine fixed and variable pricing.

Lion’s fixed term contract options continue to enjoy strong take-up, with the majority of southern region farmers opting to secure all or part of their pricing for up to three years.  Due to the carryover of fixed contracts from past seasons, Lion expects to pay the majority of its direct farmers in 2016/2017 in the southern region the net weighted average price of $5.67 per kilo of milk solids.

This price represents a premium of 27% over the forecast opening price announced by the price setter in the southern region.

In the southern region for 2016/2017 our three (3) year fixed price is $5.50 per kilo of milk solids, while the one (1) year fixed price is $5.10 per kilo of milk solids and the one (1) year variable price is $5.00 per kilo of milk solids. These prices are based on standard 7.2% milk solids.

Lion Dairy & Drinks Managing Director, Peter West, said: “Our 2016 opening pricing is a sign of Lion’s confidence in the dairy market, and in our turnaround strategy.  We continue to focus on driving profitability in key dairy categories through our premium dairy brands and market-leading innovation.

“Lion’s range of pricing and contract options is designed to help farmers better manage market volatility.  We are proud to offer southern farmers one, three and five-year contract options with the ability to fix pricing on up to 50% of volumes for up to three years.

“Since pioneering our flexible model, we’ve seen strong take up by farmers of our fixed pricing options. Lion’s pricing model allows farmers to select the blend of risk and certainty that’s right for their business. We believe it helps farmers to plan for the future.

“Unlike some of our competitors, Lion does not believe in retrospective price cuts. Instead, we are committed to building long term partnerships that give our farmers the confidence they need to invest and grow in partnership with us,” Mr West said.

Almost 400 dairy farmers supply Lion, comprising of 180 direct suppliers and 218 through the Dairy Farmers Milk Co-Operative (DFMC). 

Other Regions in Australia

Region

Cents per litre

New South Wales

53.7

South East Queensland

59.6

Far North Queensland

59.2

Western Australia

54.7

In New South Wales, Lion is pleased to announce a competitive weighted average milk price of 53.7cpl for its direct suppliers for the 2016/2017 season. This is 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.

“In New South Wales, Lion continues to invest behind key brands like Dairy Farmers. This is in addition to our commitment to invest $87m to transform our white milk and milk-based beverages’ manufacturing footprint across the eastern seaboard and accelerate our business turnaround,” Mr West said.

Elsewhere in Australia Lion’s pricing remains unchanged. In South East Queensland Lion offers direct farmers a competitive weighted average milk price of 59.6cpl, while in Far North Queensland Lion offers the DFMC a strong weighted average milk price of 59.2cpl. Lion will continue to pay direct farmers in Western Australia a competitive weighted average price of 54.7cpl for the 2016/2017 season, which is the highest published price in the state.