Murray Goulburn says weather creating challenges
A suspension of the Milk Supply Support Package (MSSP) for the remainder of FY17 was also announced by the Australian cooperative.
MG says that unexpected continual rainfall since mid-September has created a major challenge for its suppliers and the Australian dairy industry.
All production regions across south-eastern Australia are impacted, in particular the North and West of Victoria, where widespread flooding has impacted dairy herds and pastures.
Production across the region was down 10.7% in August and this trend has continued. In particular, the North of Victoria has moved from drought-like conditions in FY16 to severe wet conditions.
Impact of wet conditions
As a result of these very wet conditions, MG expects milk intake for FY17 to be approximately 20% lower than last year. This reduction in milk intake is driven by milk supply losses of approximately 350m liters (approximately 10% lower than last year’s intake) through retirements from the industry.
The company also expects on-farm production by its approximately 2,200 farmers to reduce due to the wet conditions by 10 to 12% in FY17.
As a result, MG has reduced its FY17 farmgate milk price forecast to A$4.70 per kgms ($3.58), down from A$4.88 per kgms ($3.71).
Due to the delay in the traditional peak milk production cycle, the company says that it may see an extended period of above average production in the coming months. However, MG says it expects profitability will be impacted as a result of the climactic conditions.