Consumers face lift in retail milk prices

CATHERINE HARRIS
Last updated 10:37 05/04/2014

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Milk prices are expected to rise, with one of New Zealand's two main processors blaming the raw milk cost.

In a letter to its customers, Goodman Fielder, which owns the Meadow Fresh milk brand, is raising the wholesale price of its white, UHT and flavoured milk by 5c a litre, and cream by 10c a litre from Monday.

Fonterra, the main supplier of raw milk and owner of the Anchor and Dairy Dale milk brands, said it continued to review its wholesale prices and would let customers know through the appropriate channels.

Goodman Fielder cited commercial sensitivity when asked about the price rises. But, it told the NZX on Wednesday that it had told its customers of the increases to recover a rise in raw milk prices.

Fonterra lifted its forecast farmgate milk price, which sets the raw milk price, from $8.30 to $8.65 per kilogram of milk solids in February.

However, Goodman has also incurred deteriorating trans-Tasman trading and plans to cut 300 jobs in the next three months.

Dairy commentator Keith Woodford said it was likely that once one of the key milk producers raised its prices, others would follow. The price consumers paid did not just reflect the raw milk price, but also processing, distribution, retail markups and tax, he said.

With just two months to go, the milk volume collected by Fonterra appears to be steering the industry to a record year for milk production.

Milk collection in the 10 months ended March hit 1416m kilograms of milk solids, 6.3 per cent higher than the same period last season. ANZ rural economist Con Williams said last year's drought meant this year's volumes would always be higher, but good pasture growing were also playing their part.

Another factor was the higher milk payout, $3.15 better than last year, he said.

"The incentive to feed more supplements and keep on milking for as long as possible is greater than it was last year, and also the availability of supplementary feed is greater.

"In saying that, a lot of our customers are already down to once a day milking."

William's own forecast was that milk yields would be 9 per cent higher than last season, setting a record. Fairfax NZ

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