Just two days after announcing its minimum price, Fonterra Australia was forced to increase the weighted average opening from AU$6.06/kgMS to AU$6.40/kgMS.
The move brings it into line with competitors Bega Cheese and Saputo Dairy Australia and is a new minimum rather than a step-up, locking in the price under the mandatory code.
Fonterra says it had kept in line with industry convention to open at a price lower than the full-year forecast, with the understanding that step-ups would be paid throughout the season where the market supports it.
But this wasn’t a step-up. Clearly the co-op’s suppliers expressed their unhappiness with the original opening price and Fonterra had to act fast.
The co-op is continuing to lose market share in the Australian raw milk market.