Norco Shows Market Direction

By Brian Tessmann, QDO President

The announcement by local dairy co-operative Norco Milk of a 0.5 cent per litre farm gate milk price increase is not only welcome, but also illustrates the different market conditions in the northern dairy region compared to those in the south.

In announcing its retrospective price increase, co-operative chairman Greg McNamara said the average supplier could expect a retrospective payment with the normal October milk payment of around $1350. He added that the payment was a result of an overall improvement of the Norco business. In particular, he noted the groundswell of support from consumers in deciding to strategically purchase branded milks as the major driver in enabling the cooperative to pass that financial reward on to their dairy farmers collectively.

Mr McNamara added that the Norco Patronage reward scheme will be paid in addition to the step up in November. On top of this a 6% dividend will also be recommended to members to be paid when Norco farmers come together at their AGM on November 9.

This appears to be in stark contrast to information mailed to farmers by Parmalat and also delivered to farmers at the Premium group meeting at Toogoolawah last week. At that meeting members were told Parmalat was looking to drop their price by over 1.5 cents per litre. This appears to leave many Parmalat suppliers, particularly those with higher components, well below the local market. The removal of the new autumn milk payment will also hit those who in shifted calving times hard.

Premium indicated price negotiations had stalled with the real probably of arbitration for the first time. Contracts have only been offered in one, two or three year terms but will however have six month rolling prices, despite that fact that Parmalat in its submission to the senate inquiry recommended that farmers and industry should avoid long contract terms without associated fixed pricing.

It looks like Norco farmers can welcome an early Christmas present, however Parmalat farmers have a lot to think about. The real question is what can and will they do next?