Lion Dairy & Drinks today announces a revised farm gate price for its dairy suppliers who selected variable pricing in the southern states
10 May 2016
Lion Dairy & Drinks (Lion) has today announced a revised farm gate price for less than 10% of its dairy suppliers in the southern states, who have selected variable pricing for the 2015/2016 season.
Following changes to the milk supply market in Australia, Lion reviewed its variable pricing rates for the 2015/2016 season and made the decision to adjust its variable pricing for only the month of June 2016 by 4.65 cents per litre - reflecting a new annual averaged weighted price paid of $5.92 per kg of milk solids.
Lion Dairy & Drinks Managing Director Peter West said that this revised price continues to reflect a strong price for the 2015/2016 season, and will only impact our dairy suppliers who have chosen variable pricing for all or part of their volume.
“As one of Australia’s leading branded dairy players, this decision was not something we took lightly, however it reflects the current milk supply market,” Mr West said.
“We are committed to building long term sustainable and mutually beneficial partnerships with our dairy suppliers and as such we offer a variety of choices and a premium when it comes to price. Our milk supply contracts have varying lengths (1, 3 or 5 years) and multiple pricing options. This allows our farmers to make informed decisions about what pricing model best suits their individual circumstances,” he said.
“We appreciate that this decision will be disappointing to the small number of our farmers who have chosen a variable pricing option for the 2015/16 season, however it should not be unexpected, as this is in line with market movements.
“Lion decided not to adjust the variable rate for May 2016, as we felt it was important at this time to provide our farmers, who did choose the variable pricing option, with some additional time to prepare for the change. Our revised variable rate is only applicable for June 2016, which is the last month of the 2015/2016 season.”
Mr West said that by offering a range of price options we believe this allows our suppliers to manage the effect of fluctuations in a volatile dairy market.
“We think our pricing model offers them a compelling opportunity to select the level of risk and certainty that is right for their business, and allows our suppliers to plan and grow for the future,” he said.
Lion Dairy & Drinks Farm Gate Milk Supply Agreement and Pricing Options
Lion dairy suppliers in the southern states (Victoria, Tasmania and South Australia) have the choice of: variable pricing underpinned by a minimum pricing guarantee; fixed pricing if they prefer a set and determined price; and also an option to combine fixed and variable pricing.
Under our three year contract, dairy suppliers can elect to fix some of their volume for this period and this is also offered in various combinations - including where up to 50% of the volume is fixed and the rest is variable, or where 50% is fixed at a three year rate and the other half at a 1 year fixed rate.
Lion is a leading beverage and food company with a portfolio that includes many of our region’s favourite brands.
We employ more than 7,000 people across Australia and New Zealand predominantly and take great pride in our local manufacturing footprint, which spans 34 sites – including large dairy farms, milk, cheese, yoghurt and juice sites, breweries, craft breweries, wineries, as well as venues and over 39 Liquor King retail outlets in New Zealand.
Lion is a company focused on long-term, sustainable growth. We have a clear ten year strategy to transform our dairy and juice businesses and champion the nutritional credentials of our portfolio; reinvigorate our beer markets and contribute to vibrant and responsible drinking cultures; and build our presence in high-value categories in targeted Asian markets. To achieve this we invest in our core strategic assets – our people, brands, production facilities and supply chain.
For more information:
External Relations Director, Lion Dairy & Drinks
Phone: +61 437 306 437