Australian business helps its farmer suppliers manage volatility

Published 5 July 16

Australian food and beverage company, Lion, expects to pay its suppliers a net weighted average price of approximately 21.5p/litre for the 2016/17 season (July-June). This compares with Murray Goulbourn’s and Fonterra Australia’s opening prices for the upcoming season of about 16.3p/litre and 18.0p/litre respectively.

Lion is offering its suppliers a range of fixed and variable farmgate pricing options for periods of between one and five years. For instance, farmers can lock into fixed prices for one or three years, of approximately 19.3p/litre and 20.9p/litre respectively, on up to 50% of milk volumes. Alternatively, farmers can opt for a variable pricing scheme for one year, which will be underpinned by a minimum price of about 19.0p/litre.