In a letter to suppliers seen by The Weekly Times, ACM managing director Michael Auld said the company was moving to a “nine and three” pricing system.
“This means that ACM will pay one price for the nine months of the year for shoulder milk (Jul/Aug/Dec-Jun) and a ‘spring’ price for the other three months (Sep/Oct/Nov),” Mr Auld said.
“The ‘spring’ price will be reflective of the returns achievable over the spring production period when we have the most exposure to dairy commodity prices and the highest level of volatility.”
ACM has set its guaranteed minimum shoulder price at $7 a kg MS for milk, while its spring price was $5.50 a kg MS.
This brought the average price to a guaranteed minimum of $6.50 a kg MS, well above this season’s return of $6 a kg MS.
But Mr Auld said there was a “strong likelihood” of increasing the milk price, especially for the three month period of September to November.
He said ACM’s current forecast was a $6 a kg return for the September to November period, bringing the average estimated price to $6.70 a kg MS for the whole season.
ACM is asking dairy farmers to sign by the end of March as it could not guarantee the pricing offer would remain open indefinitely.
“ACM will keep supply open to any supplier who do (sic) not sign on by the end of March 2019, but the supplier will not have the protection of the guaranteed price minimum in this letter,” Mr Auld said.
“Our opening price is to be announced in June 2019 and it could be lower than the guaranteed price minimum for those who have not signed their agreement.
“If the GPP (Guaranteed Price Plus) is lower, those who sign on before the end of March 2019 or are already committed by written agreement to ACM will be protected.”