Lions roar back in milk wars

In a new twist to WA's dairy wars, Lion Dairy and Drink has thrown its hat in the ring with what it says is a market-leading offer for WA Farmers.

The deal comes just days after Countryman revealed rival Brownes had offered prices between 55c/l to 60c/l to a WA cooperative buying group.

LDD agricultural procurement director Murray Jeffrey only finalised last-minute negations to some of its key WA dairy producers late yesterday.

Mr Jeffrey said the new pricing model for direct suppliers across Western Australia offered market-leading choice, transparency, incentives and returns.

"Lion is offering a choice between secure three and five year contract terms to new and existing Lion contracted suppliers. Based on current farm collections, this offer will raise Lion's average price paid in WA for grade 1 quality milk to 53.6c/l - higher than any published price available in the market today," he said.

Under the new deal, Mr Jeffery said key elements of the new offer will include an increase to of 2c/l to 49c/l, with a base payment option.

"The deal will also include an additional 0.5c/l premium in years 4 and 5 for those choosing a five-year term," he said.

"There will also be the lowering of the volume incentive payment threshold from 5 million litres pa to 70,000 litres per month (840,000 litres pa), and increasing the maximum available incentive to 3.5c/l."

Mr Jeffrey said the his company's move reflects Lion's confidence in the dairy industry in Western Australia, and the company's recently announced three-year strategy.

"Lion has a clear growth strategy in WA, focused on winning in profitable segments like milk based beverages and speciality cheese - underpinned by secure and mutually rewarding partnerships with our milk suppliers," he said.

"We recognise that the market for milk in WA has become more competitive, and the industry has been subject to a lot of change and uncertainty in recent times. Farmers tell us that they are looking for a home for their milk that is secure, with contract terms that offer strong returns, incentives, and transparency.

"Lion's offer is open to all WA farmers - it's not a special deal for a select few. And we are proud to be putting such a strong offer on the table that increases choice for WA farmers while at the same time sending a strong message about our confidence in the industry and our own growth trajectory in WA."