MURRAY Goulburn's new milk-payment plans offer producers more flexibility, writes SIMONE SMITH

Murray Goulburn's 2500 suppliers will decide over the coming weeks if they want to change how they are paid for their milk.

The co-operative unveiled its new payment structure with its opening price last week.

However, many suppliers will not receive their information booklets until this week.

The options available under the new payment structure include the new "seasonal" or "domestic" pricing or the existing "traditional" structure.

According to MG's Milk Payment information booklet, the seasonal-payment option would provide greater cash flow for the first half of the season compared with the existing traditional and new domestic model.

Seasonal-payment option prices outlined by MG managing director Stephen O'Rourke in the opening-price supplier letter were $2.82/kg butterfat and $7.03/kg protein from September to December.

This is compared to $2.61/kg butterfat and $6.53/kg protein for the same months under the traditional model.

But, unlike the traditional-payment option, prices under the seasonal system do not rise as much at the beginning and end of the season.

MG general manager of field services Ross Greenaway said there were strengths and weaknesses of each system.

For example, the seasonal option offers cash flow in spring but, unlike the traditional payment option, it would be harder for farmers under the seasonal option to take advantage of "the good season" in autumn as the price would be lower.

The third option, domestic, "recognises the commitment of milk supplied out of season" and offers a flatter price with a "domestic incentive" payment at the end of the season. To qualify, farmers must supply 40 per cent or more of their milk out of peak production months.

This incentive ranges from 8c/kg butterfat and 20c/kg protein to 40c/kg butterfat and 100c/kg protein, depending on the quantity of qualifying production.

MG has also introduced a growth incentive that will be paid on increases in butterfat and protein production "compared to the average production from that farm's previous two financial years".

Suppliers who choose the domestic and seasonal options have to commit to MG for the year, while suppliers returning to the co-operative have to sign-on for three years.

Similarly, MG suppliers who have started milking again or farms that have been converted to dairy operations would also commit for up to three years because they would receive more money through the growth incentive in the first year.