A FARMGATE milk price drop would only affect the base price of all three of Murray Goulburn's new payment systems.
Incentives attached to the individual payment systems or the growth incentives would not drop if the milk price plummeted like it did during the 2008-09 season.
Speaking at the Rural Press Club of Victoria in Melbourne last week, MG managing director Stephen O'Rourke was quick to reassure farmers that he didn't expect the price to drop and that MG believed in future demand from a growing global population.
"The good news is world market opportunities to supply higher value dairy products continue to emerge," he said.
"(The industry has) had its ups and downs and probably will continue to do so, but generally in our view the future remains very positive."
Earlier this month MG introduced a new payment system where suppliers have to choose between two new payment structures and the existing, traditional style of milk payment.
Its 2500 supplier-shareholders have until the end of the month to decide if their business would be best suited to either the seasonal, domestic or traditional payment options.
The domestic option has a slightly lower base price throughout the season, but rewards farmers who produce 40 per cent or more of their milk out of season with a "domestic incentive" bonus.
This payment system has prompted some within the industry to question if the system will reward farmers with a higher production cost and prompt suppliers to chase out-of-season production, which could become expensive.
Mr O'Rourke said new pricing system was about protecting the milk the co-operative already had, as well as MG "trying to match the way farmers farm".
He said every system would share equally in any prices ups and downs.
Looking ahead, Mr O'Rourke said the co-operative would do more to help farmers manage volatility in the marketplace.
It will also put more effort into improving its product mix to boost farmgate returns.
The co-operative announced an opening milk price of $4.75 per kilogram of milk solids at the beginning of this month.
"The milk price we pay today is greater than the commodity return if we were just producing commodities and selling them," Mr O'Rourke said.
"Our challenge is to keep trying to widen the gap between commodity return and the actual price we are paying our suppliers. That's why we continue to invest heavily in product and market development.
