Farm Fresh has issued a statement with regard to the unusual market activity and rumours circulating related to the recent announcement by Bega Group and the decline in Australian milk production resulting in intense competition for raw milk.
This comes as Bega Group said it is expecting a decline in performance and an expected non-cash impairment in the range of AUD180m to AUD280m in its audited results. In response Farm Fresh Berhad said it is also impacted by the less-than-expected decrease in farmgate milk prices in Australia as the company purchases milk from third-party farmers in Australia, but much less impacted compared to Bega Group.
Accordingly, Bega Group exclusively purchases 100% of its milk requirements from farmers in Australia whilst Farm Fresh purchase of milk ingredients from third-party farmers in Australia is expected to account for approximately 14% of its total milk ingredients equivalent to more than 100 million litres in the financial year ended 31 March 2024. Additionally, 70% of the raw milk used comes from its own farms in both Malaysia and Australia.
Farm Fresh added that it continues to take into account various factors in determining investments in its upstream, midstream, and downstream operations, the input costs, and variations that occur from time to time, to ensure it does not depend heavily on any specific milk ingredient source.
