No movement in opening milk prices

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The Australian Dairy Products Federation blames dairy imports for the lower milk price this season. Photo by Holly Curtis

Fonterra Australia, Bega Cheese and Saputo Dairy Australia had not moved from their opening price of about $8/kg of milk solids by July 1.

And the Australian Dairy Products Federation says this year’s lower farm gate milk price has been set to preserve the viability of the dairy industry.

Under the Dairy Code of Conduct all processors were expected to have their milk supply agreements published by June 1, and must nominate a minimum price by July 1.

With the exception of Norco in northern NSW, the major processors have offered milk prices below last season, with farmers facing a cut to their income.

The Australian Dairy Products Federation, representing dairy processors, pointed to the flood of imported dairy products that followed several years of record high milk prices.

Federation chief executive officer Janine Waller said during the 2022 and 2023 year, imports surged by 17 per cent, leading to the highest ever consumption of overseas dairy products in Australia, nearing 30 per cent of 344,000 tonnes.

“We want to ensure Aussie families can continue to enjoy affordable, locally made and branded milk, cheese, yoghurt, butter and ice-cream in their homes,” Ms Waller said.

On July 1, the estimated weighted average farm gate milk price in the southern region ranged from $7.94 to $8.20/kg MS.

“Following two years of record high farm gate milk prices, this remains up to 14 per cent higher than it was three years ago (financial year 2021-22),” Ms Waller said.

“Compared to the farm gate milk price paid by major global competitors, the southern Australian price remains at a premium.

“It is up to 10 per cent higher than New Zealand’s milk price midpoint of A$7.43/kg milk solids.

“It’s important to remember the announced farm gate milk prices are minimums for the season, with incentives on offer and the possibility of price reviews as global market conditions improve.

“We encourage farmers to use the dairy industry’s milk value portal which provides transparent and comprehensive data on farm gate milk pricing, offering insights into current and historical rices and market trends.”

Latest figures released by Dairy Australia show cheese exports are rising, in value and tonnages.

However, two of the bigger categories — skim milk and whole milk powders — are lower than the same time last year.

About 30 per cent of Australian milk production goes into exports.

EastAUSmilk president Joe Bradley pointed out the vast majority of Australian milk is sold domestically, including around a third going into milk bottles.

“So it is hard to understand the obsession of some milk processors and Australian Dairy Products Federation on exports and using this to drive down farm prices,” Mr Bradley said.

“Any farmers who are off contract need to shop around and compare prices from all processors.”

VFF UDV president Bernie Free has previously said the notional, average $8/kg MS price would not be the actual price that every farmer would receive.

“Make sure you are happy with the contract you are offered before you sign up,” he said.

Mr Free said farmers should also consider looking at other processors to see if they were getting maximum value from their milk supply curve.

However, Mr Free warned that farmers considering changing their supply curve by calving down at different times of the year, should carefully examine the costs, before making the switch.