Shop around and do your budgets, advises UDV

author avatar
UDV president Bernie Free.

Farmers trying to get the best deal for their milk had some decisions to make over the next month, the UDV suggests.

UDV president Bernie Free said the notional, average $8/kg MS price would not be the actual price that every farmer would receive and over the next month, before the financial year started, it was an opportunity to run the farm figures through a budget to see the individual outcomes.

“If you are not happy with your factory’s budget then get someone else to do a budget,” he said.

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

Mr Free was asked if he knew of any farmers able to negotiate special prices for their operation.

“There have been rumours about that happening, but I have never spoken to anyone who was able to do that.

“Having said that, there is no rule against negotiating a higher price with your factory.”

Factories would be likely to value volume, quality and butterfat.

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.

Farmers wanting to stay viable had the option of switching their land use to something else, “because at the opening prices we are not going to see much growth in milk production”.

Mr Free said he was surprised to see the Australian Dairy Products Federation warn that milk prices were too high, before the prices were announced and believed that this was an attempt to soften farmers up.

“I don’t know why the federation did this, rather than the individual processors.”

Dairy Farmers Victoria president Mark Billing said he suspected some farmers would be culling the worst performers in the herd to reduce costs and generate some income.

“With these prices I know some farmers have already gone to their spreedsheets and said to themselves: that’s $1 or 10 to 15 per cent off last year,” Mr Billing said.

The annual Victorian Dairy Farm Monitor Project illuminates some of the figures behind the state’s dairy businesses.

Although dairy farms have been enjoying the highest milk prices in many years, they have also been hit by rising costs.

For example, the monitor project identified that in 2022-23 milk prices increased by 33 per cent, with the average of $9.77/kg MS being the highest in at least 17 years.

But variable costs rose by 23 per cent to $5.04/kg MS, with purchased feed and fodder being the major contributor, increasing by $0.59/kg MS

High labour costs added to the increase in overheads. The same year, for example, many dairy farmers in northern Victoria had to contend with flooding.