ADFC makes farmgate move as GDT surge continues

Dairy processors are “running out of excuses” not to lift the farmgate price as a smaller rival offered the biggest farmgate lift this season.

Australian Dairy Farmers Corporation has provided the biggest farmgate lift this season, as the international dairy index soared overnight.

ADFC announced it would increase its price by 20 cents per kilo milk solids, the first of the smaller processors to raise the pricing bar this season.

Following the lead of bigger players Bega, Fonterra and Saputo, ADFC management confirmed it would now pay an average of $8.40 per kilo milk solids.

In a letter to suppliers, ADFC general manager Andrew Sutton said: “The revised price will be backdated from July 1, 2024 and payment will be included with January statements and paid on 14th February 2025.”

ADFC has 139 suppliers and major purchasers of its milk include hospitality juggernaut Procal, popular yoghurt brand Chobani and Made Food Group.

The ADFC announcement came as the Global Dairy Trade index posted one of the biggest jumps to its headline figure this financial year.

In overnight trade, the international dairy index lifted 3.7 per cent overall to reach $US4296 ($A6868), with the skim milk category posting the biggest rise of 4.7 per cent to reach $US2835 ($A4533).

Dairy Farmers Victoria president Mark Billing said the surging GDT coupled with the weakening Australian dollar meant processors were “running out of excuses” not to lift the farmgate price.

“Back in April last year, we (DFV) said $8.50 per kilo milk solids shared the risk between supplier and processor and the processors, in our view, overcorrected by 50 cents,” he said.

“The ADFC step up announcement was a positive move and really points the way for all the remaining processors to lift and push towards and above that $8.50 mark.

“We know that processors are out there consulting with farmers at the moment, they have to have those awkward conversations with supplier meetings and explain the reasons why they’re still tracking so low and not lifting their price.”

This week, eastAUSmilk chief executive Eric Danzi took aim at processors and their representative group, Australian Dairy Products Federation, claiming the farmgate price should be “at least $10 a kilo milk solids”.

Mr Billing said while $10 per kilo milk solids was not attainable for many processors, there was still a gap between the lower prices currently on offer and the rising international market.

“Even if you look at the ADPF’s own milk value portal, there’s been a lift in their indicators, so processors really are running out of excuses about not lifting.”