Australian Dairy Farmers says ‘no excuses’ on strong farmgate price

As dairy producers have their pens poised ahead of the June 1 deadline for opening floor prices, a key international index has continued bouncing upwards.

The latest Global Dairy Trade session increased 1.8 per cent across the board. Picture: Zoe Phillips

Leading dairy farmers say there are “no excuses” for processors to cut farmgate prices next month following a well-timed jump in international prices.

The headline figure of the Global Dairy Trade (GDT) index rose 1.8 per cent overnight to sit at $US3708 ($A5640), the third consecutive session in positive territory.

Cheddar was the standout at this week’s auction, with a sizeable 8 per cent rise to an average of $US4257 ($A6475) per tonne.

Whole milk powder recorded a 2.4 per cent lift, to an average of $US3350 ($A5096) per tonne while butter lifted 2.1 per cent to an average $US6593 ($US10,029) per tonne.

It comes as Australia’s milk processors have their pricing pens poised for the June 1 deadline to confirm opening floor prices, as stipulated by the federal government’s mandatory dairy code of conduct.

Australian Dairy Farmers president Ben Bennett said the latest GDT result undercut the processor argument that international prices were heading south.

“The processors are running out of excuses to cut farmgate prices. In reality: there are no excuses,” he said.

“Last year, the GDT in the lead-up to June 1 was significantly lower than it is now. But they opened with strong prices because the market demanded it.

“Twelve months on, we’ve got a stronger GDT. There are no excuses when it comes to giving farmers a strong farmgate return.”

Mr Bennett’s comments follow Saputo’s projection last week of a 15 per cent cut on current pricing.

Saputo management informed suppliers that a weighted average opening farmgate milk price of between $7.80-$8.00 per kilo milk solids was likely next season.

Both Fonterra and Bega declined to weigh in with a price following the Saputo indication.

Last week, the Australian Dairy Products Federation said the high cost of raw milk was unsustainable without a change in market conditions.

ADPF chief executive Janine Waller said: “The Australian dairy industry will not be sustainable unless it remains globally competitive across the entire supply chain.

“Seventy-one per cent, or more than 6 billion litres, of Australia’s total milk production is directly trade exposed to global commodity markets and exchange rates.”