Australian dairy farmgate: Farmers hope for better prices

Brad Collins expected low opening milk prices. He says every link along the supply chain needs to be profitable – and if you want a sustainable industry, pricing is part of that.

Dairy farmers with tempered expectations for opening prices say processors can improve their position in the coming weeks.

Southwest Victorian dairy farmer Brad Collins said he had a good relationship with his processor Bulla and that negotiation rather than confrontation was key.

“Everyone along the supply chain has to make a profit — the farmers, the processors, the shops and supermarkets,” Mr Collins said.

“The key part is getting the balance right so that every part of the chain is getting a fair go and that farmers aren’t working for free.

“We planned ahead, so we expected these type of prices but that’s not to say they can’t rise in the next fortnight or so.”

Terang dairy farmer Brad Collins

While Bulla roughly matched most of the other processors, with pricing hovering around $8 to $8.50 per kilo milk solids, farmers were impressed by Norco’s $12.35 per kilogram milk solids offering in its northern NSW/Queensland catchment area.

Mr Collins said: “We would love to have Norco in Victoria. That price won’t affect us directly but it’s a good signal to the rest of the market.

“I’m part of Dairy Farmers Victoria and we’re advocating the need for sustainable prices, putting that message out there that if you want a sustainable industry, pricing is part of that.”

While processors have copped criticism from farm lobby leaders, the role of Aldi, Coles and Woolworths has also come into focus.

Gippsland farmer Aaron Thomas said supermarkets were taking a bigger cut of the dairy profit pie than farmers and processors.

“The supermarkets have got a big role to play in creating a sustainable dairy industry,” the Wron Wron district farmer said.

“Aldi, Coles and Woolies have all enjoyed a number of very profitable years and good luck to them. But with the prices at $8 per kilo milk solids or thereabouts, the dairy farmer isn’t getting a good return

“The numbers out this week has to be a starting point. Even if it went from $8.00 to $8.50, that 50 cents would make all the difference.”

Southern NSW farmer Ruth Kydd said opening prices paid to farmers were roughly at the cost of production, eroding the fledgling confidence regained in the sector after the 2016 clawback.

The NSW farmer said labour costs were rising steeply, noting the federal government’s confirmation of minimum wage payrises on Monday.

“Electricity prices are going up, labour costs are certainly up... Yet the price of milk is going down. Any profit margins that farmers once had will be eroded,” eastAUSmilk committee member said.