Australian dairy farmgate prices: Fonterra step-up

Fonterra has stepped up its farmgate price — so will the rest follow? A leading dairy farmer says there’s no excuse. Here’s why.

All processors need to lift their farmgate prices ahead of Christmas to improve primary producer viability heading into the new year, the United Dairyfarmers of Victoria president says.

Fonterra became Australia’s first major processor to step up this season, confirming a 15 cent per kilo milk solids lift this week.

Following several sessions of robust results on the Global Dairy Trade index, Fonterra confirmed its weighted average milk price would rise to $8.15 per kilo milk solids.

However, rival factories were unanimously silent on whether they would follow suit when contacted by The Weekly Times.

UDV president Bernie Free said $8.15/kg was a start but other processors needed to start improving their farmgate offerings as farmers reassessed their futures into 2025.

“It’s a case of better late than never from Fonterra. This announcement should now set in motion all the other processors,” the southwest Victorian farmer said.

“The GDT has been consistently improving — cheddar, butter, whole milk powder — and has done for many months now.

“Stepping up is the only way to keep farmers in dairy. The processors are making a dollar, the supermarkets are doing even better — billion dollar profits. Where’s the return for the primary producer that makes the raw product?”

Winslow farmer Bernie Free was recently reappointed as United Dairyfarmers of Victoria president. Picture: Nicole Cleary

International dairy prices continued their upthrust on the GDT overnight, with a 1.2 per cent increase to the headline figure to sit at $US4193 ($A6507) per tonne.

Taking into account this week’s result, the GDT headline figure has risen a cumulative 7.9 per cent in three successive trading sessions, on the back of 1.9 per cent a fortnight ago and an impressive 4.8 per cent jump in early November.

Major processors including Bega, Burra, KyValley, Lactalis and Saputo were all contacted by The Weekly Times for comment.

Rabobank dairy analyst Michael Harvey said farmgate prices in France, Germany, Ireland and New Zealand were all nudging 2022 record highs heading into 2025.

“We’ve got several factors heading in the right direction for the Australian farmgate,” he said. “Exchange rates for example. The Aussie dollar is heading south — which obviously is great for Australian dairy exports.

“We were originally thinking, like most currency watchers, that we were heading north of US70 cents, which would have taken some gleam off export returns but now the Aussie dollar is around US64 cents, that’s better than expectations earlier in the season.”