Australian dairy farmgate prices: UDV president Bernie Free says processor arguments invalid

Processors have been slammed over their international price arguments, with new figures contradicting the factory belt-tightening message.

Strengthening international dairy prices contradict processor arguments about cutting opening prices, the United Dairyfarmers of Victoria president says.

Bernie Free says lower opening prices confirmed this week were based on flimsy arguments from processors such as Saputo, Bega, Lactalis and Fonterra.

His comments come as the headline figure in the latest Global Dairy Trade session strengthened by 1.7 per cent to reach $US3824 ($A4930).

This week’s result is the fifth consecutive GDT trading session in positive territory, staging an ongoing rally in early April after several poor results in March.

“One of the main reasons for cutting opening prices that the processors keep rolling out is a weak world market. But the GDT is up this week and it was up the fortnight before that,” the UDV president said.

“In fact, the GDT is stronger than it was this time last year when the processors came out with prices around $9.40 (per kilogram milk solids).

“Now on average, we have a cut of $1.20 a kilo to be $8.20 (per kilogram milk solids).

“All the information I’ve received and people who watch the market closely have noted, is that international conditions are improving.

“So the arguments of the processors and the ADPF (Australian Dairy Products Federation) don’t stack up. They’ve been saying how bad things are for months, yet the international numbers tell a very different story.”

Both butter and whole milk powder categories on the GDT rose 1.7 per cent to sit at $US6864 ($10,305) and $US3478 ($A5221) respectively.

Fonterra chief operating officer Anna Palairet told New Zealand radio that the GDT result showed Chinese demand for dairy was improving.

“Certainly, (the GDT result) gives us cause for continued momentum and confidence going forward,” the NZ-based executive said.

“Butter is up and the anhydrous milk fat is on the up. It’s a good result.”

Earlier this week, ADPF chief executive Janine Waller said: “ADPF is urging dairy farmers to speak to their processors to request an income estimate for accurate pricing information on expected earnings for the year.

“Farmgate milk prices achieved at individual farm level will vary so it’s important to discuss your specific circumstances.

“Your processor is the source of truth on what different arrangements can provide to your business.”