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Australian dairy prices: Is 2021-22 set to be a record year?

Are Australia’s dairy farmers finally getting a reasonable return for their efforts? We look at a decade’s worth of opening prices to find out.

United Dairyfarmers of Victoria president Paul Mumford.
United Dairyfarmers of Victoria president Paul Mumford.

Victoria’s dairy farmers are being paid premium prices at the farmgate — but industry leaders warn input costs are hot on the heels of the high returns.

The average opening price paid by processors in the Garden State to kick off the 2021-22 financial year is $7.03/kg milk solids.

It’s the first time the average has broken through the $7/kg milk solids barrier and a marked improvement on four short years ago.

In the wake of the 2016 clawback by Murray Goulburn and Fonterra, Victoria’s farmers were paid $4.80/kg milk solids a few months later to start the 2016-17 season.

Median opening price at the Victorian farmgate.
Median opening price at the Victorian farmgate.

But it wasn’t the worst average farmgate opener in the 2010s.

That dubious record was smashed the following financial year with a nadir of $4.75/kg milk solids at the start of the 2017-18 season.

United Dairyfarmers of Victoria president Paul Mumford said the clawback cast a long shadow over financial confidence in the sector.

“The clawback captured all the headlines at the time because it was so dramatic,” Mr Mumford said. “What a lot of people outside (the dairy sector) didn’t realise was that prices at the farmgate stayed low through 2016, into 2017, 2018.

“It’s only the past few years that have really returned that confidence back into the sector.”

Casting an eye over the 2010s, the decade started off relatively low at the farmgate.

Both Murray Goulburn and Warrnambool Cheese and Butter offered an average farmgate opener of $4.90/kg milk solids to start the 2011-22 season while Fonterra offered $4.65/kg milk solids.

However, Mr Mumford said the relatively low 2011-12 opening price average of $4.85/kg milk solids should be put in its historical context.

“Input costs at the start of the 2010s were pretty low. Even if it was $4.80/kg, $4.90/kg milk solids, the gap (between the opening price and the input price) was wider then than it is now.”

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Original URL: https://www.weeklytimesnow.com.au/dairy/australian-dairy-prices-is-202122-set-to-be-a-record-year/news-story/ea02f7510aaace7a67ff341c87927121