Australian dairy: Saputo provides opening price for 2022-23 season

Australia’s big three processors have all provided opening farmgate milk prices, in advance of this afternoon’s dairy code deadline.

Australia’s big three processors have now all provided an opening price with Saputo finally confirming its farmgate figure, 48 hours out from today’s code deadline.

The Canadian processor announced a non-exclusive figure of $8.50/kg of milk solids as its average weighted price.

A further 15 cents/kg of milk solids is being offered to existing and potential suppliers in northern and southwest Victoria for exclusive supply.

All processors have to report their opening prices by this afternoon as part of the mandatory dairy code of conduct, introduced by the federal government two years ago.

In a letter to suppliers released on Monday, Saputo management said: “As you are aware, this is an average across our supply base and milk prices achieved at an individual level may vary.

“We commit to reviewing our milk price on a quarterly basis – in October, January April and at the end of the milk year.”

Meanwhile, Coles is offering more than $9/kg of milk solids for farmers willing to lock in exclusive supply contracts.

Milk2Market pricing analyst Richard Lange said Coles pricing delivered an average price of $9.15/kg of milk solids for a two-million-litre farmer on flat production, or about $8.72/kg of milk solids for seasonal production.

United Dairyfarmers of Victoria vice-president Mark Billing said most Coles suppliers would be on fairly flat production, which came at a cost justifying the need for a premium price.

“The numbers are showing a good gap at $8.25 (kg/MS) for Fonterra’s weighted average price to Coles above $9,” Mr Billing said.

“Prices are good, which means we can maintain similar margins to this season after huge hikes in grain, fuel and fertiliser costs.”

Bulla was the first processor out of the 2022-23 starting blocks, confirming in March an opening price of $7.40 to $8.00 per kilo milk solids.

The Colac processor then upped the ante this week, raising its price range.

Bulla procurement general manager Rohan Davies said a majority of suppliers would receive an opening price in the $8.70-$8.90/kg of milk solids.

Bega was also an early opener, providing a price range of $8.20-$8.60/kg of milk solids in April.

Last month, Fonterra opened with an weighted average farmgate milk price of $8.25/kg of milk solids for the 2022-23 season.

Saputo chief executive Lino Saputo junior at the Australian Dairy Conference 2018.