Australian farmgate milk prices: A ‘make or break’ time for farmers

Norco has announced its opening farmgate milk price to farmers as the race to secure supply finally gets underway.

NSW dairy processor Norco has opened with a milk price higher than last year – outbidding key rival Lactalis in the race to secure NSW and Queensland supply.

Management at the Lismore-based processor have announced an average opening price of 88c a litre, 1c/litre higher than average compared to its 2022 opener.

Lactalis has opened at 76.7c per litre in NSW and 82.3c/l in Queensland for the 2023-24 season in NSW, earning a high-profile rebuke.

Norco chief executive Michael Hampson said the 88c average was the highest opening figure ever paid to its farmer-members.

“Within our means, Norco is constantly looking at how we can add value to our farmer members,” Mr Hampson said.

“And as Australia’s last operating dairy co-operative, we also feel we have a responsibility to think longer term about how our actions can better support the Australian dairy industry as a whole.”

“Leading on milk price is just one of the ways we can help to safeguard the future of the dairy industry, for all dairy farmers in our region and across Australia.”

Norco is one of the Australia’s leading suppliers of fresh milk for the domestic market. Picture by Richard Gosling

Lismore region farmer Andrew Wilson said Norco’s opening figure was welcome given rising on-farm costs.

“Whilst other processors are looking to reduce milk prices in the industry, it is great to see that our co-operative is continuing to support us” he said.

Mr Hampson said his “ultimate goal was to see farmgate milk price at $1 per litre” which would provide greater confidence in the sector.

“However, we do also need to consider the current economic climate and the impact on consumers,” he said.

“So it is important that we balance efforts to continue to add value to our farmers, with consumer affordability – but we will continue to work hard to find the right balance.”

EARLIER TODAY
Dairy farmers say the next 26 hours are make-or-break for the industry, with opening milk prices falling short of expectations.

Primary producers across the eastern states are on tenterhooks and fear they will need to exit the industry or reassess operations if prices don’t match production costs.

Processors are required to publish their opening prices by 2pm Thursday, under rules stipulated by the mandatory dairy code of conduct.

Only two processors — Bulla and Lactalis — have provided price indications ahead of the Thursday deadline.

NSW dairy farmer Malcolm Holm

Southern NSW dairy farmer Malcolm Holm said he was nervous about what dairy deadline day had in store.

“The next 26 hours are going to be telling for our industry,” Mr Holm said.

Mr Holm said he was hearing that there had been a lot of pressure on the processors.

He said there were concerns that some processors might like to see another price lowering.

“When you contrast this with the milk shortage in Australia, this is a crucial time,” Mr Holm said. “The fact processors are leaving it until the last minute (to announce prices) leaves me very nervous.”

Regarding negotiations or a potential bidding war after the deadline on Thursday, Mr Holm said he believed processors would put a stake in the ground and stick to the price.

Dairy farmer Phil Ryan of Bega in NSW. Picture: Supplied

Bega region farmer Phil Ryan said there were vast amounts of disappointment across the industry as a reaction to the first two announcements of opening prices.

“Ultimately, these prices will result in a drop in milk supply,” he said.

Mr Ryan said dairy farmers had experienced price rises across nearly every input cost.

“If processors want milk, they have to pay a price that enables farms to be competitive and sustainable,” he said.

Last year, Bulla opened the farmgate price bidding war in mid-March and was followed in April by larger processors such as Bega.

By early May, most processors had issued at least one price indication, in some cases two, before the official June 1 deadline.

Mr Ryan said there would likely be a bidding war in the coming weeks.

“There is going to have to be. Too many farmers are struggling, and too many farmers are under pressure to decide what to do with their business,” he said.

Mr Ryan said he was eagerly awaiting a price from Bega and Saputo.