Australian farmgate prices set to lower in 2024, analysts say

Dairy farmers are set to have their farmgate prices cut next season with the record run tipped to end. See the details.

Victorian dairy farmers are set have their farmgate prices sliced next season, analysts say, with a record run tipped to end.

From a high of nearly 90 cents a litre in southern Queensland and northern NSW markets, to a bit over 68 cents a litre in the tightly-held Western Australia trade, the 2023-24 financial year has been one of the most profitable since the 1999-2000 deregulation of the sector.

Victorian farmers have received more than $9.20 per kilo milk solids this season, with some nudging the $10 per kilo mark, equating to more than 70 cents per litre.

However, Rural Bank’s Australian Agriculture Outlook has tipped the 2024-25 season will be less profitable as international dairy downturn kicks in.

The report projects 2024-25 opening prices will drop below $8.50 per kilogram milk solids, about a dollar less than the current price.

Imports reached an all-time high share of Australian sales. Picture: Zoe Phillips

Rural Bank analyst Sean Hickey said Australian farmers were ahead of their Kiwi counterparts by more than $2 per kilo milk solids.

He said processors were under pressure to cut costs in the new year, with an influx of dairy imports edging out domestic produce in supermarket refrigerators.

“The past two dairy seasons have been among the very best for farmgate prices right around Australia,” Mr Hickey said.

“Processors in the lead up to this current dairy season were concerned about the tightness of supply. Australia’s milk pool is at its smallest in 30 years.

“The milk pool is still around the 8 million litres mark but global milk prices remain weak.”

“We see new season opening farmgate prices likely to drop below $8.50 per kilo milk solids as processors continue to right-size their businesses. They’re doing this right-sizing to adjust to a lower supply environment.”

Data published by Dairy Australia earlier this month found milk consumption nationwide sits at 1.4 billion litres as of November 2023, with imports making strong gains due to cost competitiveness.

Coinciding with deregulation of the sector, imported products accounted for only 11 per cent of Australia’s dairy consumption in the 1999-2000 financial year.

However, last financial year, 27 per cent of dairy consumed domestically originated from abroad — mainly the US and New Zealand.