Saputo joins Bega and Fonterra with 15 cent farmgate price rises

A third dairy processor has upped its farmgate prices for producers in three states. See the latest.

A third Australian dairy processor has committed to farmgate milk solids price increases as global demand for dairy heats up.

Saputo joined Bega and Fonterra in announcing step ups of 15 cents a kilogram of milk solids, lifting its weighted average farmgate milk price for Victoria, South Australia and Tasmania to between $8.15 - $8.30 per kgMS.

The Bega Group also announced a 15c/kgMS lift in its three key dairy growing regions last Friday, plus a smaller lift for its local suppliers on the NSW South Coast.

The price lift will see Bega’s average milk solids price range from $8.05 to $8.35 per kg, about an 1.8 per cent increase on its opening average milk solids price range of $7.90 to $8.20 this season.

Bega also announced a $0.10 per kg price rise for milk solids for Bega and Bodalla suppliers, which will raise the opening average milk price in the region from $9.50 to $9.60 per kg.

Both processors followed Fonterra’s lead from earlier this month, when it announced a 15 cent step up to deliver a weighted average milk price of $8.15/kgMS.

All three processors have raised their prices in line with rising global dairy markets, with the NZ Global Dairy Auction index rising by almost 20 per cent since this time last year, from 1025 to 1219.

Bega Group executive chairman Barry Irvin said “the price increase reflects stronger dairy commodity markets and Bega Cheese’s commitment to ensure we are delivering a competitive price to our suppliers,” he said in the special circular statement seen by The Weekly Times.

“This price increase is paid in addition to the monthly minimum prices for FY2024-25. The price increase for the period up to December 31, 2024, will be included in the December pay statement and paid in January 2025.”

Bega Cheese executive chairman Barry Irvin speaking at the Global Food Forum in Brisbane. Picture: Glenn Hunt (The Australian).

The circular to Bega and Bodalla suppliers stated: “As previously communicated, when considering milk price in the Bega region we take into account returns from the commodity market and our competitive position when compared to the fresh milk markets.

“The above increase reflects the increase in value of manufacturing milk, mitigated by a softening in fresh milk markets.”

Bega has been contacted by The Weekly Times for comment.

Bega’s wider $0.15 per kg step up is in line with Fonterra’s decision to become the first major processor in Australia to announce a farmgate step up this season when it lifted its milk solids price by $0.15 per kg.

In recent weeks international dairy prices continued their rise with the latest figures showing a 1.2 per cent increase to the headline figure to sit at $US4193 ($A6507) per tonne earlier this month.

Dairy price step ups have also been recorded across the Tasman with both Fonterra and Synlait lifting their New Zealand farmgate in recent weeks — now offering $NZ9.50 ($A8.53) per kilo milk solids.

NZ dairy analysts expect the Kiwi farmgate will surpass $NZ10 per kg milk solids this season – it would be the first time the NZ farmgate has hit double digits.