Dairy D-Day 2023-24: Fonterra and Saputo slash farmgate milk price

Processors have made big cuts to their 2023-24 opening farmgate offers to dairy farmers. Compare all the prices here.

5.30PM JUNE 1
Saputo has opened the 2023-24 season with a 6 per cent cut to its $9.50 a kilogram milk solids farmgate milk price, announcing it will offer $8.90/kgMS, for exclusive supply in the 2023-24 season.

Saputo stated it’s exclusive milk price “includes an additional $0.15 per kilogram milk solids ($0.10 per kg butterfat and $0.20 per kg protein) above the non-exclusive minimum milk price to be offered in each region”.

This compares to Fonterra’s weighted average opening milk price of $8.65/kgMS, which is 10 per cent down on the current season’s average of $9.57/kgMS.

However a company spokeswoman said Fonterra’s price was “based on the standard minimum monthly rates and production payments and did not include any fresh/flat milk premiums or multi-year commitments”.

United Dairyfarmers of Victoria president Mark Billing said Fonterra “was dreaming” if it expected farmers to accept such a price.

“I’m disappointed to see them open so low, given on-farm pressures with costs of production,” Mr Billing said.

2PM JUNE 1

Australian Dairy Farmers Corporation have provided an opening price of $9.05 per kilogram milk solids, as processors nationwide raced towards the 2pm code deadline.

Union Dairy Company has also released its opening price in the minutes ahead of the deadline with a figure of $9.20/kg milk solids.

The ADFC breaks down its average prices into six-month payment periods with the July to December price at $8.56/kg milk solids and the January to June 2024 period at $9.45/kg.

In a letter to suppliers, ADFC general manager Andrew Sutton said: “The announced price above will be the minimum milk price paid for the 2023/24 season.”

As per previous seasons ADFC will continue to monitor pricing movements in the coming weeks and update you accordingly.”

ADFC is set to hold supplier information evenings in Leongatha on Thursday June 8; Tongala on June 13 and Gunbower on June 14 while sessions will also be held in Alvie on June 20, Timboon on June 21 and Allansford on June 22.

1.40PM JUNE 1

Burra Foods has released a minimum farmgate milk price of $8.50 to $9.00 per kilogram of milk solids.

Chief executive Stewart Carson said: “As per our long-term practice, we are quoting a range in which more than 90 per cent of our milk supply partners will sit, rather than a weighted average price, which is often difficult for many to achieve.

“We acknowledge that this minimum price is a reduction on current year.

“While we are disappointed this is the case; we have considered the decreased value in global markets over the last 12 months and the growing uncompetitiveness of Australian exports versus other countries.

“Australia is the only country in the world that must set a minimum milk price for the next 13 months, yet trade in volatile markets.”

12.30PM JUNE 1

The first of Australia’s big three processors – Fonterra – has slashed its 2023-24 opening farmgate milk prices by almost 10 per cent.

Fonterra opened at $8.65 a kilogram milk solids, compared to this season’s weighted average price of $9.57/kgMS.

Fonterra and its major rivals, Bega and Saputo, are battling for supply in a shrinking milk pool, which has slumped by more than 500 million litres this season – equivalent to 250 farmers leaving the industry.

Fonterra reported this week that over the past three seasons it has grown market share from 15.4 per cent to 17 per cent of a declining national milk pool, effectively maintaining milk collections at about 1.4 billion litres.

Fonterra Australia managing director René Dedoncker said that Australian farmgate pricing for the 2023-24 season was higher than international commodity values, which have fallen by 17 per cent in the past year.

“Despite the decline in international prices, the outlook for dairy remains generally positive with global demand currently expected to lift in the medium-term, with only modest supply growth forecast in export regions,” he said.

“We are confident in our price position and our ability to be competitive, with our diversified product mix, sales channels and access to domestic and export markets giving us options for our farmer suppliers’ milk.”

10AM JUNE 1

The first wave of opening season milk prices that swept out of NSW and Queensland this week has receded to expose the harsh reality of what dairy manufacturers are likely to offer.

Cadbury chocolate manufacturer Mondelez has announced a 2023-24 opening farmgate milk price on exclusive supply contracts that is well short of a glass and a half – at $8.73 a kilogram of milk solids, down 12 per cent on this season’s $9.91/kgMS.

The company’s non-exclusive opening is down 13 per cent, from $9.11/kgMS to $7.93/kgMS,

“We believe this is in line with local market conditions, and more importantly, supports the partnership we look to drive with our farmers,” Mondelez dairy procurement manager Vikram Tole said.

Merseylea dairy farmer Paul Lambert, who supplies Mondelez, said he was “disappointed” at the company’s opening price.

“(But) it’s what’s happened before,” Mr Lambert said. “Mondelez has done this and then immediately stepped up a week later.

“We’ve been supplying them (Cadbury) for 40 years and they have looked after us over the long haul and always been good at closing, even if their opening is a little down.”

1PM MAY 31

Norco has opened with an average price of 88c a litre for its NSW and Queensland suppliers, 1c higher than last year.

The NSW processor’s opening price comes a day after Lactalis angered dairy farming groups with its opening offers of 76.7c per litre in NSW and 82.3c in Queensland.

Norco boss Michael Hampson said “Norco is constantly looking at how we can add value to our farmer members”.

“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.”

9AM MAY 31

Dairy farmers say the next 26 hours are make-or-break for the industry, as the first milk price offers fall short.

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

NSW dairy farmer Malcolm Holm.

Southern NSW dairy farmer Malcolm Holm said he was nervous about dairy deadline day.

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

“When you contrast this with the milk shortage in Australia, this is a crucial time.

“The fact processors are leaving it until the last minute (to announce prices) leaves me very nervous.”