Dairy farmers guide to 2024-25 opening milk prices

More dairy farmers will leave the industry if this week’s opening prices are maintained into the new season, farmer leaders have warned. Use our interactive graphic to search what’s being offered by every processor.

Australian dairy farmers are tipped to get a farmgate cut in the 2024-25 season.

Norco has led the opening price field with an offering more than 50 per cent higher than processors nationally, reflecting its unique NSW status.

The Lismore-based processor confirmed an opening price of $12.35 per kilogram milk solids, similar to the figure it promulgated last season.

Norco largely caters for the fresh milk and ice cream market and is the nation’s largest farmer co-operative, providing consistently high returns to suppliers.

Management at the processor said the price translated into a price of 89.5 cents per litre.

Norco chief executive Michael Hampson said despite the challenging economic environment, “these pricing decisions represent a continued commitment by the co-operative to actively support our 281 farmer members in any way they can”.

“Norco values the hard work of our farmers and the sheer dedication that goes into putting high quality milk on supermarket shelves, and the best way we can show them that is by paying a strong price for their product,” he said.

“Equally, the best way consumers can continue to support our hardworking dairy farmers is to keep choosing Norco when doing their weekly shop.

“And it would appear that shoppers are heeding this message with sales of Norco branded milk continuing to grow, despite the challenging environment.

“With that said, I’d like to extend a very sincere thank you to all of our loyal Norco customers who do continue to buy our products, and would like to reassure them that every time they choose Norco, every cent remains in Australia, and goes right back to supporting our farmers, their families and the regional communities in which they operate.”

BULLA: JUNE 3

Bulla says “unprecedented level of rising input costs” mean the processor needed to cut its opening price compared to previous seasons.

Management at the Colac-based processor have confirmed a price bands range from $7.85-$8.65 per kilo milk solids, depending on supplier profile.

Bulla chief executive said consumer behaviour had altered due to cost-of-living pressures and an influx of foreign dairy.

“Our planning process for each season takes into account our own performance and that of the external market,” he said.

“This year has seen an unprecedented level of rising input costs, shifts in consumer behaviour and increased competition from imported dairy.

“As we shared with our farmers recently, these pressures indicated that the milk price for this season would be lower than where it has been over the past year.”

With a focus on ice cream, Bulla has faced increased competition from imported confections including cut-price ice cream from New Zealand, Slovakia and Hungary.

“We recognise that any reduction in milk price will have an impact on our farmers and that we are not alone in this challenge,” Mr Hood said.

“However, we will work hard to address this through portfolio innovation and continuous improvement.

“We remain committed to being competitive at farmgate and, at every step of this process, we keep our important relationships with our farmers at the forefront of considerations.”

ADFC: JUNE 3

Australian Dairy Farmers Corporation have released their exclusive milk supply agreements, with a financial year pricing twist.

Unlike other processors, ADFC provide a pricing breakdown on code deadline day split into six month instalments.

Exclusive suppliers of ADFC will receive a base price of $7.42 and a quality incentive of $0.28 between July and December this year, totalling $7.70 per kilo milk solids for the first half of the season.

For the second half of the financial year, ADFC suppliers will receive a base price of $8.42 and a quality incentive of $0.28 between July and December this year, totalling $8.70 per kilo milk solids.

Flattened across the season, ADFC exclusive supply clocks in at $8.20 per kilo milk solids as an opening price — although like all processors, there is potential for step ups.

BEGA/BURRA: JUNE 3

Bega and Burra have landed their opening prices in the low $8 per kilo milk solids range, reflecting deflated demand for milk across southeastern Australia.

The two processors are the latest to upload their milk supply agreements to their websites, as stipulated by the federal government’s mandatory dairy code of conduct.

Burra management confirmed a price range of $8.00-$8.50/kg milk solids, saying “as per our long-term practice, we are quoting a range in which the majority of our milk supply partners will sit, rather than a weighted average price which is often difficult for many to achieve.”

Burra chief executive Stewart Carson said despite the challenges faced by the dairy industry, “the spirit of optimism and resilience serves as a driving force behind our strategic focus.”

“There have been a lot of changes to markets in the last 12 months and our flexibility has enabled us to take advantage of opportunities as they presented,” he said.

“Sharing our product mix, markets, strategic focus and ongoing investment program is important to ensure our milk supply partners feel connected and confident in the future of our business.

“We are very proud of our ongoing and significant contribution to Gippsland. We continue to heavily invest in new products and our plant to expand production capability.”

Bega has presented a price range of $7.90 to $8.20 per kilo milk solids.

On last week’s edition of the Australian Ag Podcast, Bega chief executive Pete Findlay said export conditions were increasingly variable.

“More than two thirds of our dairy pool is impacted directly or indirectly by global commodity prices,” he said.

“So it’s really just trying to understand where they’re at and where they might go over the next 12 months.”

SAPUTO: MAY 31

Saputo has joined the race for milk supply, announcing an opening weighted average milk price of $8.00 to $8.15 per kilogram milk solids.

Management announced on Friday that the $8.00 to $8.15 per kilogram range was for exclusive supply and available to suppliers in the Northern region, South-West Victoria and South Australia, Gippsland and Tasmania.

It comes only 24 hours after Fonterra officially kicked off the opening price bidding at an $8.00 per kilogram milk solids average.

Saputo milk supply and planning director Kate Ryan said the price reflected the softer international milk market.

“Our opening milk price factors in ongoing global market volatility due to subdued demand, as well as greater variability in domestic markets and anticipated market returns,” she said.

“As we see more market certainty, we would expect to review our prices during the year.

Ms Ryan said Saputo’s “strong business position supported paying a premium above current commodity price returns.

“This is due to business efficiencies achieved over recent years, including network optimisation initiatives taken to strengthen our competitiveness, reduce costs and ensure higher utilisation through our facilities,” she said.

“As part of SDA’s long-term commitment to the Australian dairy sector, we continue to support our farmers’ growth and business success with a range of ongoing specialised services and programs, while also investing in our operations, in the industry and in our regional communities.”

Saputo also confirmed a flat monthly payment option was available to suppliers that prefer a consistent payment structure throughout the year and a growth payment of $0.70 per kilogram milk solids on any net growth in a farm’s milk solids, as well as finance options.

FONTERRA: MAY 30

Fonterra is first out of the milk season starting blocks, going to the market today with an opening price average of $8.00 per kilogram milk solids.

In a letter to suppliers, Fonterra Oceania managing director Rene Dedoncker said the price reflected the shift in market conditions.

“In recent years, our industry has seen higher commodity prices, stronger consumer demand and a shortage of milk to meet this demand,” he said.

“However, heading into FY25, the global market for cheese, which is a strong contributor to our prices, has declined since the start of FY23.

“Cost of living pressures have led to softer domestic consumer demand and higher volumes of lower cost dairy imports.

“This, together with increased milk production in all dairy regions, has contributed to excess cheese inventory in the Australian market driving pricing down further.

“We believe an $8.00 per kilogram milk solids milk price reflects these dynamics, which we will continue to monitor closely as we move through the season.”

Fonterra Oceania chief executive Rene Dedoncker says there’s potential for price increase before Monday’s dairy deadline.

In a letter to suppliers, Mr Dedoncker outlined an opening price average for Fonterra of $8.00 per kilogram milk solids.

Last year, a number of processors released prices in May, only to revise their figures closer to the June 1 deadline.

Mr Dedoncker said while there was a possibility of a price revision like previous years, market conditions had altered significantly compared to the “bidding war” in May 2023.

“Right here, right now, we are out before the weekend, to give our farmers a bit of certainty and less anxiety with a minimum price,” he said.

“I can’t predict how things will play out.

“But I do know it’s a very different set of circumstances to last year or the year before where we saw a heightened degree of activity on milk prices.

“Demand is different. Processors are holding a lot more stock on hand this year than they did last year.”

WHAT WILL OPENING MILK PRICES LIKELY BE?

Dairy farmers are likely to have their paycheques slashed mid-year with a leading analyst forecasting weaker opening prices next season.

RaboResearch dairy analyst Michael Harvey believes opening prices will settle at an average of $8.00 to $8.20 per kilo milk solids on the back of tepid economic conditions both at home and abroad.

His forecast comes as Australia’s milk processors count down the days to the June 3 price announcement deadline.

Stipulated by the federal government’s dairy code of conduct, the time frame for processors to confirm their prices has been pushed forward 48 hours as the usual June 1 deadline falls on a Saturday this year.

“As with any average, some processors will offer a little more, some will offer a little less. But the $8.00 to $8.20 (per kilo milk solids) range is what we believe processors will aim at,” Mr Harvey said.

“Reflecting where we have been over the past 12 months, the commodity market has been on significant downturn. We’ve seen some recovery so far, but we’re looking out at the next six months (of the 2024-25 financial year) and we’re quite cautious around further upsides, in fact, you can't rule out further downsides based on what the market is indicating.”

Australia’s milk pool recovery in recent months has also played a part in softened expectations for new season prices.

Released this week, Dairy Australia’s situation and outlook report forecast the 2023-24 season would clock in at 8.35 billion litres at the end of the financial year on June 30.

“One of the factors behind the strong prices in the last cycle was that shrinking milk pool. “Now that the milk pool is recovering, you could say recovering ahead of schedule, that’s changed that dynamic.

“Some excess volumes are being channelled toward bulk ingredients and commodities, which are underperforming in both the Australian domestic market as well as the export markets, so we have parts of the product mix are loss-making.”

Dairy Farmers of Victoria president Mark Billing has warned a stark drop in farmgate prices would reverse the gains made to national milk production.

He said buoyant business confidence of primary producers was largely linked to the strong prices currently paid, which had buffeted farmers against rising input costs.