Dairy farmers react to Saputo, Fonterra and Bega’s opening prices

With higher electricity and labour costs, dairy farmers say farmgate offerings need to be competitive next season

With opening prices starting with a nine, the coming dairy season will be fine, farmers say.

On Thursday, milk processors provided opening prices as low as $8.50 in some regions, with only Saputo and a few smaller players passing the $9/kg milk solids mark.

By Tuesday, Fonterra and Bega were forced to push their 2023-24 offers higher in order to compete.

Colac region farmer Peter Delahunty said the low-ball figures thrown last week were not sustainable.

The United Dairyfarmers of Victoria policy councillor expects competition between processors to ramp up in coming weeks

“There’s competition out there and a few smart operators have worked out that if they provide a stronger opening price, they win in the long run,” he said.

“I’d hope to see prices get closer to $10 per kilo milk solids. Particularly if you’re a young farmer with a mortgage, the provides some financial certainity at the start of the financial year.”

Peter Delahunty Colac region farmer Peter Delahunty is the local UDV policy councillor. PICTURE: ZOE PHILLIPS

Mr Delahunty supplies Coles and praised the supermarket for providing strong, sustainable prices at the farm gate.

But he added that the supermarket and its retail rivals needed to raise the price of generic milk to engender long-term sustainability in the sector.

“I’ve supplied Coles for a few years now and the fact they’ve entered the dairy sector from the ground up has been good for competition,” Mr Delahunty said.

“On the retail side, Coles, Woolworths and Aldi have to look at the pricing side. Two dollars a litre is still good value for money and most shoppers wouldn’t begrudge it, given prices are rising faster on everything else.”

Under the mandatory dairy code of conduct, processors have time to revise their opening prices ahead of the official start to the season on July 1.

Last week, the Fair Work Commission announced minimum wages will increase to $882.80 per week or $23.23 per hour. next financial year.

Southern NSW farmer Ruth Kydd said processors needed to take a range of factors, such as higher labour costs, into consideration when releasing opening prices.

“The cost of attracting and retaining workers has got higher and higher in recent years,” she said.

“Most dairy farmers already pay well above the minimum, so it doesn’t have a direct impact but it will have an indirect impact. You’re not just competing with other farmers for workers- you’re competing against all other employers.”

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.