Dairy farmers say Australian farmgate too low

Bega, Fonterra and Saputo have lifted. But farmer leaders say processors need to go back to the drawing board.

Farmgate prices need to be closer to $9 per kilo milk solids, dairy leaders say, claiming pre-Christmas step ups needed to be followed by stronger price hikes in the new year.

Fonterra was first with an early December lift of 15 cents to sit at a weighted average milk price of $8.15 per kilo milk solids.

A range of lobby leaders including Australian Dairy Farmers president Ben Bennett called for other processors to follow suit ahead of Christmas, with Fonterra’s two main rivals heeding the call. Both Bega and Saputo announced yuletide step ups of 15 cents each.

Bega’s average milk solids price range from $8.05 to $8.35 per kilo milk solids, while equivalent figure hovers around $8.15 to $8.30 per kilo milk solids.

Northern Victorian dairy farmer Ann Gardiner said while the pre-Christmas rises were welcome, processors needed to reach deeper into their wallets.

The Dairy Farmers of Victoria board member said input costs would continue to rise into the new year as fodder became increasingly expensive.

“Keeping milk supply bouncing along into the second half of the season, it was essential there was some form of step up from the processors. But I hope there’s more to come,” Mrs Gardiner said.

“Most, if not all, of the major processors made a profit last year. Their management have screamed about their financial circumstances but there has to be sharing along the whole value chain — I’m pretty sure the supermarkets are skimming the most value out of the end product, but processors are doing well too.”

“$9 per kilo milk solids would be closer to mark — aiming towards that figure would provide the confidence boost the industry really needs at the moment.”

United Dairyfarmers of Victoria president Bernie Free said $9 per kilo was “the bare minimum to ensure the industry doesn’t have another flood of farmers leaving in 2025.”

“If you notice, the processors have been very quiet lately. There’s not the screaming and shouting of a year or so ago. They’re doing very nicely and don’t want the farmers to notice,” Mr Free said.

“They’ve thrown out a few breadcrumbs ahead of Christmas. While something is better than nothing, $8.10, $8.20, $8.30 per kilo milk solids is not enough for farmer viability.

“Look at what’s being offered in New Zealand. $9 (per kilo milk solids) at a minimum, but if you go by the NZ example, we need to be talking $9.20, $9.30.”

NSW Farmers dairy committee chairman Malcolm Holm said the price gap between southern and northern NSW farmers was a cause for concern.

“The decision by Norco to keep their farmgate close to what they delivered last season is an example to other processors that they do have wriggle room to lift,” he said.

“We all know northern NSW and southern Queensland prices are always higher than southern NSW and Victoria but the price gap is huge now.”