Dairy farmers urged to scrutinise milk supply agreements as deadline looms

Leaders have urged dairy farmers to use their cooling off period to get a better price with new farmgate milk figures coming to light. See the latest.

A flurry of last-minute farmgate pricing offers flooded in before the July 1 cut off, with the $10 per kilogram milk solids barrier broken across southeastern Australia, according to industry figures.

Smaller processors such as Bulla publicly announced a third step-up to a range of $9.15 to $9.95 per kilo milk solids.

Union Dairy Company has raised its range to $9.30-$9.70 while Goulburn Valley Creamery also boosted its offering to $9.70 per kilo milk solids.

But eastAUSmilk chief executive Eric Danzi more information was coming to light of dairy farmers being paid well above $10 per kilogram milk solids.

He welcomed the development, claiming the processor strategy of “low-balling” had failed and urged farmers to renegotiate if they were in the 14-day cooling off period.

“If you’re a farmer, you wouldn’t be signing anything without a $10 in front of it — you’d be absolutely crazy to go any lower,” Mr Danzi said.

“If anyone who has signed a contract — if they are within their 14-day cooling off period — they should give notice and start again.

“Prices have been rising substantially over the past week, clearly enough farmers aren’t signing contracts and panic is setting in.

“I’ve heard one of the processors had only 30 per cent of their suppliers signed up only days out from July 1, hence the step ups we’ve seen.

Bega has lifted in NSW but not Victoria. Picture: Zoe Phillips

“You’ve still got some processors paying in the high $8s and low $9s, but if they’re doing that, then it’s either a strategy to lose suppliers or plain stupidity.”

The Weekly Times understands Lactalis has been offering two-year contracts worth $10.05 per kilogram milk solids in Victoria, while the Bega Bodalla price — the average paid on the NSW south coast — has also risen 20c from $10.40 to $10.60 per kilo milk solids for exclusive supply.

Bega is one of the few processors to not announce a step up in Victoria from its original range of $8.70-$9.20 per kilo milk solids.

Southern NSW dairy farmer Phil Ryan said step ups and pricing revisions in the final week before July 1 was not in the spirit of the mandatory code of conduct.

“One of the main reasons behind the establishment of the code was to provide pricing stability. What we’ve seen blatantly in June is most processors not providing a true reflection of the price, only lifting due to competition,” Mr Ryan said.

“The Fonterra price one week out from the June deadline of $8.60 was the worst example of this and should be investigated by the ACCC.”