Dairy Farmers Victoria president Mark Billing says farmgate prices deeply concerning

Dairy Farmers Victoria president Mark Billing said processors offering prices below $9 per kilo milk solids were undervaluing their farmer suppliers.

Farmgate prices across southeastern Australia have opened 80 to 90 cents per kilogram milk solids higher than last season, still underwhelming drought-stricken farmers.

Australian Consolidated Milk, Bega, Bulla, Burra, Fonterra, Frestine, Saputo and Union Dairy Company all issued farmgate offerings below the $9 per kilo milk solids benchmark at the close of the dairy code of conduct deadline Monday, although some of their suppliers will limp over $9, depending on their region.

Smaller processors looking to make gains in a depressed pricing environment, such as Australian Dairy Farmers Corporation and Goulburn Valley Creamery, clocked in at $9 per kilo milk solids.

Dairy Farmers Victoria president Mark Billing said processors offering opening prices below $9 were “clearly demonstrating an unwillingness to genuinely partner with farmers in the face of some of the most difficult operating conditions in living memory”.

“This is not a normal year,” the Colac region farmer said.

“The climate challenges we are seeing right across Victoria, coupled with extraordinary cost increases on farm, mean that farmers are carrying unprecedented levels of financial and emotional strain.”

DFV president Mark Billing. Picture: Nicole Cleary

Independent dairy analysts and farmers alike claim a cumulative rise of more than 25 per cent on the Global Dairy Trade index over the course of the 2024-25 financial year pointed to a farmgate price of more than $9 per kilo milk solids this season.

Some farm lobby leaders, such as Australian Dairy Farmers president Ben Bennett and United Dairyfarmers of Victoria president Bernie Free, say farmgate prices should be in “the high nines” or approaching $10 per kilo milk solids.

Labelling the prices “deeply concerning,” Mr Free said the farmgate offerings would exacerbate the processor-farmer divide.

“Even the most positive of dairy farmers can’t find a positive in these prices. You have to wonder whether the processors actually want a viable farming industry,” Mr Free said.

Milk2Market commercial development general manager Richard Lange said on balance, farmgate prices provided by processors this week were 80 to 90 cents per kilogram milk solids higher than June 2024.

“On last year’s opening, it’s up 80 to 90 cents and it’s up 50 cents on closing. So overall, a stronger start to the season with some processors at that $9 per kilo milk solids price point,” Mr Lange said.

NSW Farmers dairy committee president Malcolm Holm said skyrocketing input costs meant the $9 per kilo milk solids average in southern NSW would force many out of the sector.

“When you have a price at $9, there are farmers out there who have been in dairy for generations and they’re saying ‘this is my final season’,” Mr Holm said.

“They’re forcing farmers out of the sector. It’s as if the processors don’t want the milk.”

Bernhard Lubitz, Leongatha South.

BERNHARD LUBITZ, SOUTH GIPPSLAND

“This is the clawback on steroids- it really is that bad. At least with the clawback in 2016, it was a good season and fodder prices were okay - so there was just the price to contend with. This time around, we have a price that’s underwhelming to say the least along with the driest that I’ve seen south Gippsland in 25 years of farming. I’ve always approached dairy farming with positivity, because as farmers we do it because it’s more than a job, but there’s nothing to be positive about when it comes to these prices.”

Bridget Goulding

BRIDGET GOULDING, GOULBURN VALLEY

Fonterra are an embarrassment to New Zealand — and I say that as someone who was born in NZ. What they’ve done is open early at $8.60 and give the opportunity for all the other processors to provide just a smidgen more. You have to wonder what their end game is? Do they want to devalue their own assets because they’ve been trying to sell their Australian arm of their business and want a buyer? Because at prices like these, they don’t want the milk supply. And the damage it’s doing to Australian dairy farming is massive.

Tasmanian dairy farmer Andrew Aldridge

ANDREW ALDRIDGE, TASMANIA

“Fonterra coming out with the $8.60 figure the other week has flatlined competition - it’s been a terrible moment for Australian dairy. Every other processor has rounded down as a result — the prices offered up are ludicrous. We’ve had dry conditions in Tasmania for a while now and I understand it’s even worse in some parts of Victoria and South Australia. The first processor to offer stronger prices, if one or two are brave enough, they will benefit. Farmers are shopping around far more now because loyalty isn’t rewarded by the processors - in fact, it’s often punished.”