Dairy farmgate prices 2023-24: UDV says high figures needed

Processors say a farmgate correction is coming, but rural leaders think prices are right as they are. Here’s how the market is unfolding.

Rising electricity and fuel costs mean new-season farmgate milk figures must reflect current prices.

This time last year, several milk companies, including Bulla and Bega, gave indicative prices to lure producers and secure supply.

Initial farmgate offerings in March 2022 hovered between $7 and $7.50 per kilogram milk solids, but a bidding war erupted and lifted the price to more than $9 per kilogram by the June 1 deadline.

United Dairyfarmers of Victoria president Mark Billing said the opening price for the 2023-24 season needed to be above $9 per kilogram milk solids in to preserve industry confidence.

“There’s good news and bad news when it comes to input costs,” the Colac farmer said.

“The good news is that fertiliser prices have eased significantly- we’re not seeing the same pressures we saw this time last year with fertiliser.

“The bad news is electricity, with indications that it’s going to jump 20 to 30 per cent in the next few months. Fuel is also a concern.

“About $9.50 to $10 (per kilogram milk solids) is where the opening price needs to be at (in June) to ensure farms remain viable.”

Ever-rising input costs are threatening last year’s great opening milk prices. Picture: Zoe Phillips

Tasmanian Farmers and Graziers Association dairy council chairman Geoff Cox said the fate of suppliers and the upcoming prices was challenging to determine.

“It appears that there will be a settling in price,” the Ringarooma farmer said.

“It will just be a matter of how much the Australian price comes back.

Mr Cox said world markets always dictate the price outcomes for milk.

However, he emphasised the shortage in supply added further complexities.

“The demand is still there, and supply is not,” Mr Cox said.

“We don’t want the price to go down; the current milk price is good.

Milk volumes in Australia dropped by 3.6 per cent year-on-year in January 2023, according to data from Dairy Australia.

Production in northern Victoria dropped by 10.2 per cent in January, and Gippsland was down 6 per cent.

The recent falls led Dairy Australia to recently revise down Australia’s milk pool forecast to a four to six per cent contraction by the end of the 2022-23 financial year.

NSW Farmers Association acting dairy committee chairman Malcolm Holm said there was a degree of nervousness about opening milk prices.

“We have seen a drop in the world market,” the Finley farmer said.

Mr Holm said those suppliers on multi-year contracts were somewhat buffered, but for others, it was a wait-and-see approach.

“I think last year there was a huge bidding war to get milk supply … it will be interesting to see what happens this year,” he said.