Farmgate milk price: Prices settle at $9.50/kg of solids

Dairy farmers have played off processors in a bidding war for their milk this season. See how prices compare across the regions.

Farmgate milk prices are settling at a midpoint of about $9.50/kg MS.

Farmgate milk prices on offer from Australia’s big three processors have settled at a midpoint of about $9.50 a kilogram milk solids, after a two-month battle for supply.

Milk2Market commercial manager Richard Lange said the shackles had “well and truly come off dairy farmers this season” as they negotiated the best prices they could get.

The milk price battle has settled at about $9.50 per kilogram of milk solids. Picture: Zoe Phillips

“Of the 3000 farmers in Victoria nearly every one of them has been able to hold a private auction to get the highest bid for their milk,” Mr Lange said. “And there’s been a greater willingness of companies to bargain.”

Milk2Market’s latest milk price comparison shows that at $9.52/kgMS Fonterra is just ahead of its major rivals Bega and Saputo, based on the seasonal pricing it is offering a two million-litre farm (three months peak and nine month off peak).

But while Milk2Market’s analysis is based on minimum prices on offer, many larger farmers have been able to negotiate higher prices.

Such deals have angered some smaller players who have contacted The Weekly Times complaining that sign-on bonuses and higher payments should be off the table.

United Dairyfarmers of Victoria vice-president Mark Billing said he was no fan of bonuses, but the reality was “if you have a larger volume of milk you’re more attractive” to processors and able to negotiate a higher price.

As for prices climbing any further Mr Billing said “global dairy trading has softened a bit over the past month” and “my gut feel is processors have put quite a bit of money on the table and are unlikely to provide step-ups”.

Like many farmers, Mr Billing said current pricing was offsetting a hefty hike in farm costs, which equated to about $2/kgMS.

Mr Lange said one of the most interesting developments this season was the rise of smaller processors, who collectively were carving off a sizeable chunk of Saputo’s, Fonterra’s and Bega’s supplies.

He said Coles had been seeking more fresh milk, while cheese makers Florida and La Casa Del Formaggio were boosting their direct farmer supplies, relying less on third parties.

At this stage KyValley and Frestine were offering farmers $9.80/kgMS for flat supply, with Bulla not far behind at $9.75/kgMS and ADFC at $9.71/kgMS.