Fonterra Australia lifts farmers’ milk price as global markets surge

Fonterra has lifted its milk price for Aussie farmers. See how it compares to the other major processors.

Fonterra Australia managing director René Dedoncker has just lifted his suppliers milk price by 20 cents a kilogram of milk solids. Picture: Andy Rogers

Fonterra Australia has increased its average farmgate milk price for this season by 20 cents to $7.30 per kilogram for milk solids, comprising 17 cents per kg of butterfat and 24 cents per kg of protein.

The step-up, which will be backdated to July 1 last year, comes as global dairy prices hit a 10-year high due to shrinking supply, freight bottlenecks and surging demand from Asia as its nations recover from Covid lockdowns and restrictions.

But the $7.30/kg MS price is still well behind the $8.45/kgMS (NZ$9.20/kgMS) Fonterra is paying its Kiwi farmers.

The 20 cent lift puts Fonterra ahead of Saputo and Bega across most of the southeast Australia dairy belt (see tables below).

Fonterra Australia managing director René Dedoncker said the step-up in the Australian farmgate price rise was due to strong dairy prices coupled with the company’s good performance.

“We know that the dry summer in many regions and higher input costs on farm are impacting profitability, so we hope that passing on this increase now will help offset some of these costs,” Mr Dedoncker said.

“Although we are seeing historically high commodity prices and a weaker Australian dollar, the decline in milk production in Victoria and Tasmania is limiting the upside from export markets.

“We also continue to see the impacts of the global supply chain disruption on our business with no immediate end in sight, and more recently the domestic supply chain has been severely impacted by Covid.”

More detail on Fonterra’s business performance will be available when it announces its first half results for FY22 on March 17 2022.

This milk price comparison was prepared by Milk2Market whose calculator can be used by farmers to analyse their individual production profile against current pricing.

NOTE: This comparison is based on what farmers receive once DA levies and other charges have been taken out of their milk cheques.