Global Dairy Trade: Farmers call for pricing step up

International dairy prices are up again, prompting farmers to call for processors to be “more like Santa and less like Scrooge” ahead of Christmas.

A late spring lift in international dairy prices has farmers calling for an early summer step-up after a season of flat farmgate pricing.

The headline figure at the latest session of the Global Dairy Trade index lifted by 1.9 per cent, to sit at $US4089 ($A6266) a tonne.

It represents the second consecutive rise in the GDT with a 4.8 per cent boost a fortnight ago setting farmgate step-up expectations in motion.

Whole milk prices led the way this week with a 3.2 per cent lift to reach US$3828 ($A5863) — while anhydrous milk fat also lifted 1 per cent to sit at US$7622 ($A11,680).

South Australian Dairyfarmers Association president Robert Brokenshire said the latest GDT results bodes well for a farmgate step up but sympathised with processors over lacklustre domestic conditions.

“There’s a clear upward trend with Global Dairy Trade, which is great to see. Prices at the farmgate are at the weakest they’ve been since the introduction of the mandatory code of conduct (in July 2020),” Mr Brokenshire said.

“Dairy farmer margins are squeezed in South Australia, Victoria and some other parts of Australia due to drought, interest rates and rising input costs.

“The processors similarly say they have tight margins, so the GDT should ease that somewhat.

“Our concern remains with Woolworths, Coles and Aldi and their pricing of milk – that is clearly having a deflationary effect on the domestic market and we urge them to reconsider their pricing on generic brands.”

Australian Dairy Farmers president Ben Bennett said processors were “running out of excuses” by not providing a step up.

“We’re now in late November and we’ve heard nothing from the processors on step ups,” the southwest Victorian farmer said.

“What are the processors waiting for? Are they hoping farmers don’t realise that the GDT is up, and consistently up. Let’s have a bit more Santa and a bit less Ebenezzer Scrooge.”

Fonterra chief operating officer Anna Palairet said Chinese dairy stockpiles were finally abating, helping stimulate international trade demand.

“Wonderful to see the continued strength in the Global Dairy Trade. Really driven through the strength from China, we’re seeing continued reduction in the base of raw milk out of China, which is pushing buyers onto the Global Dairy Trade,” she said.