Global Dairy Trade: Mark Billing calls for drought region-specific step-up

Eleven weeks into the season, dairy processors haven’t budged on farmgate prices. So how is it impacting drought-hit farmers?

A region-specific farmgate step-up is needed for southwest Victoria with potential expansion to other drought-hit regions, Dairy Farmers Victoria says.

DFV president Mark Billing says there is historical precedent for farmgate pricing recognising the financial impact of drought.

“There clearly is a need for an improved price at the farmgate. The longer the drought goes on, the greater the need,” the Colac region farmer said.

“Fodder costs are high and with reduced yields this harvest, those prices will increase over the season. Yet the farmgate hasn’t budged since July.

“Southwest Victoria is still struggling through drought, parts of northeastern Victoria are feeling it too. There needs to be recognition of this in the farmgate price, given how low it opened.”

In July, Dairy Farmers Victoria released data that showed the average break-even price was between $7.80 and $8.20 per kilo milk solids.

Most processors either provided prices within that band or slightly above cost of production.

“This is in the interests of the processors as well as the farmers to have a stronger farmgate price,” Mr Billing said.

“If you’ve got farmer after farmer exiting the industry because they can’t makes ends meet, then that undercuts the viability of the processors – it’s that simple.

“There is precedent for (region-specific pricing), the processors have done this before.”

The organisation representing most of the nation’s milk processors — Australian Dairy Products Federation — has been contacted for comment.

Mr Billing’s comments come as the latest Global Dairy Trade session produced a flat result, the first test since Beijing’s central bank announced billions in stimulus earlier this month.

The headline GDT figure declined 0.3 per cent, to sit at $US3852 ($A5757) a tonne.

Cheese prices lead the way this week with a 4.2 per cent rise for cheddar to reach US$4702 ($A7027) while the butter category edged back by 0.3 per cent to US$6495 (A$9708) a tonne.

Fonterra cooperative affairs managing director Mike Cronin said this week’s GDT numbers were relatively positive given the slowdown in demand earlier this year.

“A flat outcome is pretty good at the moment, a pretty steady result but a good one,” he said.

“A little bit of economic stimulus in China, as they come into their holidays, seems to be really helpful.”