Global Dairy Trade: Powder bounce on international market

International dairy prices are jumping up. So why is the Australian farmgate flat in January, farmers are asking.

A farmgate gap between Australia and New Zealand is set to widen with a bounce in the international dairy index.

Farmer leaders including eastAUSmilk president Joe Bradley and South Australian Dairyfarmers Association president Robert Brokenshire said the trans-Tasman gap was fast becoming a nationwide problem for the dairy sector, with expectations the milk pool will further contract this season.

Last week, the Global Dairy Trade headline figure rose 1.4 per cent to $US4146 ($A6589) per tonne, with the whole milk powder category leading the pack — jumping an impressive 5 per cent to $US3988 ($A6338) per tonne.

Skim milk powder also performed well, rising 2 per cent to an average of $US2729 ($A4340) per tonne while cheddar lifted 2.8 per cent to $US4846 ($A7708) per tonne, with butter not far behind on a 2.2 per cent upswing to $US6984 ($A11,109).

The lifting GDT has resulted in NZ dairy farmers enjoying several step ups this financial year, with the price now sitting at $NZ10 ($A9.05) per kilo milk solids.

Mr Bradley said the fragile state of the Australian dairy industry needed to be a federal election issue, with Australians set to go to the polls by May.

“The processors were full of complaints last season, pointing to the international dairy prices and the currency exchange when it suited them. Now, they’re silent,” the Queensland dairy farmer said.

“We’ve got a federal election due — where are our leaders when it comes to policies that are supportive of Australian dairy? Do they want a fresh milk market in Australia?

“There are a range of areas they could look at — labelling, electricity, giving younger farmers a fairer go.”

Mr Brokenshire said with the Australian dollar sitting at 63 US cents, arguments from processors about an influx of NZ and American dairy produce was outdated.

“The Aussie dollar is at its lowest point against the American dollar in years — so that’s good for export competitiveness, as well as our pricing position in Australian retail,” he said.

Australian Dairy Products Federation chief executive Janine Waller said processors acknowledged the “ongoing challenges regarding pricing in the dairy supply chain,” following criticism from the Australian Dairy Farmers organisation earlier this month.

Ms Waller said the ADPF was “committed to fostering transparency around the value of domestic milk in Australia and in turn what this means for the broader dairy product portfolio”.