Milk2Market milk price rankings: Bega, Fonterra, Saputo and Lactalis

Competition for milk has heated up following a slow, wet spring. See how much processors are offering dairy farmers.

Bega is just a nose in front of its major rivals on the milk price it pays farmers. Picture: Zoe Phillips

Bega is just ahead of its major rivals Saputo and Fonterra on farmgate pricing, as they race to secure milk in a market that is still short on supply, according to independent analysis.

Milk2Market pricing analyst Richard Lange said recent step ups from Saputo and Fonterra in Victoria had brought them into line with Bega.

But the publicly listed Australian processor was still ahead of its Canadian and Kiwi rivals, based on M2M’s annualised average pricing for sample farms.

Mr Lange said across the regions all three majors were still paying a 20c a kilogram premium in Northern Victoria above what was on offered in Gippsland and South-West Victoria.

Among the smaller players he said Lactalis had stepped in to offer a seasonal payment in Gippsland for the first time of $7/kgMS or more to win over larger farmers and secure supplies for its Longwarry plant.

The Kyvalley Dairy Group was also offering seasonal pricing for the first time in Victoria’s southwest as they moved to secure supplies for their new plant in Geelong.

But overall Mr Lange said it was ADFC and Bulla that were the most aggressive market players, seeking new supply by offering simple pricing that farmers could easily compare.

“It will be interesting to see how many farmers are going to investigate opportunities to get higher prices in the back half of the season, where they can easily shift with just 30 days’ notice under non-exclusive agreements,” Mr Lange said.

He said the analysis was based on sample farms and that anyone wanting to assess their individual production should use M2M’s milk price calculator to see who comes out on top.

Ultimately he said competition had heated up following a slow, wet spring that had stymied growth, at a time when demand from the food services sector was taking off as Covid restrictions eased.

It was a point backed up by Bega general manager Mark McDonald who said the wet conditions in combination with dairy farmers exiting the industry meant supply growth has not met processors’ expectations.

“We’re not seeing much movement (of farmers to rivals) at the moment,” Mr McDonald said.

Dairy Australia reported milk production was down 4.1 per cent to the end of September in Victoria, 2 per cent down in South Australia and almost 9 per cent under last season’s (year to date) in Tasmania.

Mr Lange said farmers needed to be careful when comparing prices.

“It’s still easy to get confused on what price is on offer,” he said. “Companies reporting gross prices, prices including GST and pricing that has assumed payments during the year, with or without non-exclusive discounting.”

Notes on sample farms

All prices are in $/kg milk solids (Net Price including levies and charges)

Highest average annual price selected for each sample farm

The monthly price allows for seasonal profiles and demand. It is based on the annual average price offered for a 12 month contract

+ Bega offers a MPS1 flat payment system. For the sample farms, the MPS 9/3 provided best price option

* Note Fonterra pricing based on standard Exclusive MSA not Fonterra Fresh (Fonterra non exclusive MSA have a price deduction)

** Lactalis South for NSW price