New estimates show impact of Australian dairy opening price drop

New figures have revealed just how much cash dairy farmers are expected to lose next financial year, with warnings more will leave the industry.

Dairy farmers are set to lose an average $200,000 to $300,000 next financial year, with new analysis highlighting the cash crunch hurtling towards primary producers.

Opening prices announced by most dairy processors at the start of June have stubbornly stayed around $7.80 to $8.30 per kilo milk solids, with a financial reprieve unlikely less than a week out to the season start date.

Numbers crunched by the Australian Dairy Farmers organisation show an average farm with 200 cattle will lose an estimated $146,803 in the 2024-25 season if no step-ups are forthcoming, based on the current $1.50 per kilo milk solids cut.

A farmer with 300 cattle will lose an estimated $220,204 while a milk supplier with a 400-head herd would lose $293,606 and a 500-head operation would lose $367,007 — based on the $1.50 per kilo cut.

ADF president Ben Bennett said the estimated cut of 10 to 15 per cent in opening prices compared to 2023-24 financial year would force many primary producers to consider their future in the sector.

“You can’t sugar coat sheep crap and call it a Jaffa. These opening prices are bloody terrible for dairy farmers,” the southwest Victorian farmer said.

“Opening prices are being cut by 10 or 15 per cent but the price of chemicals will rise, the price of hiring farm workers is already confirmed to rise in the new financial year and power prices are always on the up and up.”

Another industry lobby group, Dairy Farmers Victoria, have also crunched the numbers and determined the cumulative impact on farmers will be a $500 million cut to the primary producer bottom line.

DFV president Mark Billing said the cost of production was roughly between $7.80 and $8.20 per kilo milk solids for most farmers.

“Given the opening price range, many of Victoria’s dairy farmers will work for nothing in the coming season,” the Colac region farmer said.

Australian Dairy Products Federation, which represents most of the nation’s processors, says step ups during the season may occur in the event of favourable market changes.

ADPF chairman John Williams said: “Dairy processors have issued what they believe is a fair and reasonable opening milk price based on many factors, including market conditions.

“All processors have stated this is a minimum price, and if the market conditions were to favourably change, they would review their prices through the season.”.