Saputo and Fonterra raise farmgate prices for 2021-22 Australian dairy season

With milk supply flat across most dairy regions nationwide, Saputo and Fonterra have provided the first farmgate step ups for the season.

Fonterra and Saputo have stepped up their farmgate prices in the same week as competition for supply heats up.

Subdued supply has been cited by Fonterra Australia management as one of the factors behind the step up, which raises its average farmgate milk price season to $7.10/kg milk solids.

Today’s announcement by Fonterra is hot on the heels of a step up by Saputo on Thursday, the first for the season.

Fonterra Australia managing director René Dedoncker said since the processor’s last price review in August, global market conditions have remained positive.

“We’ve continued to see strong domestic demand, particularly for our consumer brands and we expect to see the food service sector rebound as restrictions ease across Victoria and New South Wales,” he said.

“This gives us confidence in the fundamentals of our business and that we can continue to earn and pay a competitive milk price.

“However, the challenges of COVID-19 continue to put significant pressure on the supply chain. In particular, we are dealing with delays in getting product from our distribution and warehouse partners to our customers.

“We are also seeing lower than expected milk volumes off farm, owing to the unseasonably wet spring which is limiting our ability to capitalise on the strong commodity market conditions.

“Although we are hopeful that this price signal and the soil moisture will translate to a recovery in milk production in the back half of the season.”

On Thursday, Saputo became the first of Australia’s big three processors to step up at the farmgate this season, with a 10c/kg milk solids lift.

Suppliers to the Canadian-based dairy giant were informed this week that they will receive a further 7c kg/butterfat and 14c/kg protein, to be paid in November.

Saputo Dairy Australia supplier relations director Anthony Cook said the likely end of statewide lockdowns means the hospitality sector could start buying dairy and other produce with greater confidence.

This increases our weighted average farmgate milk price in the 2021-22 season, in the southern milk region to $7.05 per kilogram milk solids (up from $6.95 kg/MS),” he said.

“Our domestic retail business continues to perform well and we hope to see improvements in the food service sector, moving forward, which has been impacted by ongoing lockdowns.”