Saputo issues milk price indicative figures ahead of 2024-25 season

Saputo has fired the starting pistol on the farmgate price season. But Fonterra and Bega have declined to weigh in.

United Dairyfarmers of Victoria president Bernie Free said the Saputo indicative figure was “pretty speculative”.

Australia’s milk processors are yet to follow Saputo’s surprise move in offering a farmgate figure for next season.

Yesterday, Saputo indicated a farmgate price cut of more than 15 per cent in a letter to suppliers.

Saputo’s potential weighted average opening farmgate milk price of between $7.80-$8.00 per kilo milk solids kicks off the bidding season, with a June 1 deadline set by the federal government’s mandatory dairy code of conduct.

Both Fonterra and Bega declined to weigh in with a price following the Saputo announcement.

Bulla Dairy Foods has been one of the price leaders in several seasonal cycles although chief executive Allan Hood did not nominate a farmgate figure on Wednesday.

“The timing for our opening milk price announcement has not been finalised and our team

is still planning for the upcoming milk price season,” he said.

“As always, we will strive to remain competitive in the market and to add value, keeping the successful and valued partnerships with our two hundred plus Victorian dairy farmers at the forefront of our considerations.”

Northern Victorian farmer Bridget Goulding said the shortage of milk across southeastern Australia would mean the price would rise over the coming month.

“It feels like Saputo and Fonterra are locked in a game of ‘rock, paper, scissors’ to work out who was going to be the first to put out a price,” she said.

“This low figure won’t mean much in a couple of weeks. There’s a shortage of milk and the processors know it.

“The thing about this processor move to cut farmgate prices is that input costs never go down and farmers know it.

“Think about the cost of hay, or silage, or power, or fuel. Few input costs are going down yet the processors want farmers to accept a big pay cut?

“Retail prices are another factor. A $1.60 for milk is too low — everyone has to make a profit along the supply chain and that price is out of date.”

In a letter to suppliers this week, Saputo milk supply and planning director Kate Ryan outlined the “early guidance range.”

She said the price was indicative and not necessarily the final figure that Saputo would provide by the start of the new season.

“As we look to the new milk season ahead, industry and market conditions remain dynamic,” Ms Ryan said.

“For the upcoming season, we expect opening farmgate milk prices will be reduced to factor in ongoing global and domestic market volatility.

“(The prospective price reflects) anticipated market returns and ensure Australian dairy products remain competitive.

“Our analysis to date indicates an early guidance range for a weighted average opening farmgate milk price of between $7.80 (and) $8.00 per kilogram milk solids and, as usual, we would expect to review prices during the year as we see more market certainty.

“This is early guidance only – not our opening price.”

United Dairyfarmers of Victoria president Bernie Free said the Saputo indicative figure was “pretty speculative.”

“You only have to look at what’s happened over the past two or three cycles. Processors have come out with a low-ball figure like this one then they’ve had to up their game,” he said.

“That’s the market economy. Processors want to provide the lowest farmgate price possible, farmers want the highest farmgate price possible.

“With supply as tight as it is at the moment, Saputo will have to move from that position. The market will demand it.”