Southeastern Australia farmgate prices: Calls for spring step ups

Southeastern dairy farmers face mounting pressure from drought conditions. What’s the latest from the major processors?

Pressure is growing on major processors to provide a springtime step up as drought erodes profit margins across much of southeastern Australia.

Norco became the first processor to step up this season, lifting its offering to 90.37 cents per litre — equating to roughly $12.85 per kilo milk solids.

The dual-pronged farmgate lift is driven by a 1 cent per litre co-operative premium and an 0.5 cents per litre quality bonus payable from September 2025 for milk that meets specific quality thresholds.

Processors have kept their July opening prices in place.: Photo: Zoe Phillips

Fonterra was the first processor to announce its 2025-26 opening price, with an average of $8.60 per kilo milk solids confirmed seven days out from the mandatory dairy code deadline before rising to $8.90 by July 1.

Bega have provided an $8.70-$9.20 per kilo milk solids range in Victoria, Saputo at $9-9.10 per kilo milk solids and Lactalis at $9.20 per kilo milk solids.

Smaller processors such as Goulburn Valley Creamery and multi-year deals via Coles have nudged the price offered closer to $10 per kilo milk solids or above in some circumstances.

Dairy Farmers Victoria president Mark Billing said the average farmgate offering from the major processors was too low in a time when farmers were battling drought.

“Several independent analysts have suggested the market fundamentals are there for step ups in spring. It’s a question of who is prepared to go first and how high,” he said.

“At a time of prolonged drought across much of Victoria, the processors would be wise to provide financial incentive to keep farmers in dairy.

“The cost of fodder is sky high, if it’s available in the first place. It’s well documented input costs are up across the board. We understand processors have to get the balance right with their own profitability, but it can't be one-way traffic.”

Bega, Fonterra, Lactalis and Saputo as well as smaller processors have been contacted by The Weekly Times for comment.

Industry observers such as Bendigo Bank Agribusiness insights head John Droppert and Rabobank senior analyst Michael Harvey have both recently said market conditions were favourable for late spring step ups.

NSW dairy farmer Graham Forbes said the pricing impasse showed how reform to the federal government’s mandatory dairy code of conduct was vital.

“It can’t be set-and-forget. The code was designed to be reformed and tweaked to respond to changes in the marketplace,” he said.