Victorian dairy farmers call for strong price to counter inflation costs

A dairy leader has set a challenge to processors, calling for a minimum price per kilogram of milk solids.

A minimum of $8.50 per kilo milk solids has been set as a challenge to processors by Victoria’s dairy leader as the factories jostle for supply.

Bega is the only one of Australia’s big three processors so far to confirm an opening price for the 2022-23 financial year at an average of $8.40 a kilo milk solids, although the figure varies by region.

Saputo and Fonterra are yet to show their hand with the topic front of mind at this week’s United Dairyfarmers of Victoria conference, the first this decade due to coronavirus lockdowns.

UDV president Paul Mumford congratulated Bega on going early with its price but added that there was room for improvement from all processors in order to retain farmers in the sector.

“Credit to Bega: they announced early and really set the ball rolling,” Mr Mumford said.

“Now, we need the other processors to confirm where they’re heading and provide that certainty we need to retain farmers in dairy.

“I’d say $8.50 (per kilo milk solids) at a minimum is where we need to start from. Anyone with even a slight connection to dairy knows input costs are growing by the day.”

Mr Mumford’s comments come on the same day as Rabobank predicted an $8.40 per kilo milk solids average in southern Australia.

Rabobank senior dairy analyst Michael Harvey said the $8.40 figure would be a record price and 15 per cent higher than benchmark milk prices for the 2021/22 season.

He said while prices were strong at present due to weak supply abroad, the market was set to soften heading into the new financial year.

“From here, we are forecasting a price correction in global markets on the back of a

return to year-on-year growth in milk supply in export regions from the second half of

2022,” he said.

“(That will coincide with) a sizeable drop in Chinese bulk import volumes over the course of year and broader demand rationing from consumers in emerging markets.”

Last week, Bega Cheese chairman Barry Irvin said depending on supplier size and supply profile, most suppliers would receive an opening milk price in the range of $8.20 to $8.60 per kilo milk solids.

“As is always the case when setting milk price, it was important that we considered the returns in both the Australian and international markets,” Mr Irvin said.

“(We also considered) milk requirements for our significantly expanded portfolio of products and the competitive circumstances in each of our regions.”

Fonterra Australia managing director Rene Dedoncker said the processor would aim to announce its opening prices in a timely fashion.

“Last season, we opened in mid-May which was well received by farmers as it gave them an earlier line of sight to the season ahead,” he said.

“We’re working on next season’s pricing, and our farmers can expect to hear from us first.”

Saputo did not respond to The Weekly Times in time for deadline but it is understood the Canadian processor has been losing suppliers to competitors in its south-west Victorian heartland in recent years.

Bulla was the first processor out of the starting blocks for the 2022-23 season.

The Colac-based processor confirmed in March an opening price of $7.40 to $8.00 per kilo milk solids for the coming financial year.

Processors are required to file opening prices by June 1, under the Federal Government’s Dairy Code of Conduct.

However, an April or May announcement can be revised by the processors in the weeks leading up to the June deadline, which occurred last yea.