Call for a fair share of fat pay
AUSTRALIAN dairy farmers say they are being underpaid for fat despite a global hike in butter prices.
Global butter prices have surged from $US4000 a tonne 12 months ago to almost $US6000 a tonne now, while skim milk powder has been bogged down at $US2000 to $US2500 since late 2014.
Yet Australian dairy processors continue to pay farmers two to 2½ times more for protein than fat, leading some to question if local dairy manufacturers are cross-subsidising protein production.
Across the Tasman Sea, Federated Farmers New Zealand vice president Andrew Hoggard said his fat-to-protein pricing ratio was more balanced than that in Australia.
Jersey Australia president Chris McKenzie said Warrnambool Cheese and Butter was paying just $3.30/kg for fat but $8.25/kg for protein.
Mr McKenzie said he was concerned fat was being used to subsidise protein production, which disadvantaged Jersey producers.
“It’s just robbing pay Paul,” he said.
Mr McKenzie queried how much was being taken out of the global butter price to cover the costs of a strategy that has Peter to been focused powder.
“We’ve ended up with farmgate pricing that’s not giving us the true value of the products the world demands.”
Mr McKenzie said milk prices needed to be fattened up, even if it meant disadvantaging some herds.
While Jerseys and some mixed-breed herds can produce milk at 5 per cent fat or more, many Holstein herds are pumping out milk at little more than 3 per cent fat.
“If it [the fat-to-protein pricing ratio] was rebalanced we would see more mixed breed herds as we became more aware of on-farm costs,” Mr Mckenzie said.
One industry analyst said it was clear fat prices needed to rise but this would put pressure on larger dairy herds.
Australian Dairy Products Federation executive officer Peter Stahle said tradition had determined the price differential between butterfat and protein at the farmgate.
He said the differential was an issue, given current demand for butterfat, but any change would have to be implemented with “careful, close consideration with both sides of the dairy fence”. on skim milk