Strong prices lead to positive outlook

Dairy supply companies delivered good news to farmers last week, with strong farmgate milk prices ranging between $8.50 and $9.05 per kilogram milk solids.

On World Milk Day on Thursday, all eyes were on the announcements by processors who declared much anticipated farmgate prices.

The trend across processors was delivering farmers with a stronger opening price than last year.

High milk prices and strong demand for milk contributed to 80 per cent of Gippsland dairy farmers indicating positivity about their businesses in the latest dairy Australia season and outlook report.

The report showed since 2018/19, an increasing number of Gippsland farms had been profitable, increasing to 94 per cent in 2021/22.

However, GippsDairy farmers reported a slight dip in industry confidence which was attributed to concerns about farmgate prices and weather conditions for the next six months.

Fonterra Australia’s weighted opening price was $8.655/ kg milk solids, compared to $8.25 last year; while Burra’s 2022/23 opening price was set in the $8.50 to $8.90/kg milk solids range compared to $8.20 to $8.60 last year.

Fonterra Australia managing director René Dedoncker said Australian farmgate pricing for the season ahead remained higher than international commodity values.

“Despite the decline in international prices, the outlook for dairy remains generally positive with global demand currently expected to lift in the medium-term, with only modest supply growth forecast in export regions.”

Mr Dedoncker said that Fonterra Australia’s business was well-placed to continue to deliver good returns.

Burra Foods said its quoted price range was where more than 90 per cent of its suppliers would sit. However, Burra acknowledged the minimum price was a reduction on the current year.

“Whilst we are disappointed this is the case; we have considered the decreased value in global markets over the last 12 months and the growing un-competitiveness of Australian exports versus other countries. Australia is the only country in the world that must set a minimum milk price for the next 13 months, yet trade in volatile markets.

“We are very proud of our contribution to Gippsland and are heavily invested in our local dairying communities,” chief executive officer Stewar Carson said.

Saputo Dairy Australia’s opening price was higher than last year’s, announcing its opening weighted average milk price of $8.90 to $9.05 per kilogram milk solids for exclusive supply in the 202324 season.

Expanding on its existing dairy investment rebate and milk cooling rebate programs, SDA introduced a new growth payment of 70 cents per kilogram milk solids on any net growth in a farm’s

milk solids to encourage growth across its supplier base and the dairy industry.

“For the coming season, SDA has enhanced our milk price offer to meet the needs of more suppliers. We have invested in new payment options and incentives, including for farmers who want to invest in the growth and sustainability of their dairy business,” SDA supplier relations director Anthony Cook said.

Australian dairy Farmers president Rick Gladigau said farmers enjoyed the benefits of the mandatory code of conduct, which meant by 2pm on Thursday, all farmers knew what their processor was offering for the upcoming season.

Mr Gladigau said phones were running hot on Thursday as processors announced their opening prices, but in the past the announcements were dragged out often over several weeks.