Farm gate milk prices for the start of the new season have crept higher than at the start of last season.
Average prices for northern Victoria have reached about $9.15/kg of milk solids, according to the Australian Dairy Products Federation.
At the same time last year the price in the southern region of Australia was closer to just under $9/kg MS.
Australian Dairy Products Federation executive chairman John Williams said analysis by the federation and Fresh Agenda confirm that Australia’s dairy processors will continue to pay extremely competitive prices for milk throughout the 2023-24 season, despite the fact dairy commodity prices are significantly lower this year than they were 12 months ago.
The rising prices have pushed some conditional offers into the $10/kg MS range. For example, the Bega Group is offering $10/kg MS to its local Bega Valley suppliers.
“These are without doubt the highest on record opening milk prices in terms of the announced expected average milk prices that will be paid in the major southern regions this season, with a weighted average expected price of $9.15/kg MS,” Mr Williams said.
He said processors had taken broadly similar approaches to the pricing of milk this season, with relatively minor structural changes in milk supply agreements, especially in specific regional price incentives.
“These are very challenging times for Australian dairy processors,” he said.
“They are competing for milk supply in a shrinking national milk pool, and they are also competing with lower cost product both on the export and on the domestic front.
“On top of this, they are also contending with exorbitant overhead and input costs, (inclusive of energy, labour, transport and raw milk).
“Australian dairy processors are currently paying in the order of 20 per cent higher farm gate milk prices in Australia compared to New Zealand.
“This clearly places Australia at a competitive disadvantage not only in export markets, but it is also being reflected on our supermarket shelves with New Zealand-made cheese and butter priced significantly cheaper than Australian-made products.
“We know that imported products from New Zealand are up 22 per cent year-to-date (February 2023) and imports from the US are up 46 per cent.”
The Milk Value Portal run by the federation, has a range of price information.
