• Aussies warned that price of milk could soon rise
• Supply is down but cost of production is up

Aussies are being warned to expect the price of milk to rise sharply as the embattled dairy industry continues to decline.

The Australian Dairy Producers Federation found the milk pool – a system that ensures farmers receive a similar per-gallon payment for milk – was down 5.3 per cent at the end of May 2023, compared to the same time last year.

But while farmers are getting less, the price of dairy products on average for shoppers has risen 15.1 per cent in the year to May 2023, according to the Australian Bureau of Statistics.

Increased production costs, bad weather and surging inflation are just some of the reasons for the discrepancy.

United Dairy Farmers of Victoria president Mark Billing said a growing number of producers in recent decades have ditched the dairy game because the returns on their labour just isn’t good enough.

‘Milk prices at the shelf had stayed stable for 10 or 15 years or more. So, the milk price at the retail level has not kept up with inflation at all,’ Mr Billing told Seven News reports.

‘Domestically, the price of milk (more recently) has been pretty good based on the fact the milk pool in Australia is pretty tight.’

However, in May – which is the beginning of the new milk season – numerous dairy processors stated they would be increasing prices.

One milk processor, Saputo, said the increase would equate to $0.25 per kilogram per milk solid (kg/MS) for farmers in Victoria, South Australia and Tasmania.

Dairy farmers sell their milk to processors which is then used for fresh milk or processed as milk solids for use in cheese, yoghurt or baby formula.

In May Bega also announced it was increasing its milk price to $9.20 kg/MS, which is approximately 69 cents per litre.

While Victoria is the largest exporter of milk production in the country – contributing about 64 per cent of the national milk pool – its milk production has dropped 6.4 per cent in the last year.

This is due to the number of registered dairy farms in Victoria dropping in the last decade as herd sizes increase.

In the last decade almost one-third of dairy farmers in Victoria have bowed out of the industry and in Tasmania there are only 79 registered dairy farmers left.