Nearly all of Australia’s processors have posted a step up. But farmers say the numbers don’t add up. Here’s why.
A grassroots revolt has erupted among dairy farmers over farmgate step ups, which they claim are too little, too late.
Last week, Lactalis boosted their farmgate offering by 15 cents per kilogram of milk solids, announced only days after Burra Foods announced its own 10 cent step up.
Management at the French-owned Lactalis are now offering $8.55 per kilo milk solids in northern Victoria and $8.40 per kilo milk solids in southern Victoria and Tasmania, while Burra now have a revised range of $8.10 to $8.60 per kilo milk solids.
Only Fonterra have committed to a farmgate price review, scheduled for sometime in April, while other processors are keeping their cards close to their chest as farmer anger builds.
Gippsland farmer Bernhard Lubitz from Leongatha said the Global Dairy Trade index had risen 20 per cent this financial year yet farmgate prices had barely lifted 2 per cent in the same time frame.
“The processors were very happy to point to the GDT when they felt prices were too high in previous seasons. Now the strength of the GDT doesn’t suit their message,” he said.
“The cost of production at the moment is around the $9 per kilo milk solids mark yet the price being paid to farmers is far lower than that.
“The step ups provided this season are rising far slower than the cost of fodder and other inputs like electricity.”
Mount Gambier, SA, farmer Will Seidel said the drop in the Australian dollar this season against the US greenback, from US68 to US62 cents, also undercut processor arguments of domestic market competition.
“(There’s been) a 20 per cent rise in commodity prices since July 1. Dairy farmers have seen less than 2 per cent of these benefits,” he said.
“This raises pressing questions about the industry’s future, (mainly) when will dairy farmers receive fair returns on their produce? How can farmers invest in their future when they’re not seeing the financial benefits?”
The Australian Dairy Products Federation, which represents most of the nation’s milk processors, were contacted by The Weekly Times for comment.
Australian Dairy Farmers president Ben Bennett said the recent round of step ups did not come close to acknowledging improved market conditions.
“I wouldn’t designate them with the term ‘step up’. The price increases are tokenistic at best,” the southwest Victorian farmer said.
“If they think these price changes are step ups then they’ll have farmers stepping out of the dairy industry.”
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