Fonterra has announced to its Australian farmers an opening weighted average milk price for the 2025/26 season of AUD 8.60/kgMS.
This price has been based on the minimum monthly rates in the milk supply agreements, a mix of fat and protein, and assumed standard production and quality incentives.
The opening price is higher than the current season, reflecting improved global market conditions, dampened by a continued soft domestic outlook. Geopolitical tensions, potential trade disruptions, and currency volatility continue to create uncertainty for the longer-term outlook.
However, favourable signals for the season ahead, including the increase in global dairy prices over the last 12 months, are building optimism for F26.
Global demand has shown signs of growth, with constrained global supply driving an uptick in global prices throughout the year. Australian dairy exports have strengthened in value and volume compared to the previous year. These improvements have been supported by a return to balance between local and global dairy prices and a favourable yet volatile Australian dollar.
“While there’s room for local demand to lift, we remain confident in the strength of our business and ability to be competitive on price as we navigate these conditions throughout the season. This is underpinned by the diversity of multiple dairy product types, sales channels, and markets that we sell into.”
Fonterra is committed to paying a competitive milk price throughout the season. As part of its bi-monthly review process, the co-op will continually assess market conditions and look to increase the milk price when the market and business performance support it, as it did in F25.
The co-op also acknowledged the prolonged dry conditions and the impact on farmers right across the industry. These challenges are well understood throughout the business, and the priority is to support farmers in partnership through Farm Source Professional and its regional teams.
The Fonterra Co-operative Group continues to pursue divestment options for the global consumer and associated business, including Fonterra’s Australian operations.
“Your milk contracts remain one of our most valuable assets, and we assure you they will carry through as part of any trade sale or Initial Public Offering (IPO),” added Breckenridge.
“Our Supplier Meetings commence soon, and we will be out in our dairy regions to share our thoughts on the market conditions and to update you on our business. This will be my first time attending Supplier Meetings, and I look forward to meeting you soon.”
Area Managers will contact farmers to help with an income estimate and to assist them in choosing the best pricing model for their business.
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