In short:
Dairy companies have announced a slight increase in their opening farm gate milk prices.
Dairy farmers say they need more as they struggle to cover the costs of production.
What’s next?
Farm leaders are warning of declining milk production and farmer exits if dairy companies do not support them.
Dairy farmers have been disappointed by the farm gate milk prices announced for the next financial year as they continue to struggle with drought and floods.
Dairy companies have revealed their opening milk prices, a month before the start of the financial year, as required under the mandatory milk pricing code.
This year’s milk prices are up slightly on last year, ranging from $8.60 to $9.20 per kilogram of milk solids.
But they are lower than what farmers were hoping for.
‘Unprecedented’ strain
The dairy heartlands of Victoria, South Australia and Tasmania are in the grips of drought, while many farms in New South Wales and Queensland are recovering from floods.
“This is not a normal year,” Colac dairy farmer and Dairy Farmers Victoria president Mark Billing said.
“The climate challenges we are seeing right across Victoria, coupled with extraordinary cost increases on farms, mean that farmers are carrying unprecedented levels of financial and emotional strain.”
He said companies risked the rapid decline of Australia’s milk production if they did not increase prices to help dairy farmers through the tough times.
“Milk processors have repeatedly said they value their suppliers,” Mr Billing said.
“This is the year where those words need to be backed by action.”
Mark Billing says farmers are carrying unprecedented levels of strain. (ABC Rural: Jane McNaughton)
How much are they getting?
The majority of farmers are paid for the level of fat and protein in their milk, known as milk solids.
Many were hoping to be paid at least $9.20 to $9.50 per kilogram of milk solids, which equated to about 70 cents per litre.
Mr Billing said the prices under $9.20 on offer from the dairy companies were not enough for farmers to get by.
United Dairyfarmers of Victoria president Bernie Free agreed.
“It’s pretty disappointing, really,” he said.
He said some farmers would quit the industry if milk prices did not go up soon.
“I think it’s a concern that farmers may move out of the industry at this price mark, especially in [drought-affected] western Victoria,” he said.
“Gippsland is not far behind us, and there are pockets in north-east Victoria that are doing it pretty tough.
“There is only so long you can throw good money after bad.”
Dairy farmers are disappointed by the price they will be paid for their milk. (ABC News: Warwick Long)
Milk production drops
Dairy Australia’s latest outlook shows the national milk pool is on track to drop 1 per cent this financial year, compared to the previous one.
It has also forecast a further drop in production of up to 2 per cent in 2025/26.
If that happened, milk production would sit around 8.24 billion litres, almost 3 billion less than the industry’s peak in the early 2000s.
Dairy Australia analysis and insights manager, Eliza Redfern, said ongoing challenges with the weather were affecting production.
“We are also seeing a lower appetite for farm business growth, and we do expect some farm exits to continue within the new season,” she said.
Dairy Australia is forecasting a drop in national milk production next financial year. (ABC News: Maren Preuss)
Higher price than last year
Fonterra Oceania was the first milk company to announce its opening milk price for the next season, with one of the lowest prices — an average of $8.60 per kilo of milk solids.
Its director of farm source and sustainability, Matt Watt, said while it was higher than last year’s opening price, he understood farmers would like more.
“What we’ve got to do is make sure we’re running a business that is here not only this year but for years to come,” he said.
“That’s our job, frankly, to make sure that we’re continuing to make decisions that support paying a milk price that we’re earning in the market.
“Sometimes that is a milk price that farmers appreciate and enjoy, and other times it takes a bit of time.”
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