According to eastAUmilk CEO Eric Danzi strong global dairy prices achieved at recent GDT events and exporter- friendly exchange rates should push farmgate prices higher. Danzi challenged processors to lift milk prices to $10kgMS by July, while $12kgMS was not out of the question in his opinion. Danzi believes farmers would exit dairy if farmgate prices don’t lift, stating significant cost increases would limit expansion.
Rabobank senior dairy analyst Michael Harvey is confident prices will rise before the 2024/25 season ends citing strong recovery in global commodity values and a softer Aussie dollar. It is unlikely farmgate prices will reach $9kgMS this season but Harvey noted they were heading it the right direction.
Meanwhile, according to United Dairyfarmers of Victoria president Bernie Free step-ups really showed the amount of control processors had over milk price. Free feels the Dairy Code of Conduct for not giving dairy farmers enough power over milk pricing, and needs to be written so “farmers have a lot more power around the negotiating table when milk prices are being set.”
National Milk managing director Scott Briggs, Victoria, said alternatives to step-ups needed to be considered and that understanding the “fairy value of milk” I complicated in Australia. “A lot of our milk is sold domestically, and those contracts are six and one year, on fixed prices – that can lead to some of the discrepancies we are seeing between Australian and NZ prices.” Briggs noted that in other regions a monthly price was offered, which could move up and down, on milk, backed by risk management tools to manage volatility.
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