‘We’ve got to see movement at the retail level if we want to sustain a profitable industry.’

The price of milk at the nation’s supermarkets is expected to rise, as a shrinking Australian dairy industry means there’s less supply to meet consumer demand.

United Dairy Farmers of Victoria President Mark Billing said over the past few decades, many producers had exited the industry because they weren’t getting a good return on milk, but those left behind were still facing challenges as a result of weather and increased cost of production.

“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,” he said.

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

The national milk pool is down 5.3 per cent at the end of May 2023 compared to the same time last year, the Australian Dairy Producers Federation has found.

Meanwhile, the price of dairy and related products had already gone up 15.1 per cent between May 2022 and May 2023, according to the Australian Bureau of Statistics.

Last month, for the start of the new milk season, a number of dairy processors announced they would be increasing the farm gate price of milk for suppliers.

One processor, Saputo, said the increase would be about $0.25kgMS (kilogram per milk solid) for farmers in the northern region, Victoria, South Australia and Tasmania.

Dairy Australia industry analyst Eliza Redfern said increased export commodity prices had also pushed up local farm gate prices.

But she said it was difficult to say exactly how much further prices at the supermarket would jump.

“It’s up to those processors to work with retailers to pass those increases along,” she said.

“It’s hard to say whether there will be more increases, there is potential, but hard to say what that ratio or that proportion would be.”

Billing said for the remaining dairy farmers in the industry, the price increase was long-overdue good news.

“In the 1970s … there were around 14,000 dairy farmers in Victoria, there’s now 3,000,” he said.

“I would say we’re still in negative (price) territory from a dairy farmer’s point of view because dairy prices didn’t move for so long in relative terms.

“We’ve got to see movement at the retail level if we want to sustain a profitable dairy industry in Australia.”