You could say where there’s a Will, there’s a way to change the dairy farmgate price.

Like many dairy farmers, Will Seidel from Mount Gambier has been crunching the numbers and claims the gap between the international market and the domestic farmgate are inexplicable.

“So we have step ups which mean the farmgate has risen barely two per cent this season, less than two per cent actually,” Mr Seidel said.

“But the international dairy price has risen 20 per cent over the same period. Then you have a five cent drop in the Australian dollar this financial year.

“So that means farmers who make the raw product are only getting 10 per cent of the gains — and that’s a best-case scenario. It’s worse than that when you factor in the dollar drop.”

This month, Fonterra provided its second step up for the current financial year, lifting its weighted average milk price by 20 cents to now sit at $8.35/kg of milk solids.

It’s the only processor to provide a second step up so far, with its large-scale equivalents Bega and Saputo only providing one step up prior to Christmas and Lactalis coming to the party only last month.

A slew of smaller processors such as Burra, UDV, ADFC and Bulla have all provided a step up in early autumn, but independent market analysts say the farmgate average across all processors still sits around $8.20-$8.30/kg milk solids.

Writing for The Weekly Times, Mr Seidel said dairy farmers deserved a fair return on their produce — with processors and retailers taking too much of the dairy dollar.

“With only two months left until the opening prices for the 2025/26 season are announced, the Australian dairy industry finds itself in a state of limbo. Despite favourable market conditions, including:

– A 20% rise in commodity prices since July 1

– A 5-cent drop in the Australian dollar

– A consistently climbing dairy export index

Dairy farmers have seen less than 2% of these benefits. This raises pressing questions about the industry’s future:

– 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?

– How much more efficient can dairy farmers become, considering they’re already operating on tight margins?

The reality is that many dairy farmers are exhausted, demotivated, and struggling to make ends meet. They’re sacrificing time with families and friends, and their mental and physical health is suffering. Rising feed costs are another significant challenge facing dairy farmers. With the cost of feed increasing dramatically, farmers are being squeezed from all sides. It’s becoming increasingly difficult to maintain profitability, let alone invest in the future of their farms. Furthermore, it’s unacceptable that favourable seasonal conditions are used as an excuse to pay dairy farmers less. The reality is that dairy farmers take on significant risks to produce high-quality milk, regardless of the weather.

It’s time for the industry to recognise this and ensure that dairy farmers receive a fair and stable price for their produce, regardless of seasonal conditions. The saying goes “make hay while the sun shines” yet the sun is shining on our fabulous product but yet we see no benefit. With input costs soaring due to dry conditions across Australia, farmers are facing unprecedented challenges. It’s worth noting that Australian consumers are willing to pay a premium for high-quality, locally produced dairy products. In fact, many consumers actively seek out Australian-made dairy products and are willing to pay more to support local farmers. Additionally, there is a growing sentiment among consumers that they do not want imported dairy products. They want to support Australian dairy farmers and enjoy the unique taste and quality of Australian dairy.

It’s time to ask:

– Does the industry truly value dairy farmers’ produce?

– How can farmers plan for the future when they’re unsure of what’s to come?

– What incentives are there for young people to join an industry that seems to only reward them with uncertainty and financial strain?

In 2020, the Code of Conduct was introduced to make it more transparent and bring in minimum standards to ensure the repeats of the nasty clawbacks that crippled our industry in the mid-2010s didn’t happen again. These not only drove a lot of great people out of the industry but also left a deep scar, with trust between processors and farmers at its lowest. The 2018 drought, where feed costs were the highest in history, further exposed the vulnerability of dairy farmers. During this period, cull cow prices were on the rise, and the export heifer market was at a premium – the only thing keeping farms afloat.

The current situation is eerily reminiscent of the “milk war” of the 2023/24 season, which can only be described as an unofficial clawback – cleverly disguised to circumvent the Code of Conduct. With three months still left in this season, the uncertainty is palpable. The opening prices due in June will reveal the direction of next season, and anything below $9 will have severe consequences. The dairy industry needs its leaders now more than ever – from the Australian Dairy Farmers to Dairy Australia, who collect nearly $30 million in levies each year. The dairy industry is built on a foundation of hardworking individuals, from consumers to processors, and from farmhands to farmers. For everyone to be profitable and thrive, we must find a way to work together without exploiting each other. It’s time to unite – not just for next year, but for the generations to come – so that our great product can be enjoyed for generations to come.

We have a choice: we can continue down a path of uncertainty and decline, or we can work together to create a brighter future for our industry. The time to lead is now. Our collective goal should be a profitable industry where no one is left behind, regardless of their system. We must come together as an industry, put aside our differences, and focus on creating a sustainable and thriving dairy industry that benefits all stakeholders. The clock is ticking, and the decisions we make today will shape the future of our industry for years to come.”

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