Unexpected Gains as Mid-Tier Players Outpace Giants in New Season Offers.
As the new dairy season commenced on July 1, a compelling trend has emerged in the Victorian dairy market: smaller processors have proven to be the most aggressive in lifting farmgate milk prices. Companies such as Union Dairy Company (UDC), Bulla, and Goulburn Valley Creamery have significantly outpaced larger, more established players in their price increases over the past six weeks, signaling a shift in dairy economics and competitive dynamics within the region.
Union Dairy Company showcased the strongest uplift among all Victorian processors, revising its price from $8.70 to a range of $9.30-$9.80 per kilo of milk solids since the June 2 mandatory dairy code deadline. This represents an impressive increase of nearly 10% from its midpoint of $9.55/kgMS. Similarly, Bulla’s consecutive step-ups in June provided its suppliers with an approximate 8% gain, moving from $8.40-$9.20 to $9.15-$9.95/kgMS. Goulburn Valley Creamery also delivered a nearly 8% rise, from $9 to $9.70/kgMS, through several pre-July 1 adjustments.
In contrast to these agile smaller processors, established industry giants like KyValley and Bega notably did not publicly declare any Victorian step-ups in June. While Bega did increase its Bodalla price for suppliers in southern New South Wales, its absence from the public Victorian price lifts highlights a diverging strategy. This situation suggests a complex pricing environment where market dynamics are being shaped by more than just the dominant players, influencing dairy farmer negotiations.
Dairy Farmers Victoria board member Benjamin Vagg, a Gippsland farmer, voiced a sentiment shared by many producers: had processors announced initial farmgate offers around the $9.50/kgMS mark by the June deadline, supplier-processor relations would have significantly improved. Instead, delays and “buggering around” led to 50-60% of farmers holding out. This has resulted in a fragmented market, with “special deals” now exceeding $10/kgMS existing alongside the publicly promoted prices, indicative of covert dairy price competition.
Australian Dairy Farmers president Ben Bennett echoed Vagg’s concerns, emphasizing that the publicly promoted farmgate milk prices do not paint the complete picture, especially with private “fresh milk deals” creating a dual pricing structure. This divergence, where some larger processors show lower average public prices than smaller ones, contributes to farmer frustration. Both leaders assert that processors’ tactics are eroding trust, despite stated desires for better relationships, underlining ongoing tensions in Australian dairy supply chains.
Source: The Weekly Times Now: Victorian dairy prices compared: Smaller processors lift higher
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