LOCAL committee member for Dairy Farmers Victoria, Ben Vagg of Leongatha South is hopeful dairy processors will improve on their recently announced opening milk prices for the 2024-25 season.
Saputo Dairy Australia (SDA) announced to suppliers on Friday that its opening weighted average milk price is $8.00 to $8.15 per kilogram of milk solids, Burra Foods Australia released on Monday an opening price between $8.00 and $8.50 per kilo, with Fonterra having recently announced its opening price of $7.25 to $8.75.
Bulla Dairy Foods released its opening price on Monday, ranging from $7.85 to $8.65 per kilogram of milk solids depending on supplier profile, with its CEO Allan Hood highlighting shifts in consumer behaviour and increased competition from imported dairy among factors lowering the milk price compared to last season.
Mr Vagg reflected on the important relationship between farmers and processors and what he considers to be a desirable price.
“The processors need us and we need the processors but we should be more vocal telling them they have to go higher, and I think they are saying they are willing to go higher,” Mr Vagg said, adding that farmers need above $9 per kilogram of milk solids.
SDA’s Director of Milk Supply and Planning, Kate Ryan spoke about what drove the business’ opening price.
“Our opening milk price factors in ongoing global market volatility due to subdued demand, as well as greater variability in domestic markets and anticipated market returns,” Ms Ryan said.
“As we see more market certainty, we would expect to review our prices during the year.”
She added that SDA has achieved business efficiencies over recent years, strengthening its competitiveness and reducing costs, along with other improvements.
“SDA’s strong business position supports us paying a premium above current commodity price returns,” Ms Ryan said, stating Saputo continues to support the business success of its farmers through a range of specialised services and programs.
She says that is done while also investing in Saputo’s operations, the industry and regional communities.
SDA notes that its quoted milk prices are based on a weighted average across its supply base and that milk prices achieved at an individual farm level will vary based on specific milk supply circumstances.
A schedule of monthly minimum milk prices will be available in SDA’s milk supply agreements published online at saputodairyaustralia.com.au/milk-supply
Burra Foods explained that the majority of its suppliers will sit within its quoted price range, and that it is continuing its long-term practice of not quoting a weighted average, which is often difficult for many to achieve.
The company will publish Milk Supply Agreements on its website and will forward income estimates to each of its milk supply partners during June.
“We continue to heavily invest in new products and our plant to expand production capability, and Burra continues to enable Milk Supply Partners to nominate funding and sponsorship opportunities, to support the sustainability and vibrancy of local dairy communities, via the Burra Foundation,” Burra Foods CEO Stewart Carson said.
The opening price range of Burra Foods and SDA fell within Dairy Australia’s general opening price expectations.
“I estimate initial prices will soften to $8 per kilogram of milk solids, but range up to $8.50,” Dairy Australia’s Head of Economics, Data and Insight John Droppert told Dairy News Australia last month.
He anticipates step ups in the standard farm gate milk price during the season, perhaps going beyond $8.50, with farmers such as Mr Vagg hoping that figure is comfortably exceeded.