Local UDV call for $10 was right on the money

WHEN Fonterra Australia announced an opening price on June 1 of $8.65/kgMS for the 2023-24 season, UDV Councillor for South Gippsland Ben Vagg, said it wasn’t aggressive enough.

He said the processors would have to test the $10 mark if they wanted to send the right signal to milk suppliers.

And it seems his call, almost a month ago now, was right on the money.

A further jostling of positions over the past few weeks has seem Bega, Bulla and Burra Foods all come back to the market with adjustments as an open bidding war breaks out.

On Tuesday, June 27, Fonterra lifted its farmgate offering to a $9.20 per kilogram milk solids average, roughly on par with Bega but still behind Saputo in several key markets.

The latest Fonterra step up will mean its northern Victorian suppliers will receive $9.19/kgMS, while Gippsland lifts to $9.20/kgMS and southwest Victoria rises to $9.21/kgMS.

Australian Dairy Farmers president Rick Gladigau told the Weekly Times during the week that the competition for milk was a welcome relief for primary producers concerned about lacklustre early June offerings.

“It’s great for financial confidence in farming,” he said.

“We’ve got to deal with rising electricity bills, labour costs and higher fuel prices. All three inputs are highly likely to rise further in the coming financial year.

“So, to start with strong opening prices is important. It gives farmers the ability to plan ahead, to say we can weather the storm if an unexpected cost comes our way.”

On June 22, 2023, Saputo Dairy Australia also made adjustments revising their opening weighted average milk price of $8.90 to $9.05 per kilogram milk solids to $9.15 - $9.30 kgMS for exclusive supply in the 2023-24 season.

“To ensure its pricing remains competitive, Saputo Dairy Australia (SDA) has advised suppliers of a revised opening weighted average milk price of $9.15 - $9.30 per kilogram milk solids for exclusive supply in the 2023-24 season.

“This is an increase of 17 cents per kilogram of butterfat and 34 cents per kilogram of protein. The revised milk price for exclusive supply is available to suppliers in the Northern region, South-West Victoria and South Australia region, Gippsland region and Tasmania (including King Island).

“The milk prices SDA has quoted above are a weighted average across its supply base. Milk prices achieved at an individual farm level will vary based on specific milk supply circumstances.”

Bulla lifted its opening prices by 10 cents across its four supplier categories last Wednesday.

Under its pricing system, Band 0 suppliers will now be paid $9.70 per kilogram milk solids, while Band 1 is now $9.50/kgMS, Band 2 now at $9.30/kgMS and Band 3 at $9.10/kgMS.

Pricing also includes Bulla’s new peak to trough (PT) calculation, which has been included by the processor this season in all price bands, providing an additional $0.20/kgMS.

Taking the PT calculation into account, Bulla’s farmgate range now sits at $9.30-$9.90/kgMS.

A Gippsland price comparison puts Bega at $9.20kgMS, Fonterra $9.20, Saputo $9.15, Lactalis $9.73, Bulla $9.30-$9.60 and Burra Foods $8.90-$9.40.