OPENING milk prices are within 10 cents of the $10 mark after Bulla upped the supply ante a further 10 cents to $9.70.
Taking into account the processor’s new peak-to-trough (PT) calculation, an additional $0.20 per kg of milk solids across all price bands, Bulla’s farm gate range now sits at $9.30-$9.90 per kg MS.
And that’s just the latest shot in a rush to sign producers, which is good news for those milking every day – and there may still be more to come.
Saputo set the highest opening price of $9 per kg MS, but all that did was spur Fonterra ($8.65 per kg MS) and Bega ($8.60 per kg MS) into action to match the price.
Cohuna-based Saputo supplier Clarke Fehring says future rises are going to be hard to pick, but thinks it’s a bit harsh for people to “be moaning” about the current offers.
Mr Fehring said last season’s prices were $2 ahead of those in New Zealand, which has “20 billion litres sitting right on our doorstep”.
Last season Australia produced 8.04 billion litres – about the same as it did in the mid-1990s.
“Producers here demand $9 or $10 but, in reality, it will be the overseas markets which will dictate the prices flowing down our production chain,” Mr Fehring said.
“This year has seen our second-highest opening price and I still don’t think the market is done – and at the same time we still have access to cheap water.
“We can look at our break even points, maybe somewhere between $5 and $7 and see what works best for us, but right now I would have to say I am more than happy with where the price sits.”
Describing himself as a low-cost, risk-averse producer, Mr Fehring said he had swapped his 265 milkers to an autumn calving herd as part of that strategy.
While it means he cannot get the premium off peak shoulder prices, he can offset that by having his herd on grass for eight months.
If he runs into a bad summer, he can simply dry the cows off.
“We’re very comfortable with that, just as we are pretty comfortable with the prices so far this year,” he said.
Australian Dairy Farmers president Rick Gladigau said the pricing bandwagon was a rush of good news for dairy farmers after the “lacklustre” offerings earlier this month and “a great boost for financial confidence in farming”.
“As dairy farmers we already have to deal with rising electricity bills, labour costs (and shortages) and higher fuel prices,” Mr Gladigau said.
“And we would expect all three inputs to be 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.”
Despite the decrease in Australian milk production, dairying remains Australia’s third-largest rural industry, employing an industry workforce of 34,700.
About 36 per cent of Australia’s production is exported. Major markets are throughout Asia, with a focus on China, Singapore, Indonesia, Japan and Malaysia.
Before its latest rise, Saputo Dairy Australia chief executive Lino Saputo said to ensure its pricing remained competitive, the company stepped up its opening offer when advising suppliers of a revised opening weighted average milk price of $9.15-$9.30 per kg MS for exclusive supply in the 2023-24 season.
He said that was an increase of 17c per kg of butterfat and 34c per kg of protein, with the revised milk price for exclusive supply available to suppliers in the northern region, southwest Victoria and South Australia and Gippsland regions 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.”
