Milk price rise welcomed

OPENING season milk prices are at record levels after processor Saputo Dairy Australia announced a rise in their minimum milk price.

Saputo has announced the minimum monthly price and additional payments have resulted in a weighted average farm gate milk price of $8.50 per kilogram of milk solids for non-exclusive suppliers, up from the previous price of $7.25 per kilogram of milk solids.

It’s higher than the opening price of $8.25 per kilogram of milk solids revealed by Fonterra in May and a welcome boost to dairy farmers battling high input costs.

The Saputo price will be supplemented by additional payments to suppliers including monthly milk quality bonuses, productivity payments and off-peak payments. Saputo has also committed to no price step-downs in any circumstances during the year, honouring an ongoing promise to suppliers.

Tasmanian Farmers and Graziers Association Dairy Council chairman Andrew Lester said the price increases were welcomed by Tasmanian dairies. “It’s certainly handy to have a price increase for this season with all the costs,” he said.

“Commodity prices are high so we’ve been expecting a bit of an increase,” Mr Lester said. “On top of that, there are positive signs for next year too.” The Saputo announcement came just before the Dairy Code of Conduct opening price deadline of June 1.

It’s expected milk processors will review their prices in coming weeks to ensure they secure supply in a competitive market. The increase in prices has been partly driven by rising input costs facing dairy farmers and it is hoped they will alleviate associated pressures.

Dairy Australia’s Situation and Outlook Report released last week found ongoing growth limitations and heightened margin risk were expected to offset strong milk prices and favourable seasonal conditions. “The 2022/23 season will be marked by rising numbers throughout the supply chain – from production costs to farmgate prices, from commodity values to food expenditure,” Dairy Australia’s Industry Insights and Analysis Manager John Droppert said.

“Meanwhile, labour shortages remain a significant constraint, while high beef prices and soaring land values have enticed farmers and farmland away from dairy.” Tasmanian dairy farmers do not have access to the additional $0.10 – $0.20 per kilo premium for non-exclusive suppliers.