Farmgate milk prices must go up

The price of milk paid to farmers plummeted in southern Australia in July 2024. This was in theory due to international dairy prices, but is this in hindsight correct? The clear answer is no.

An extremely effective campaign was run by the ADPF, the processors peak body, last year to drive prices down in southern Australia. At the time, the prices being offered seemed disingenuous and based on misinformation and the desire by processors to recoup profits from farmers. The rhetoric being sprouted by those with a vested interest to drive prices down was that a $2/kg price fall was required to be internationally competitive. We were told that Australian farmers were getting paid much more than NZ farmers and this had to stop.

Well stop it has and now southern Australian farmers are getting paid much less than those in NZ. NZ prices to farmers are currently around $A9/kg which is almost $A1/kg higher than southern Australian farmers are being paid. Current international dairy products, including for whole milk powder, and the extremely low Australian dollar suggest that prices should be at least $10/kg if not substantially higher. Clearly, as was clear at the time and even more obvious in hindsight, milk prices fell way too far in July 2024.

Prices must go up substantially in southern Australia in July 2025 to a price of at least $10/kg. This should have a positive impact on milk prices in NSW and Queensland.

In addition, there must be substantial changes to the dairy code to ensure that the market functions and processors compete for milk. The processor peak body ADPF should be precluded from influencing milk price as clearly occurred last year. Individual processors should not be allowed to send price signals pre 1 June which clearly are heard by farmers, rival processors and the market generally. The role of institutions, with major processor clients, in sending price signals must also be reviewed.

Eric Danzi, CEO eastAUSmilk