Dairy farmers need 90c/L to continue dairying

All major milk processors released their new milk contracts on 1 June. All processors announce significant increases in prices as expected with increases between 9 and 12c/L except farmers owned that has announced only a 5 c/L increase. All processors now pay between 80 and 85c/L on average.

Of the 3 major processors, Norco announced a potential 12 c/L increase which will see an average perhaps around 84 c/L. Lactalis announced a 9c/L with an expected average price around 81-82 c/L. DFMC who supply Bega announced a 10.5c/L increase that will see them average around 83c/L in southern Queensland. DFMC is expected to average around 81c/L in North Queensland in north Queensland.

Are farmers excited by the price increases? No. Will this be enough to stop exodus of farmers from the industry? No. The cost increases from fertiliser, chemicals, fuel and purchased feed over the past year are likely to more than swallow up the price increases. And the ongoing wet and muddy conditions will continue to hamper production and milk quality.

There are likely to be further increases during June and there needs to be. To get farmers excited and profitable again prices need to average at least 90c/L. anything less than this will see the exodus from the industry continue.

Farmers have time before they need to sign so do not sign anything yet. Get quotes from all processes to see who pays you the most since there will be significant variations between processors for individual farmers. Make it clear to processors that you need more to stay in the industry.

There is no spare milk in Australia to send to Queensland, so processors need Queensland milk. Processors need to demand money in the retail sector to remain profitable and pay farmers 90c/L or the spiral of falling milk supply will continue.

Eric Danzi – eastAUSmilk Co-CEO