Hopes for dairy price rise after tepid opening offers

TWO local dairy farmers are hoping for an increase in milk price offers over the next month following the publication of milk supply agreements by processors. Most milk processors have emerged with minimum prices of around $8 per kilogram of milk solids (kg/MS), a noted drop on last year. Whorouly dairy farmer and representative of Dairy Farmers Victoria Jon Pethybridge said the minimum milk price offer from dairy company Lactalis Australia, at $8.40 per kg/MS, was a little lower than he would like. “Hopefully over the next couple of weeks, [with] negotiations and a bit of demand, we can get that price up a bit higher. “It's got to be north of $8.50.” Mr Pethybridge said the relatively dry autumn may indicate an expensive winter ahead because of the need to hand-feed cattle instead of relying on pasture. “If we can get a lot of grass in the system, our cost of production is going to be a lot less, but if it is a tough winter we're going to have to buy in some more feed, and it's going to become a really tough position,” he said. Dederang dairy farmer and director of the Mountain Milk Cooperative Scott McKillop described the minimum prices as underwhelming, but in line with prior forecasts. “We were all probably expecting a reduction given the lines of communication that were coming out and a lot of the major processors were softening us up as farmers to expect a drop in milk pricing,” he said. Mr McKillop has previously had contracts with Shepparton-based dairy company Noumi (formerly Freedom Foods). He said Noumi’s opening price was $8.10 per kg/MS, compared to $9.30 last year. “We need a milk price closer to $9 a kilogram to reflect the effort and time and commitment we make as farmers, and also if you want the industry to grow and prosper rather than hold steady or even decline, because we're still seeing numbers of farmers declining, dairy farmers particularly,” he said. “Our costs have been rising in line with everything else amongst the economy too. “We're all facing cost challenges, obviously interest rates are higher, labour costs are higher, it's hard to find labour as well.” New Zealand dairy cooperative Fonterra announced its opening price forecast last Wednesday at $7.25-$8.75 per kg/MS with a mid-point of $8. On Friday Saputo Dairy Australia joined the race with a weighted average milk price of $8.00 to $8.15 per kgMS. Mr McKillop said price offers tend to rise by around 5 per cent as processors compete for suppliers. Speaking on behalf of the Mountain Milk Cooperative, Mr McKillop said they are examining offers from multiple companies. "We're looking to try and extract the best possible price we can from processing companies to pay our members the best possible price we can, as well as hopefully have the opportunity to grow our membership," he said. Kilogram per milk solids is determined by sampling milk for its protein and fat content. A stipulated by the Australian Competition and Consumer Commission’s (ACCC) dairy code of conduct, milk processors must publish their milk supply agreements for the following financial year by June 1, but as this fell on a Saturday the publication date was pushed to June 3.

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