Dairy farmers lash milk prices

WA dairy farmers have lashed processors’ prices for the approaching milk season, after new Federal Government regulations revealed the standard minimum farmgate milk prices for the first time.

On Monday, processors published respective minimum milk prices online and specified the quality and quantity requirements for contract deals for the 2020-21 milk season. The pricing is applicable from July 1 this year to August 31 next year.

According to the industry’s mandatory code of conduct, processors must publish one or more standard forms of milk supply agreement online.

The code, which came into effect at the start of the year, is designed to try to level the playing field between processors and farmers.

It was developed after the Australian Competition and Consumer Commission’s 2018 inquiry into the dairy industry recognised the damage done when processors made retrospective cuts to farmgate milk prices. Retrospective price cuts are no longer allowed.

WAFarmers dairy section president Michael Partridge, a Brunswick dairy farmer, said the move to make processors’ prices public benefited industry transparency.

However, he said the State’s available prices were “very disappointing” given the high operational costs farmers contend with.

“There has been a lot of smoke and mirrors in the past and this makes it more transparent,” he said. “It is fair to say that we are pretty disappointed with the prices that came out, especially with cost of production in WA going up 10¢ per litre in the past five years.

“There doesn't seem to be a positive movement in price, despite evidence it is required.”

WA’s three major dairy processors all confirmed prices for this milk season on Monday, with Brownes Dairy revealing an average seasonal price of 52.58¢ per litre in its exclusive milk supply agreement for the 2020-21 season — including peaks of 64¢ per litre from January to March.

Prices offered by Lactalis, which owns Harvey Fresh, include a standard base of 54.11¢ per litre for next January and February.

Lion Dairy and Drinks provided two contracts for its WA farmers, split into two regions — Pinjarra-Busselton, and Albany.

Lion Dairy’s weighted average milk price, based on the company’s current milk supply at its exclusive pricing, will be 52.5¢ per litre in WA.

Lion agricultural procurement director Murray Jeffrey said the company's minimum pricing for the approaching milk season was “a sign of our confidence in the Australian dairy industry”.

“Our strategy will see us continue to focus on driving profitability in key dairy categories with our premium dairy brands and market-leading innovation,” he said.