Ensuring Aussie dairy remains competitive at home and throughout the world

Australian Dairy Products Federation Chief Executive Officer Janine Waller says the new season’s southern region farmgate milk prices (FMP) are more closely aligned with global market conditions, as processors move to ensure Australian dairy products remain competitive locally and internationally.

For the FY24/25 season, processors have offered an FMP aims to sustain the viability of the Australian dairy industry, keeping factories operational, protecting jobs, and supporting farmers and local communities.

“The last couple of year’s record-high milk prices, led to an influx of international dairy products, resulting in unprecedented imports and high consumption of cheaper overseas alternatives,” Ms Waller said.

“The data speaks for itself. In FY22/23, imports surged by 17 per cent (including a 29 per cent increase from New Zealand and 16 per cent from the United States), leading to the highest ever consumption of overseas dairy products in Australia – nearing 30 per cent, or 344,000 tonnes.

“We want to ensure Aussie families can continue to enjoy affordable, locally made and branded milk, cheese, yoghurt, butter and ice cream in their homes.”

On July 1, the estimated weighted average farmgate milk price in the southern region ranged from $7.94 to $8.20/kgMS*. Following two years of record high FMP, this remains up to 14 per cent higher than it was three years ago (FY21/22).

While the gap between FMP and global markets is closing, the new season’s price is up to 17 per cent higher than the spot Oceania commodity milk value (CMV) of $6.98/kgMS* (as of June 1, 2024) – which is an important milk price indicator.

“Compared to the FMP paid by major global competitors, the southern Australian price remains at a premium. It is up to 10 per cent higher than New Zealand’s milk price midpoint of A$7.43/kgMS (protein adjusted),” Ms Waller said.

“It’s important to remember the announced FMP are minimums for the season, with incentives on offer and the possibility of price reviews as global market conditions improve.

“We encourage farmers to use the dairy industry’s Milk Value Portal which provides transparent and comprehensive data on farmgate milk pricing, offering insights into current and historical prices and market trends.”

Five years of FMP data, Milk Supply Agreements (MSAs) and their contract features – including the new FY24/25 season – are now easily accessible on the portal.

“While last year saw fierce competition among processors for milk supply to fill factory capacity, pushing milk prices up, this opening season was very different,” she said.

“Processors are adjusting their operations to match supply, ensuring economic viability for the future. This strategy aims to protects jobs and the dairy products we love, safeguarding the industry for years to come.

“We want certainty for both dairy farmers and processors to confidently plan and invest in the industry.

“Our goal is for a strong, vibrant Australian dairy industry and to keep dairy manufacturing local.”

To learn more about incentives on offer, how Australian milk prices compare to global competitors, or how dairy commodities are performing, visit milkvalue.com.au

* All milk price estimates, are based on minimum milk price as per published Milk Supply Agreements. Assumes a farm producing 2 to 2.5 million of litres of milk annually, average fat and protein and regional average seasonal milk supply curve.  Sourced from the Milk Value Portal Farmgate Milk Value Tool.