Under the Dairy Code of Conduct, processors were required to announce minimum prices by June 1.
Among the major processors operating in northern Victoria, Saputo has opened the season at $6.21/kg butterfat and $12.42/kg protein (exclusive, northern region) , Lactalis at $6.23/kg butterfat and $9.34/kg protein, and Bega Cheese at butterfat $5.76, and $11.52/kg protein for non-exclusive agreements, northern Victoria and Riverina.
Farmers and processors now have until the end of the month to finalise agreements.
The VFF United Dairyfarmer Victoria branch described the prices as inadequate, warning they could drive a contraction in milk supply.
“We’re extremely disappointed with initial opening milk prices at a time when dairy farmers are facing skyrocketing on-farm costs," VFF UDV president Bernie Free said.
“This price announcement doesn't even factor in inflation or any of the costs of global instability.”
Mr Free said processors risked undermining their own supply if prices did not improve.
“Less milk supply will put pressure on processors, as farmers consider their future moving forward,” he said.
Mr Free said farmers should remember the headline price was not necessarily the price that suppliers were going to get.
“Just because the contract says a minimum price, you don’t have to accept that. You can negotiate a better figure,” he said.
“Get a budget done and look into the fine print. If you are struggling with the complex figures, it might be worth spending a few hundred dollars and getting some assistance.”
Australian Dairy Farmers president Ben Bennett took a measured tone about the price, describing the figures as a “conservative floor” and a starting point for negotiations, while acknowledging the pressures facing all parts of the supply chain.
“There’s no fat in the system at the moment,” Mr Bennett said.
“Processors are hurting too. We’re operating in a tight global environment and everyone in the supply chain needs to get a return.”
Mr Bennett pointed to a range of factors shaping the market, including ongoing conflict in the Middle East driving volatility in fuel, fertiliser and freight costs, shifting international commodity markets, and movements in the Australian-US dollar exchange rate.
He also flagged concern about seasonal conditions, with forecasts pointing to a possible strong El Niño developing this year.
“That creates a level of trepidation across many dairy regions as farmers look ahead to the middle of the season,” he said.
“There’s a lot of uncertainty, and not a lot of comfort in the outlook right now.”
Both bodies said cost pressures were likely to influence production decisions, with some risk of industry contraction if conditions tightened further.
Other processor prices announced on June 1 include: Kyvalley Dairy Group base price for A2 approved milk, 60 cents litre (excluding bonuses and thermoduric penalties); ACM (Girgarre), for July $5.01 butterfat and $11.02 protein in a non-exclusive agreement; Goulburn Valley Creamery (non-exclusive agreement) $9/kg milk solids; Noumi $6.09 butterfat and $12.18 protein.
Noumi said it would continue its additional volunteer farmer support payments until June 30, at which point it will be reviewed.
