Melbourne processor Bulla Dairy Foods has kicked off the milk pricing competition, with price bands set between $8.80 and $9.60/kg milk solids.
The range is higher than the company opened with last season.
Under the national dairy code, introduced three years ago, all processors must publish standard forms of milk supply agreements on their website before 2pm on June 1.
Dairy and procurement general manager Rohan Davies said with the current economic climate showing so much volatility and uncertainty, he believed they had opened with a strong and market-relevant opening price for the season ahead.
“Our team has been forecasting and planning for the upcoming milk season for some time, taking into account current market conditions.
“This has put pressure on our business like many businesses in our industry and wider and has been a factor in our planning for the season ahead.”
He said this was a starting position and as business progressed, they would make necessary adjustments to the price.
Bulla Dairy Foods began last season with most suppliers in the $8.70 to $8.90/kg MS range.
Fresh Agenda dairy consultants have forecast a full-season milk price paid to southern producers, expected to average $8.50/kg MS in 2023-24 based on projected commodity prices, average manufacturing conversion costs and the industry product mix.
In the March 2023 Situation and Outlook Report, Dairy Australia forecasts a contraction of between four to six per cent in the Australian milk pool this season, due to worker shortages, competition for land and resources and wet weather conditions.
While milk production may be contracting, Australian dairy’s commodity prices are strong compared with other exporting countries, helping insulate the industry from some of the pressures emerging overseas, according to the report.
Global commodity values have dropped, along with international demand for dairy.
“The level of dairy product available for export globally is growing, as production in other countries outweighs local demand,” Dairy Australia’s industry analyst Eliza Redfern said.