Milk prices disappoint suppliers

Girgarre dairy farmer Pat Nicholson supplies Australian Consolidated Milk (ACM).

Mr Nicholson said the original opening price of $8.85/kg of milk solids was extremely disappointing, however ACM later increased its opening price to $9.

“Considering current seasonal conditions, we need to be over $9 as a minimum and realistically more like $9.50,” he said.

“For those struggling to survive and eating into their equity, this offers no incentive whatsoever, and I wouldn’t be surprised if some farmers pull the pin altogether.”

Mr Nicholson said his business had made the tough decision to destock a month ago, dropping the milking herd from 450 to 400.

He said if dry conditions remained through to spring, they would drop down further to around 300.

“We are fortunate here in the north we have irrigation — currently everything is in the ground, it’s just not growing, and if that continues, with fodder reserves so low across the country, we could be in for some real trouble if it doesn’t rain.”

Mr Nicholson said processors were now using contracts to secure supply.

He said if he signed on with ACM for two years, he could get an additional 20¢/kg MS.

“My predicament is then we are locked in to supplying ACM for another three years and at this stage, an additional 20 cents is not worth the risk.

“There are just so many things impacting our business now from global markets, climate conditions, water prices and input costs, and processors are just dangling carrots to secure their own supply, rather than looking at the long-term sustainability of farmers and the industry.”

Gunbower dairy farmer Stu Modra supplies Bega, which opened with $8.70-$9.20/kg MS.

Mr Modra said opening milk prices were not good enough given the current high cost of production.

“We are looking at hay prices anywhere from $400 to $700/tonne,” he said.

“Without rain, temporary water will open up where it finished over $300, and then there are our grain and other associated input costs that keep increasing.

“None of these prices give you any incentive to get out of bed in the morning and milk cows, especially if you are a young farmer.”

Mr Modra said if processors were serious, they would offer a sustainable price over the cost of production.

“If processors would just pay us what we are worth, we would just get on with the job.”

Alpine Valleys Dairy president Ebony Mull said generally speaking, everyone was very disappointed with Fonterra’s early opening milk price of $8.60/kg MS setting the benchmark so low.

“So many farmers are suffering through drought and now floods, and processors continue to make big profits,” she said.

“It seems as if they don’t really care if they lose a whole heap of farmers.”

Farming at Gundowring, Ms Mull said her region had been hit hard by dry conditions.

“Normally we don’t have to buy in a lot of fodder, but we have had to this year,” she said.

“We have dropped our numbers from 250 to 200 to help protect our feed supply.”

She also wonders what the low price will mean for the future of the industry.

“I know around here, over the last five years, we have had a lot of young people return to the region and some of them are really struggling — a price below the cost of production will not help keep young people in the industry.

“There is still a lot of disconnect between processors and suppliers.”

In a statement, Dairy Farmers Victoria expressed concern around any milk price below $9.

President Mark Billings said the 2025-26 season was not a normal year.

“Climate challenges we are seeing right across Victoria, coupled with extraordinary cost increases on-farm, meaning farmers are carrying unprecedented levels of financial and emotional strain,” Mr Billings said.

“Milk processors have repeatedly said they value their suppliers, this is the year where those words need to be backed by action.

“The welfare of farmers, their families and their communities is at stake. A strong milk price is not a luxury, it’s a necessity.”