Fonterra Raises Farmgate Prices: Will Rivals Follow Suit?
Source: DairyNews.today
Australia’s dairy sector is calling for action after Fonterra announced a step-up in farmgate prices. Industry leaders argue the move should prompt other processors to follow, ensuring better returns for primary producers as the new year approaches.
Fonterra Leads with $8.15/kg Step-Up
Fonterra became the first major Australian processor to lift its farmgate price this season, announcing a 15-cent increase per kilogram of milk solids (kgMS). This brings its weighted average milk price to $8.15/kgMS, following a sustained improvement in international dairy prices.
The decision comes on the back of three consecutive sessions of gains on the Global Dairy Trade (GDT) index, with the latest auction reporting a 1.2% increase, pushing the headline figure to $US4,193 ($A6,507) per tonne.
Pressure Mounts on Rival Processors
The announcement has put pressure on competitors such as Bega, Burra, KyValley, Lactalis, and Saputo, which have yet to indicate whether they will also raise prices.
United Dairyfarmers of Victoria (UDV) President Bernie Free described the move as “better late than never” and called on other processors to step up.
“This should set a precedent for the rest of the industry,” Free said. “Global dairy prices have been improving steadily—cheddar, butter, whole milk powder—and processors and supermarkets are making significant profits. Farmers, as the backbone of the supply chain, deserve a fairer share.”
International Trends and Local Factors Favor Price Lifts
Rabobank dairy analyst Michael Harvey noted that farmgate prices in key dairy-producing countries like France, Germany, Ireland, and New Zealand are nearing record highs. Australian farmers, he argued, should expect similar improvements given the current conditions.
“Australian dairy has several tailwinds right now,” Harvey said. “A weaker Australian dollar, currently around US64 cents, is bolstering export competitiveness. Earlier this season, there were concerns it might climb above US70 cents, which would have dampened export returns. But now, the currency trend is playing in favor of local producers.”
Sustainability of the Sector at Stake
The call for price increases goes beyond profitability. Free emphasized the urgency of supporting farmers to ensure the long-term viability of the industry.
“Stepping up is critical to keeping farmers in dairy,” he said. “Without meaningful price adjustments, many farmers may be forced to reconsider their future in the sector.”
Uncertainty Ahead
While Fonterra’s decision has been welcomed as a positive step, the silence from other processors has left many farmers waiting anxiously. With global dairy markets on an upward trajectory, the question remains whether Australia’s other major processors will rise to the challenge.
For now, the industry is watching closely to see if Fonterra’s move sparks a broader shift. As Free put it, “Processors have no excuse. It’s time to act.”
Fonterra became the first major Australian processor to lift its farmgate price this season, announcing a 15-cent increase per kilogram of milk solids (kgMS). This brings its weighted average milk price to $8.15/kgMS, following a sustained improvement in international dairy prices.
The decision comes on the back of three consecutive sessions of gains on the Global Dairy Trade (GDT) index, with the latest auction reporting a 1.2% increase, pushing the headline figure to $US4,193 ($A6,507) per tonne.
Pressure Mounts on Rival Processors
The announcement has put pressure on competitors such as Bega, Burra, KyValley, Lactalis, and Saputo, which have yet to indicate whether they will also raise prices.
United Dairyfarmers of Victoria (UDV) President Bernie Free described the move as “better late than never” and called on other processors to step up.
“This should set a precedent for the rest of the industry,” Free said. “Global dairy prices have been improving steadily—cheddar, butter, whole milk powder—and processors and supermarkets are making significant profits. Farmers, as the backbone of the supply chain, deserve a fairer share.”
International Trends and Local Factors Favor Price Lifts
Rabobank dairy analyst Michael Harvey noted that farmgate prices in key dairy-producing countries like France, Germany, Ireland, and New Zealand are nearing record highs. Australian farmers, he argued, should expect similar improvements given the current conditions.
“Australian dairy has several tailwinds right now,” Harvey said. “A weaker Australian dollar, currently around US64 cents, is bolstering export competitiveness. Earlier this season, there were concerns it might climb above US70 cents, which would have dampened export returns. But now, the currency trend is playing in favor of local producers.”
Sustainability of the Sector at Stake
The call for price increases goes beyond profitability. Free emphasized the urgency of supporting farmers to ensure the long-term viability of the industry.
“Stepping up is critical to keeping farmers in dairy,” he said. “Without meaningful price adjustments, many farmers may be forced to reconsider their future in the sector.”
Uncertainty Ahead
While Fonterra’s decision has been welcomed as a positive step, the silence from other processors has left many farmers waiting anxiously. With global dairy markets on an upward trajectory, the question remains whether Australia’s other major processors will rise to the challenge.
For now, the industry is watching closely to see if Fonterra’s move sparks a broader shift. As Free put it, “Processors have no excuse. It’s time to act.”
