Fonterra Provides Second Farmgate Step Up for 2024-25 Season

Fonterra, the leading dairy processor, has announced an increase in farmgate milk prices for the autumn season. The New Zealand-based dairy giant has raised its milk price by 20c/kg of milk solids, placing its weighted average milk price at $8.35/kg. This move follows a previous 15c/kg increase in December aimed at bolstering competitiveness during the busy holiday season.

According to Matt Watt from Fonterra, the adjustment consists of a rise of 17c/kg for butterfat and 24c/kg for protein. The company has pledged to pass on market-earned prices to farmers consistently, amid a global dairy market showing signs of improvement. However, uncertainties in international trade and a fluctuating Australian dollar pose potential challenges.

While Fonterra’s proactive approach is commendable, rival processors like Saputo and Bega have followed suit, but smaller processors remain reticent. Criticism has arisen from farmer groups regarding the sluggish adjustment by these smaller entities. Mark Billing, President of Dairy Farmers Victoria, highlights the necessity for price adjustments, citing increasing production costs and severe drought conditions affecting Victoria’s dairy regions.

Despite some processors like Lactalis providing price step-ups, others like Australian Consolidated Milk have yet to adjust farmgate prices, maintaining a range of $7.80-8.20 per kilo, which fails to reflect significant market and currency changes since June.