Major milk processor Fonterra Australia has upped its minimum farm gate milk price to $6.40 per kilogram of milk solids, matching the price offered by competitor Saputo Dairy Australia earlier this week.
Under the new mandatory Dairy Code all milk processors released their milk prices for the 2020/2021 season on June 1, which was a move welcomed by dairy farmers across the country.
On Monday Fonterra said it would pay farmers an average $6.06 per kilogram of milk solids, while competitor Saputo announced an average of $6.40.
North and North West dairy farmer Grant Archer, who operates a dairy farm at Bracknell and another at Circular Head, said he was pleased with the prices despite them appearing lower than the previous year.
Mr Archer said his Bracknell farm is supplying to processor Lion this year, which offered a price of around $6.40 per kilogram of milk solids.
"We are pretty pleased with that. Rabobank had predicted a price of $5.70 so we were thinking that the price might have been in perhaps the high fives. When it came out at $6.40 it was much higher and were pleasantly surprised," Mr Archer said.
"It is a price that we can certainly still make money out of ... we have been on a bit of a growth path recently, and have been doing quite a bit of investment on farm. That price means we can continue to do that, there is going to be some extra money so we can continue to invest and grow the business, and develop the farm."
He said the farm at Circular Head, which supplies milk to Mondelez for Cadbury's had been offered an opening price of $5.90 plus a 10 cent loyalty, but expected that this price offer would increase by the week's end.
"They were the first company to come out with a price in Tasmania. We got an email from them yesterday saying that under their agreement they had an ability to review and would be reviewing their price," he said.
"The price setters are Fonterra and Saputo. Smaller companies have more specialised markets and are probably getting greater returns on those prices and tend to follow those main companies, making sure they are also slightly better to secure preferential supply."
Mr Archer said the seasonal financial certainty provided by the new code was excellent for farmers.
He said the fact that all the prices were released at the same gave farmers enough time to make an informed decision about which company they would be supplying next year.
