'Do better' on opening milk prices: dairy farmers say to processors

Bega and Burra were the latest processors to open, following the Saputo Dairy Australia (SDA) announcement on May 31 of an opening milk price of $8-$8.15/kg MS - a 12-14pc drop on last year's price.

Fonterra was the first processor to announce an opening price - with $8/kg MS - on May 30.

Australian Dairy Farmers president Ben Bennett said lower milk prices came as producers faced other price and income pressures.

"We are getting hit by the biggest storm, the pain is coming in no uncertain terms," Mr Bennett said.

The dairy heifer export market had been hit, as were dairy beef prices, he said.

He said there was now a "sovereign risk", when it came to heifer exports, due to the planned shut down of the live sheep export trade.

"The heifer export job waxes and wanes but now we have this compounding issue - the government has just bent to the whims of people who are completely removed from the industry (live exports), with no real basis or comprehension of it," he said.

"Once again, we are thrown under the bus."

Dry conditions across many dairy regions were also having a major impact.

"We are seeing good production, at the moment, however, it is a mirage," he said.

The processors had tried to talk down milk prices, using exports as their benchmark, Mr Bennett said.

"That's a little bit of a porky, just a little porky, and this is the reason we have things like the Dairy Code, to stop such naughty behaviour," Mr Bennett said.

Beef cattle prices were down significantly but farmers had committed to producing dairy-beef 15-18 months ago.

"The price is clearly not enough, particularly with this present, elongated dry period - we really had a short spring and for every five millimetres of rain we've had, the wind has dried out 6mm of moisture," he said.

Craig Emmett, Stanhope, Vic, is currently drying off his 260 head herd but was expecting to increase numbers to 300 eventually.

He supplies ACM.

"I am not going to stop dairying if I get $8/kg MS," he said.

"I have really enjoyed the last two seasons of high 'nines' ($9/kg MS) - it's just meant I have been able to invest on farm in capital and do some improvements to make life more bearable, as opposed to just doing the bare minimum," he said.

"It certainly makes farming a lot more enjoyable, when there is a bit more money around.

The area around Stanhope had fared well over autumn.

"It's been spot on, it's unusual for us to be good, while the south-west has been dry," he said.

'We got 30mm a few weeks ago and another 25mm on Thursday, so we were 55mm for the month - and obviously we irrigate too, so its just been perfect, to be honest."

United Dairyfarmers of Victoria president Bernie Free, Winslow, Vic, said he assumed the processors had not come out with the "best price" at the start.

"We need to wait and see what further offers they are prepared to give," Mr Free said.

"An $8/kg MS figure is probably encouraging people to think about what other pursuits might be more profitable.

"The factories are saying they want milk, but are not prepared to pay for it."

He said the current price would not offset rising input costs.

"Inflation is still continuing and rural inflation is higher, so it's a reduction in real terms, through the increase in input costs," Mr Free said.

"At the end of the day market forces are telling you that $8.50/kg MS is way too low."

Dairy Farmers Victoria president Mark Billing, Colac, Vic, said processors "certainly did" need to do better when it came to prices.

"If prices stay down there, it will have an impact on the milk pool, there is no two ways about that," Mr Billing said.

"It's got to be mid-eights, at an absolute minimum, it needs to be up the high end of $8, as a price adjustment, not as low as they (processors) are taking it."

Interest rates had started to bite, he said.

"The last Dairy Farm Monitor project data showed most were profitable, but that was before interest rates started to move - the numbers that are going to be done at the end of this financial year, will show that profitability has come under pressure over the last 12 months," he said.

No autumn break in some areas, tightening feed availability, a low milk price and shortage of on farm cash "is going to have a significant impact on south-west Victoria," he said.

"The processors speak of their increased costs, that's reflected exactly the same way, on farm."