Opening milk prices deemed unsustainable for South Australia's dairy farmers

Australian farmgate milk prices opened 10-16 per cent down on last year.

Most processors in southern regions have opened at about $8 a kilogram milk solids

"Dairy farmers need more than $8/kg MS," Mr Brokenshire said.

"It's disappointing that some of the companies have chosen to open at such a low unsustainable milk price.

"There's a big variance between $8.10/kg MS and $9, and $8 to $8.50 is unsustainable for our dairy farmers."

He said dairy farmers have had it tough enough for most of the past 20 years.

"We're just starting to recover and whilst export processes are finding it tough and imports are being arguably dumped into Australia, we still need a sustainable profitable milk price," he said.

"We're calling on processes to reassess their opening prices over the next couple of weeks realising that they don't have a business either if milk production is not available to them."

Fleurieu Milk Company told Stock Journal it did not require any additional supply and long-term contracts remained in place with their suppliers.

"There is a small step up on the farmgate price paid in 2023-24 but this was all documented in the previous contract," general manager Nick Hutchinson said.

"The 2024-25 average price is based on $10.64/kg however we pay in cents per litre instead of kg/solids."

Rabobank says Australia's dairy farmers are "in reach" of a fifth consecutive year of overall profitability despite lower minimum farmgate milk prices forecasted for the season ahead.

In its recently-released Australian Dairy Seasonal Outlook 2024, Walking a Tightrope, Rabobank expected minimum farmgate milk prices across the southern Australian manufacturing pool to range between $8 and $8.20/kgMS for the season ahead, down approximately 11 per cent from the current pricing.

RaboResearch senior dairy analyst Michael Harvey said in a market short of milk - and with an ambition to build momentum around the current milk supply recovery in Australia - dairy companies needed to present sustainable milk price signals to suppliers in order to remain competitive.

"(But), Australia's milk supply recovery is ahead of schedule - with some excess volumes being channelled toward bulk ingredients and commodities, which are underperforming in local and export markets - meaning parts of the product mix are loss-making," he said.

"Meanwhile, the domestic market is delivering better returns for dairy following a period of hyperinflation across the grocery aisle, but consumers choosing to trade down as a result of cost-of-living pressures is negatively impacting the domestic retail channels.

"Global market uncertainties warrant a more conservative approach to minimum pricing."