Dairy industry faces headwinds as milk prices announced

DAIRY farmers around the state say they are disappointed at opening farm gate prices announced by major companies this week.

However, there are hopes the situation will improve as the season progresses.

Saputo announced to its suppliers a weighted average milk price of $8.80 to $8.95 per kilogram of milk solids (kgMS).

Fonterra’s opening price for the 2025-26 financial year is $8.60kgMS, while Bulla’s ranges from $8.40kgMS to $9.20kgMS.

Dairy producer Paul Lambert, who operates dairy farms at Smithton and Merseylea and supplies milk to Saputo and Cadbury, said he thought the price would be higher.

“I was hoping it would be closer to $9kgMS or better,” Mr Lambert said.

“This year has been very tough.

“It’s been very dry, and I’ve had another year of high costs. Inflation bites pretty hard.”

Mr Lambert said he was hoping the next 12 months would be more positive for the dairy industry.

“It’d be nice to have an alignment of weather, milk prices and interest rates for a good season next year.”

Mercede Kay, who operates a dairy farm at Togari and is a supplier for Saputo, also thought the opening milk prices would be higher.

“I thought there was going to be a nine in front of it with the talk around the district and beyond,” Ms Kay said.

“But I’m happy to take a little bit of a lower price, compared to what it should be, if it can be sustained over a longer period of time and not see those fluctuations like we have seen in the past decade.”

Ms Kay said she was dissatisfied with the state of the dairy industry.

“What’s hard to get my head around is that I have heard in NSW some people are getting $12kgMS for fresh milk from Coles.

“Why is there a $3kgMS to $4kgMS difference in what we’re getting to what they’re getting?

“Tasmania is disadvantaged in some ways.”

The reliance on freight for things like grain was contributing to the disadvantage.

Saputo’s Director of Milk Supply and Planning, Kate Ryan, said while its opening milk price reflected the stabilisation of global commodity prices, that was offset by continuing cost-of-living pressures.

“While we are optimistic there are long-term opportunities ahead, we are mindful of prevailing headwinds,” Ms Ryan said.

“As the 2025/26 milk year is only just beginning, we will review our farmgate milk prices during the season and pass on step-ups where it is supported.

Fonterra Oceania Managing Director David Breckenridge acknowledged the domestic dairy market remained challenging.

“Our opening price is higher than the current season, reflecting improved global market conditions, although dampened by a continued soft domestic outlook,” Mr Breckenridge said.

“Geopolitical tensions and potential trade disruptions, along with currency volatility, continue to create uncertainty for the longer-term outlook.

“Global demand has shown signs of growth, with constrained global supply driving an uptick in global prices throughout the year.

“Australian dairy exports have strengthened on the previous year in value and volume. These improvements have been supported by a return to balance between local and global dairy prices and a favourable, yet volatile Australian dollar.”