15 Apr 2015

Australian dairy farmers milking higher prices

7:55 am on 15 April 2015

New Zealand dairy farmers may be looking with some envy across the Tasman, where their Australian counterparts are getting much higher prices for their milk this season.

dairy cow

Photo: 123rf

While forecast milk payments to most New Zealand dairy farmers are now languishing well below $5 per kilo of milk solids, milk prices in Australia are topping $AU6.

Last month, Australia's largest dairy company Murray Goulburn reconfirmed its milk price forecast for the 2014-15 season at $AU6 per kilo of milk solids.

That's a healthy margin above the $4.70 forecast payout that New Zealand's biggest dairy processor, Fonterra, is currently offering its farmers.

Now, a listed Victorian-based dairy farming company, Australian Dairy Farms, is boasting it will be getting 30 percent more for its milk this season than its New Zealand counterparts, even though it is also supplying Fonterra.

It says it is expecting an average of $AU6.10 to $AU6.30 per kilo.

Read Australian Dairy Farms' announcement (PDF, 437KB)

That is also above the $AU5.80 to $AU6 milk payment that Fonterra is forecasting for its Australian suppliers.

Australian Dairy Farms, which listed last year with two dairy farms in Victoria, says the higher payout prediction reflects an expected "volume production bonus".

It says the relatively strong Australian milk price in part reflects that country's much larger domestic dairy market, which means prices are not as exposed to the currently depressed international dairy market, which is keeping New Zealand farmers' payments down.

It says strong competition for milk in Victoria is also underpinning the price.

If it is of any comfort to New Zealand farmers, though, Australian processor Murray Goulburn's best-ever payout of $AU6.81, achieved last season, is still a long way below Fonterra's record payout of $NZ8.40.

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