On Thursday, Bega Cheese lifted its farmgate milk price above the $7 mark for northern Victorian suppliers.
It's the latest in a flurry of announcements by the big processors, set in motion by the Dairy Code of Conduct's requirement that they publish their milk supply agreements and minimum prices for the approaching season.
Bega had announced a $7/kg milk solids price on June 1, but on June 10 lifted this to $7.09/kg for northern Victoria and the southern Riverina.
The price for south-eastern Australia goes to $6.94/kg.
In a letter to suppliers, Bega executive chairman Barry Irvin said the processor put its “best foot forward” when announcing opening prices, with these milk prices reflecting Bega’s market and the strength of Bega’s business.
“This has been again demonstrated this year with many companies adjusting their prices following Bega’s opening price announcement,” Mr Irvin said.
“While Bega is very pleased with the response we have received from our opening announcement and is comfortable with our supply position, it is very important to us not only to reflect the market for our products but also ensure our suppliers have a competitive milk price offering.”
Bega beverage operations executive general manager Mark McDonald said the revised 2021-22 opening milk prices addressed Bega's competitive position and allowed suppliers to plan for the season ahead and make the best decisions for their farming businesses, including taking advantage of growth and new milk incentives.
The announcement comes off the back of step-ups from Fonterra and Saputo earlier this month.
Both processors are currently offering $6.85/kg MS, with Coles posting a $7.19/kg opening price and ACM touching $7/kg.
A Rabobank quarterly report put the forecast full-year milk price at $6.90/kg MS for the 2021-22 season, up 40 cents from earlier predictions.
The Australian farmgate sector is poised for another season of “sustained profitability”, according to Rabobank senior dairy analyst Michael Harvey, who predicts dairy farmers will be in the box seat to register healthy profits, primarily due to higher farmgate milk prices.
Australian milk supply growth, which has expanded by 0.7 per cent in the season to March, is forecast to expand by 1.3 per cent in the 2021-22 season to 8.8 billion litres.
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