Shrinking milk pool makes processors fight for supply

Later on Friday, Bulla updated to a record $9.30 to $9.50/kg MS offering and on Saturday, Saputo revised its price to $8.80/kg MS for non-exclusive supply.

UDV president Paul Mumford said he had never seen opening milk prices this high but the increases were “not over yet”.

“We’re seeing a tit-for-tat among processors who are jostling for milk supply,” Mr Mumford said.

“It really is showing that there is high competition in Australia’s depleting milk pool and, really, farmers need these high prices because of the increasing cost pressures.”

These cost pressures include a lack of labour, rising inflation and expensive electricity, fertiliser and fuel costs.

There is also the fact dairy farmers are leaving the industry.

“Right now other commodities are looking very favourable to farmers, such as livestock, and there is the appeal of retirement,” Mr Mumford said.

“Processors are up against an ageing industry and farmers are exhausted.”

Mr Mumford said the biggest “bug-bear” going forward would be the retailers.

“The Australia dairy industry has never recovered from the dollar-a-litre milk. They used us as a price-loss lead to get consumers through the door and undersold our product,” he said.

“They have a responsibility to teach the consumers why the price is going up, and to raise it.”