Two major dairy companies have announced step-ups in the farmgate milk price for 2018-19 and two others are considering their options.


Bega Cheese announced last week it would pay suppliers an extra 14c a kg milk solids backdated to July 1 last year, taking its milk price for the season to $5.99 a kg of milk solids exclusive of the company’s support package announced last March.

Dairy farmers who took up the Bega support package were guaranteed an extra 50 cents a kg MS but needed to contract for three years.

Bega Cheese chief executive officer Paul van Heerwaarden said suppliers would receive the step-up payment in their next milk cheque.

The announcement was soon followed by Saputo Dairy Australia, which said it would increase prices by 7c a kilogram of butterfat and 14c for protein.

Saputo said the payment would apply to Warrnambool Cheese and Butter and Saputo Dairy Australia suppliers from July 1 last year.

It said the step-ups would take the average farmgate milk price for dairy farmers in its southern milk region to $6.05 a kg MS, a rise of 10c.

The additional payment would be made this month.

Fonterra said it was still considering a step-up.

“We’re currently working through our bi-monthly price review, and we’ll advise our farmers once it’s finalised,” a spokeswoman said.

Fonterra last made a step-up in October, adding 13c a kg MS to take its average farmgate milk price to $5.98 a kg MS.

Burra Foods said it was reviewing whether it would make a step-up payment.

Managing director Grant Crothers expected to confirm this month whether a payment would be made but indicated it was likely.

“The stars are aligned,” Mr Crothers said.

He said Burra Foods was sitting at a median farmgate milk price of $5.85-$5.90 a kg MS.

Mr van Heerwaarden would not be drawn on whether more payments were likely before the end of the year.

“It’s a very challenging year at the farm gate, obviously, but it is very volatile in the markets — both currency markets and commodity markets,” he said.

“We just continue to monitor the state of the market.

“If we see changes there, we look to reflect them.”

Mr van Heerwaarden said it was extraordinarily tough on dairy farms, particularly in northern Victoria where farmers were paying a significant increase in the cost of irrigation water.

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