Dairy farmers are now enjoying the highest on-record average farmgate milk prices as another processor announces a step up.
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Bulla opened on May 17 and is now paying between $9-$9.80/kg MS.
Australian Dairy Products Federation chair John Williams said competitive prices, coupled with inflationary pressures were resulting in "challenging times".
The latest analysis by Freshagenda for the ADPF shows prices are now the highest on record in terms of the expected average milk prices to be paid in the main southern regions.
The weighted average now stands at $9.15/kg MS.
"At the same time last year, the expected weighted average milk price in southern regions was just under $9.00/kgMS," the report read.
This was despite the fact dairy commodity prices were nearly 30 per cent lower this year, compared to a year ago, while consumer spending was slowing.
As a result of inflationary pressures on household incomes, shoppers were "trading down", the report said.
As of June 1, the Oceania commodity milk value was $6.47/kgMS compared with $9.15/kgMS, or 29pc lower than the same time last year.
The Australian wholesale commodity milk value indicator was $8.28/kgMS, 17pc down from $9.99/kg MS on June 1, 2022.
The report found that reflected the disconnect between domestic wholesale prices and Oceania, due to the shortage in local production, major retailer pricing and sourcing practices for private-label cheese.
Mr Williams said "these are very challenging times" for Australian dairy processors.
"They are competing for milk supply in a shrinking national milk pool, and they are also competing with lower-cost products both on the export and on the domestic front," he said.
"On top of this, they are also contending with exorbitant overhead and input costs, inclusive of energy, labour, transport and raw milk."
He said Australian farmgate milk prices were 20pc higher compared to New Zealand.
"This clearly places Australia at a competitive disadvantage, not only in the export market, but it is also being reflected on our supermarket shelves, with New Zealand-made cheese and butter priced significantly cheaper than Australian-made products," he said.
"We know that imported products from New Zealand are up 22pc year-to-date [February 2023] and imports from the US are up 46pc."
Mr Williams said the growing price disparity between Australian and New Zealand farmgate prices was expected to continue.
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