Thursday, 05 June 2025 15:28

Aussie farmers get A$8.60/kgMS as opening milk price

Written by  Sudesh Kissun
In a letter to Australian suppliers, Fonterra Oceania managing director David Breckenridge notes that their opening price is higher than the current season. In a letter to Australian suppliers, Fonterra Oceania managing director David Breckenridge notes that their opening price is higher than the current season.

Australian dairy farmers supplying Fonterra are getting an opening weighted average milk price of A$8.60/kgMS for the new season or around NZ$9.26/kgMS -  NZ74c less than New Zealand suppliers, based on the current exchange rate.

The price is made up of the minimum monthly rates set out in milk supply agreements and based on a mix of fat and protein and assumes standard production and quality incentives.

In New Zealand, Fonterra shareholders will receive an opening forecast milk price of $10/kgMS this season. However, Fonterra has announced a wide range forecast of $8 to $11/kgMS for the season.

In a letter to Australian suppliers, Fonterra Oceania managing director David Breckenridge notes that their opening price is higher than the current season, reflecting improved global market conditions, although dampened by a continued soft domestic outlook.

However, he adds that geopolitical tensions and potential trade disruptions, along with currency volatility continue to create uncertainty for the longer-term outlook.

“However, there are favourable signals for the season ahead that are building optimism for F26, including the increase in global dairy prices over the last 12 months,” he says.

“Global demand has shown signs of growth, with constrained global supply driving an uptick in global prices throughout the year. Australian dairy exports have strengthened on the previous year in value and volume. These improvements have been supported by a return to balance between local and global dairy prices and a favourable, yet volatile Australian dollar.”

But the domestic Australian market, where Fonterra directs majority of the milk, remains challenging. Inflationary pressures have yet to fully ease, and segments of Australian consumers continue to chase value through lower-cost dairy products. Foodservice channels, both locally and globally, are facing a multi-year recovery as even lower-cost restaurants are challenged as households eat out less.

“While there’s room for local demand to lift, we remain confident in the strength of our business and ability to be competitive on price as we navigate these conditions throughout the season. This is underpinned by the diversity of multiple dairy product types, sales channels, and markets that we sell into.”

Breckenridge says Fonterra Oceania is committed to paying a competitive milk price throughout the season.

He also spoke about the divestment of Fonterra’s Oceania and consumer businesses- Fonterra is looking at a trade sale or a partial float of the assets.

Breckenridge told suppliers that their milk contracts remain one of Fonterra’s most valuable assets.

“And we assure you they will carry through as part of any trade sale or Initial Public Offering (IPO).”

More like this

Suitors line up

OPINION: As Fonterra's divestment of its Oceania and global consumer businesses progresses, clear contenders are emerging.

Fonterra R&D: Innovation needs more than just PhDs

Common sense and good human judgement are still a key requirement for the super highly qualified staff working at one of New Zealand's largest and most important research facilities - Fonterra's R&D Centre at Palmerston North.

Misguided campaign

OPINION: Last week, Greenpeace lit up Fonterra's Auckland headquarters with 'messages from the common people' - that the sector is polluting the environment.

Featured

Farmstrong marks 10 years of rural support

Nationwide rural wellbeing programme, Farmstrong recently celebrated its tenth birthday at Fieldays with an event attended by ambassador Sam Whitelock, Farmers Mutual Group (FMG), Farmstrong partners, and government Ministers.

National

Machinery & Products

Farming smarter with technology

The National Fieldays is an annual fixture in the farming calendar: it draws in thousands of farmers, contractors, and industry…

» Latest Print Issues Online

Milking It

110,000 visitors!

OPINION: It's official, Fieldays 2025 clocked 110,000 visitors over the four days.

Sticky situation

OPINION: The Federated Farmers rural advocacy hub at Fieldays has been touted as a great success.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter