Dairy Australia workshops help producers understand farmgate milk prices

Dairy Australia Industry Insights and Analysis manager John Droppert said it's planned to extend the series to other states, over the course of the coming season.

"Although most farmers and service providers have a working understanding of the annual farmgate price cycle, these workshops were an opportunity to dig deeper and unpack the core factors at work behind the scenes," Mr Droppert said.

"It might seem quite academic, but a solid foundation for this is the history of dairy industry regulation going back over 100 years.

"This century of government intervention in various forms played a huge role in how and where the Australian dairy industry developed, setting up many of the opportunities and challenges we continue to face today."

Workshops have been held in Echuca, Warragul, Leongatha, Colac, Simpson, and Warrnambool.

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Mr Droppert said against a backdrop of long-term evolution in government policy, shorter-term cycles in dairy commodity prices were the core driver behind milk value in any given season.

"With global dairy demand growing each year, fluctuations in milk production create alternating periods of relative over- and under-supply," he said.

"Australia's interconnectedness with global trade means that regardless of what happens locally, those international pressures are relevant, but they're not the full story.

"Farmgate milk prices are also influenced by the ability of processors to extract additional value from the Australian domestic market, and by competitive pressure to secure milk in any given season."

Mr Droppert said DA speakers had explained the Milk Value Portal, created by the peak representative body for Australian dairy processors, the Australian Dairy Products Federation (ADPF).

A key part of the portal was the Farmgate Milk Value Tool, which quoted weighted average milk prices paid by region, based on a range of selectable farm parameters.

The data behind the tool is sourced directly from thirteen milk processors representing over 85 per cent of Australian milk intake.

Mr Droppert said DA staff also "got down in the weeds" to explore the thought process behind choosing the right milk payment structure, for any given farm.

"Some of the key factors discussed included the match between milk flows and seasonal pricing curves, cash flow needs, milk components, and the interaction of incentives with production risks on farm," Mr Droppert said.