United Dairyfarmers of Victoria president Mark Billing, Colac, says getting income estimations would be "critically important" for producers this year, with a likely late rush of farmgate price announcements.
Processors, apart from Bulla Dairy Foods, Colac, have been slow to release opening prices for the upcoming season.
Under the Dairy Code of Conduct processors have to release opening prices by 2pm on June 1.
"It's critical to get estimations most years, but this year it's all going to happen at once [opening prices]," Mr Billing said.
"The Dairy Code has existed on a rising milk price - this is the first time we might - might - see a correction," he said.
The Dairy Code of Conduct regulates the conduct of farmers and milk processors in their dealings with one another. It came into into effect on 1 January 2020.
Mr Billing said it appeared "everyone (processors) is sitting on the fence.
"It seems to me the processors don't want to be the first one," Mr Billing said.
"Bulla has come out first again, but this time last year they were well and truly out and the show had started," Mr Billing said.
"For me, the processors are a little bit nervous about coming out too low and then losing milk."
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Bulla has announced price bands of between $8.80 - $9.60 a kilogram Milk Solids.
"With the current economic climate showing so much volatility and uncertainty, we believe we have opened with a strong and market relevant opening price for the season ahead," Bulla Foods Dairy and Procurement general manager Rohan Davies said.
Mr Davies said Bulla had always tried to make an announcement as early as it could, as part of its commitment to suppliers to give them pricing indications as early as possible, to support their business planning for the year ahead.
"This year was no different for us and, as always, our team has spent much time forecasting and planning for the upcoming milk season, including weighing up the volatility and uncertainty in the broader economy to support us in landing on a strong and market-relevant opening price to share with our farmers last week," he said.
"There is the risk of getting the price wrong, however, part of our extensive planning process includes understanding the benchmarks set by the market
"These have indicated that the price should be lower than where the Australian farmgate prices have been over the past year.
"If the market and our business performance supports higher prices we will, as we always have, make the necessary adjustments to our price."
He said the current economic environment and further complexities presented in the local dairy market had put pressure on the business.
"We are starting to see a shift by consumers into cheaper private label products in some categories and we are also seeing a growing influx of imported dairy within Australia," Mr Davies said.
"We need to closely monitor these risks and ensure that we have the right plans in place to adjust accordingly.
"Our aim is to continue to expand and evolve our business, and growth initiatives including new products in cream, yoghurt, cheese, and ice cream will help us to bolster our position and continue to assist us in maintaining and expanding both locally and overseas."
Bulla introduced a Peak to Trough ratio this season to provide additional payment rewards for those farmers who could support a more consistent supply year round.
"For example, Bulla's cream sales moving into Easter are always strong and additional milk supply through the season's low point in February, March and April greatly assists our operation," Mr Davies said.
"The new Peak to Trough ratio helps recognise supply that has a lower drop off in production in these months and provides an opportunity for suppliers to receive a higher milk price depending upon what their Peak to Trough ratio is."
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Mr Billing described comments by the Australian Dairy Products Federation as "quite interesting."
The ADPF said they its members were being squeezed by rapid growth in competition from imports, declining global prices, falling milk production and being locked into paying high farmgate prices.
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Mr Billing said cost pressures, on processors, were also being felt at farm level.
"We have seen retail prices (for dairy) increase, so that should have offset some of the processors concerns," he said.
Prices for dairy products had increased faster than for many other foods.
"Some would say that was a long time coming, those prices are still not where most dairy farmers would like to see them," he said.
At the farm gate, inflation was affecting all inputs "then you throw interest rates in there, as well.
"Dairy farmers in general have got reasonably high debt levels, so that is going to have impact on margins, as well," Mr Billing said.
An opening price of anything under $9 a kilogram/Milk Solids in Victoria was going to be "problematic" when it came to maintaining the milk pool.
"We still need to see $9.50kg/MS and above to correct milk pool shrinkage," he said.
It was disappointing the ADPF had "a bit of a swipe at the Dairy Code," he said.
"What it has done is given us a level playing field, across the supply chain - I was just a bit disappointed to see ADPF being critical of our opportunity to participate in the reviews of the code.
"It provides a level of comfort we didn't have back in 2016."
He said ADPF needed to be mindful it was one of its larger members (Murray-Goulburn), which sparked the existence of the Code.
Andrew Miller
I'm a general reporter with Stock & Land, with a special interest in irrigation issues. I completed my cadetship, with the Age, in 1980. Over my career, I've worked for ABC radio news (Mt Isa, Qld) and at provincial and suburban newspapers.
I'm a general reporter with Stock & Land, with a special interest in irrigation issues. I completed my cadetship, with the Age, in 1980. Over my career, I've worked for ABC radio news (Mt Isa, Qld) and at provincial and suburban newspapers.
