Dairy farmers are now enjoying the highest on-record average farmgate milk prices as another processor announces a step up.
Bulla opened on May 17 and is now paying between $9-$9.80/kgMS.
Australian Dairy Products Federation chair John Williams said the competitive prices, coupled with inflationary pressures on households, was resulting in "challenging times" for members.
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 was now standing at $9.15/kgMS.
"At the same time last year, the expected weighted average milk price in southern regions was just under $9.00/kgMS," the report said.
This was despite the fact dairy commodity prices were nearly 30 per cent lower this year, than a year ago, while consumer spending was slowing.
As a result of inflationary pressures on household incomes, shoppers were "trading down."
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As of June 1, the Oceania commodity milk value - a forward milk price indicator - 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/kgMS on June 1, 2022.
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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.
The portal provides four years' worth of current and historical data on the value of raw milk across Australia and new market insights into where opening farmgate milk prices are landing.
Mr Williams said the insights confirmed that Australia's dairy processors would continue to pay extremely competitive prices for milk throughput in the 2023-24 season.
"These are very challenging times for Australian dairy processors," he said.
"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.
"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 processers were currently paying 20pc higher farmgate milk prices compared to New Zealand factories.
"This clearly places Australia at a competitive disadvantage - not only in export markets - 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."
The realities of the global market and the growing price disparity, between Australian and New Zealand farmgate prices were expected to continue, he said.
New Zealand's new 2023-24 season farmgate prices were $7.25-$8.75/kgMS, compared with Australia's average of $9.15/kgMS or 23pc higher.
Mr Williams said processors were demonstrating their commitment to creating a thriving and trusted industry, that would deliver a level of confidence to farm businesses.
That, in turn, would lead to reinvestment in the whole of supply chain profitable milk growth and would hopefully turn around recent trends.
"Unfortunately, the dairy industry is experiencing year-on-year declines in raw milk production volumes which are forecast to fall below 8 billion litres (or 6pc by the end of the 2022-23 season - the first time in more than 30 years," Mr Williams said.
Further falls were expected during the upcoming season.
"Australian dairy processors are carefully managing a tough domestic trading environment, leaving dairy processors with less margin than ever before," he said.
"It is expected that some processors will need to continue to rationalise their operations.
"The flow through of this are that jobs, regional local economies and farmers, who may no longer benefit from these assets in their region, will be negatively impacted.
"These are already realities we have witnessed in the past six months."
Bulla Dairy and Procurement general manager Rohan Davies said the family dairy was steadily growing.
"Bulla is pleased to be attracting new suppliers this year and we want our price to be a clear benefit for farmers that are evaluating the current market," he said.
On June 6, Fonterra increased its weighted average by 35 cents/kgMS, taking it to $9.00/kgMS for the 2023/24 season.
