Farmgate opening milk prices are up by more than 12 per cent

Freshagenda director Steve Spencer estimated when contracts for this season were locked in last Friday, opening prices averaged between $9.35-9.40 a kilogram Milk Solids.

"The big buyers - Fonterra, Bega and Saputo - all fell in around $9.20-9.25/kg MS, so the average is pulled lower by that," Mr Spencer said.

READ MORE: Dairy Code of Conduct brings new paradigm for the industry, says UDV head

Rural Bank analysts estimated the opening price was 11.8 per cent higher than where it closed in 2022/23.

Katunga dairy farmer Bridget Goulding said as long as it wasn't too wet, this season would be a "doddle."

She said it was really good opening price, considering the international position.

"I know we have to factor in the domestic side of things, but we also have to be aware of what is happening in the GDT," she said.

Ms Goulding said she was currently milking a 140-head herd, supplying Australian Consolidated Milk, where she was very happy.

"I like their business acumen, you are not a supplier number there, they know who you are and what your family is about," she said.

Farmers were concerned about power prices, and fuel had come back but "it's certainly not great.

"With this opening price, and not a winter, spring and even a summer like last season, it will be a doddle," she said.

Farmers who were flood affected last year would be watching the skies, she said.

"An awful lot of farmers struggled with cell count issues, last season, and there have been so many detectives on this trying to work out what it is, she said.

"As long as we don't have any of that, it will be a fantastic season - because that actually stole away an awful lot of production and money, last year.

'We do need some sunshiney days."

A small herd meant she didn't have labour issues, she said.

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Bruce Glasgow, Derryvale Dairy, Bena will calve 300 females this year.

He said he hadn't had a price drop, after switching from Bega to Australian Dairy Farmers Corporation.

'It's good to be part of a co-operative again, it was a hard call to make, because we had a really good relationship with our field officer, but at the end of the day I am running a business too," he said.

"ADFC is the closest thing you can get to the old Murray-Goulburn, when it was a true co-operative."

Mr Glasgow said having co-operatives was "a bit like the former political party the Australian Democrats and their slogan Keep the bastards honest."

"I have nothing against Bega, but they are a publicly listed company and have shareholders to look after, as well as farmers."

He said last year higher prices meant he could spend money on improvements, to make life easier.

"We'll probably do the same this year, it's good to be able to improve your efficiency and possibly get a better work-life balance,."

Lachie Sutherland and wife Rebeca milk a herd of 380, at Larpent, south-west Victoria.

The season was looking positive, with fertiliser prices a lot better than what they were.

"Considering where the world price is, its obviously driven by local demand and lack of local milk," Mr Sutherland said.

The Global Dairy Trade Index has fallen 40 per cent since a peak in March 2022 to now sit around 8pc below average.

"My feeling is the companies have brought step ups forward, to compete to get the milk and they are going to be under a lot of pressure in their processing facilities, to keep things sharp," he said.

"That's the concern, we don't want to lose competition."

He said the area didn't want too much more rain.

"You get down Timboon, Cobden, Camperdown, and it's quite wet," he said.

"A lot depends on what the grain prices, feed prices, do too."

Mr Billing, Colac, says he's looking to milk 400 head this year, supplying Australian Consolidated Milk.

He said it was positive the latest Dairy Australia figures had shown a slight slowing of the decline in the milk production pool.

"It is a positive sign and it's partly due to obviously having a pretty good milk price and farmers managing the costs around that," he said.

Mr Billing agreed "at this point" there would be fewer step ups, this season.

The introduction of the Dairy Code in January, 2020, brought a paradigm shift to the industry.

The mandatory code states all raw milk must be bought under a supply agreement, that complies with it.

"What we are seeing the processors a sharing the risk a bit more evenly, instead of putting it at farmgate with a lower opening price then stepping up," he said.

"Having the money up front helps with cash flow, particularly in the first half of the financial year.

"That's partly due to the Code - potentially this year was going to be the first year that we had the code in place, where the milk price was going to down."

He said he could remember a time when farmers were several weeks into the new milk season but still didn't know what their price was.

"The code has brought that all forward and gives us more certainty at year's start."