Farmgate Milk Price

A farmgate milk price is the price farmers receive from processors for the milk they produce. Australian farmgate milk prices are based on the milkfat and protein content of the milk produced on-farm, with different prices for each component.

Unlike many countries around the world, the Government has no legislative control over the price milk processing companies pay farmers for milk. Since deregulation in 2000–01, all prices within the industry are set by market forces.

Farmgate milk prices will vary between processors. Individual company returns are affected by various factors including market and product mix, marketing strategies, utilisation and efficiencies in factory processing capacity and exchange rate hedging policies. Competition for milk among processors will also influence farmgate milk prices from season to season.

Typical factory paid prices

		2015-16	2016-17	2017-18	2018-19	2019-20 (p)
NSW	cents/litre	51.0	49.0	50.5	54.7	62.0
NSW	$/kg milk solids	7.06	6.81	6.99	7.67	8.55
VIC	cents/litre	42.8	38.0	44.2	48.2	53.6
VIC	$/kg milk solids	5.68	5.04	5.87	6.40	7.01
QLD	cents/litre	58.5	60.0	57.7	61.0	68.0
QLD	$/kg milk solids	7.99	8.22	7.84	8.31	9.31
SA	cents/litre	42.5	37.1	42.9	47.2	53.6
SA	$/kg milk solids	6.03	5.19	6.06	6.62	7.40
WA	cents/litre	52.3	50.6	49.9	50.2	52.3
WA	$/kg milk solids	7.32	7.06	7.97	7.05	7.27
TAS	cents/litre	43.7	39.0	47.0	50.3	53.3
TAS	$/kg milk solids	5.61	4.97	6.01	6.37	6.70
AUST	cents/litre	44.9	40.9	46.0	49.7	54.7
AUST	$/kg milk solids	6.01	5.46	6.14	6.64	7.19

Source: Dairy Manufacturers

Global Dairy Trade Events

Global Dairy Trade (GDT) Events are dairy ingredient auctions held twice per month. GDT Events have been in operation since 2008, offering a range of dairy ingredients from suppliers around the world, to more than 500 registered bidders from around the world.

The average value of product traded on the platform is greater than the value of annual Australian dairy exports. While pricing on the dairy trading platform may not be the actual prices Australian dairy processors receive for their product, GDT Events are acknowledged as providing credible market-based reference prices for globally traded dairy ingredients.

GDT Events - average annual AUD equivalent pricing

Year	AUD/Tonne
FYE15	3,364
FYE16	3,194
FYE17	4,183
FYE18	4,333
FYE19	4,375
FYE20	4,768

Source: Global Dairy Trade

Collective bargaining

Collective bargaining can lead to better contract terms tailored to meet the needs of dairy farmers with shared objectives.

Dairy Australia's Collective Bargaining for Dairy Farmers is a guide which can help farmers thinking of forming a dairy farmer group to negotiate supply contracts better understand what is involved, the potential benefits and the risks.

Topics include:

Understanding what is involved with setting up a collective bargaining group
Understanding the benefits including:
- Greater price certainty
- Milk quality premiums
- Reduced costs through transport
Avoiding pitfalls, including:
- Unrealistic expectations
- Poor communication
- Poor governance

The guide also includes case studies, governance guidelines and resources and contacts.

There are legal considerations for collective bargaining in Australia and the Australian Competition and Consumer Commission (ACCC) assesses each application on a case by case basis.