Milk prices

Since deregulation in 2000 there is no State intervention in the setting of milk prices.  Continuous improvement in product mix, markets and growth opportunities have resulted in significant increases in farmgate price over the last 3 years with parity to prices paid elsewhere in Australia achieved in 2006/7.  Ongoing developement of high value, sustainable markets and significantly less exposure to the commodity sector will protect against commodity price cycles going forward.   Processors pay what is required in order to meet their on-going supply requirements in terms of volume and preferred product mix.

Post deregulation, milk prices were inadequate to provide for year-round production or its associated costs and many producers changed calving pattern in order to increase profitability by producing more milk from rainfed pastures. This has resulted in a decline in milk production in the period January to June (see Figure below).

A shortage of milk overall saw the introduction of growth incentives for increased production in 2006/07.

Prices paid by processors vary and price comparisons should be calculated on an individual farm basis due to variation in the prices paid for fat and protein; methods of expressing milk components (mass/mass versus mass/volume); milk quality payments and penalties; growth incentives and deductions for either volume and/or stop charges and in the case of Challenge Dairy Co-Operative, purchase of delivery right units.

Quotas relating to milk volumes, cow numbers or other limits on land use do not apply.