Fonterra has stepped up its average farmgate milk price to $7.30 a kilogram milk solids.
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LIMITING UPSIDE: Fonterra Australia managing director René Dedoncker says the decline in milk production in Victoria and Tasmania is limiting the upside from export markets.

The 20 cents/kg MS price rise comes on the back of surging world dairy commodity prices.

It follows on from Gippsland milk processor Burra Foods, which announced a 10c/kg MS step up in January, and Bega Cheese, which in December announced a 15c/kg MS step up from January 1, but which applied only for milk supplied from January to June 30.

Fonterra’s step up is backdated to July 1, 2021.

The 20c/kg MS rise comprises 17c/kg of butterfat and 24c/kg of protein.

Fonterra Australia managing director René Dedoncker said continued strong dairy prices coupled with the good performance of Fonterra Australia’s business were behind the rise.

“We know that the dry summer in many regions and higher input costs on farm are impacting profitability, so we hope that passing on this increase now will help offset some of these costs,” he said.

“Although we are seeing historically high commodity prices and a weaker Australian dollar, the decline in milk production in Victoria and Tasmania is limiting the upside from export markets.

“We also continue to see the impacts of the global supply chain disruption on our business with no immediate end in sight, and more recently the domestic supply chain has been severely impacted by COVID.”

In New Zealand, Fonterra has lifted its forecast New Zealand farmgate milk price range to record levels on the back of strengthening global prices.

Global economic uncertainty apparently isn’t diminishing foreign demand for U.S. cheese, according to a monthly market update from the U.S. Dairy Export Council (USDEC). Multiple factors, especially adequate cheese supplies at competitive prices, put the U.S. in a position to continue export growth in the near term and increase its presence in the international market.

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