Fonterra has announced an opening milk price of $8 a kilogram milk solids for 2024/25 - a drop of 13 per cent on last season's 9.20/kg MS price. It is the first of the major processors to announce its new season price.
In a letter to suppliers, Fonterra Australia managing director René Dedoncker said the price fall reflected the shift in market conditions. "In recent years, our industry has seen higher commodity prices, stronger consumer demand and a shortage of milk to meet this demand," he said. "However, heading into FY25, the global market for cheese, which is a strong contributor to our prices, has declined since the start of FY23.
"Cost of living pressures have led to softer domestic consumer demand and higher volumes of lower cost dairy imports. "This, together with increased milk production in all dairy regions, has contributed to excess cheese inventory in the Australian market driving pricing down further." Mr Dedoncker also moved to reassure farmers that would have no impact on the business.
"We are well placed to manage through the dynamic market conditions and remain a secure home for your milk," he said. "We have a strong business with choice in which markets and channels we serve, as well as the products we make. "If a divestment was to go ahead, we intend to include all existing milk supply contracts in place at the time of sale.
"These contracts are vital to our business, and any purchaser of the business would be obliged to comply with the terms of agreeme.
