“No fat in the system”: West Vic dairy farmers brace for tight year as processors hold opening milk prices steady

Industry leaders say there’s “no fat” in the current dairy sector thanks to volatile market conditions, after processors announced their 2026/27 opening farmgate milk prices this week.

What’s going on: Milk processors are required under the mandatory Dairy Code of Conduct to release their opening prices a month before the new financial year begins.

Farmers who supply these processors are paid based on the level of fat and protein in their milk, referred to as milk solids, or MS.

The numbers: The prices announced from the country’s major processors are: 

• Bulla: $9.15–$9.95/kg MS

• Saputo: $8.80–$8.90/kg MS

• Frestine: $9.39/kg MS

• UDC: $9.20/kg MS

• Goulburn Valley Creamery: $9.80/kg MS

• Lactalis: $9.30/kg MS

• Dairy Australia: $8.80–$8.90/kg MS

• Bega: $9.04/kg MS

• Burra Foods: $8.90–$9.40/kg MS

• Dairy Farmers Corporation: $9.20–$9.80/kg MS

• KYValley Dairy: $8.45–$9.29/kg MS

• Australian Consolidated Milk: $9.10/kg MS

Year-on-year: Compared with 2025/26, most processors have either held prices steady or lifted opening offers, with several mid-tier suppliers now sitting above the $9/kg MS mark compared with a wider band of high $8s to low $9s last season. 

• Opening prices are generally higher again from 2024/25, continuing a gradual upward shift from ranges that were more commonly anchored in the low-to-mid $8/kg MS range two years ago.

Conservative numbers: Australian Dairy Farmers president Ben Bennett, who farms at Pomborneit near Colac, said in a statement the figures reflect a dairy sector still under pressure from global and domestic conditions.

• “Processors are hurting too,” he said. “We’re operating in a tight global environment and everyone in the supply chain needs to get a return. There’s no fat in the system at the moment.”

Murky waters: Bennett said the international market and exchange rate movements were continuing to underpin pricing, while geopolitical uncertainty, including conflict in the Middle East, was feeding into high costs for resources such as fuel, fertiliser and freight.

• He said seasonal outlooks were also weighing on sentiment, with forecasts suggesting a potential strong El Niño could emerge this year, adding further uncertainty for producers planning ahead.

• “There’s a lot of uncertainty, and not a lot of comfort in the outlook right now,” he said.

What’s next? Farmers will now move into a short negotiation period with processors before finalising contracts for the year ahead.