Dairy co-operative Norco has announced a five-cent increase in its farmgate milk price due to surging war-related costs for fuel, fertiliser, and freight. This adjustment raises the average price farmers receive for milk to 97 cents per litre. Current retail prices for Norco’s full cream milk range from $2.20 to $2.90 per litre in supermarkets.
Norco’s Chief Executive, Michael Hampson, highlighted that these price hikes are driven by unprecedented increases in operational costs faced by farmers, with diesel prices doubling, fertiliser costs tripling, and freight charges rising by 40%. He emphasised the need for meaningful support throughout the supply chain, as the increase in the farmgate price is a crucial measure to help farmers cope with these challenges.
Hampson clarified that this price adjustment is not aimed at increasing farmers’ profit margins but is essential for their viability and job security. He stated, “Farmers critically need these increases to remain viable and protect their livelihoods.” The focus is on maintaining the sustainability of farmers and the overall Australian dairy industry instead of merely enhancing profit margins.
The broader dairy sector is also urging major supermarkets, such as Coles and Woolworths, to increase the prices of their generic own-brand milk. This request is part of an effort to help farmers manage their operational costs better. Tim Bale, the president of eastAUSmilk, indicated earlier in the month that prices for urea, a nitrogen fertiliser, have skyrocketed, more than doubling recently. He warned that without immediate intervention, some farmers may reduce production or leave the industry altogether in the coming months.
As cost pressures persist, Hampson indicated that further price increases could be imminent. The costs associated with winter crop planting are also under threat from global market pressures, which could result in higher expenses for dairy farmers later this year.