Farmgate Milk Value Tool
This tool allows a user to understand how milk is being valued in each region and how that varies across the season, influenced by different farm characteristics (seasonality of milk supply, size of farm, milk components). This tool is not designed to compare prices available from individual processors for a specific farm as the data provided is averages and ranges, based on a discrete set of variables. Income estimates from individual processors are still the best way to compare prices available for your own farm.
To use the tool, select the options in the dropdowns that are nearest to your farm situation:
See the notes below for details of the calculations used in this tool.
The full season weighted average price is made up of the monthly rates offered in milk supply agreements, based on the selected farm characteristics. This has been weighted for the region based on the estimated milk collections by participating milk buyers or processors. Monthly rates can vary over a season – particularly in southern regions. This chart illustrates those differences divided into the most variable times of the year.
Depending on the number of processors that are buying milk in a region and their business model, there can be a wide range of milk prices on offer. The range reflects the highest and lowest prices that would be paid by relevant processors based on the farm input parameters selected above. Please see the notes below. The weighted average in each case – weighted by processor intake for the region – corresponds to the chart on the left and indicates where the bulk of the region’s milk is priced.
The seasonal pattern of milk supply is an important determinant of the pricing outcome for an individual farm. This chart illustrated the monthly share of milk production, describing the farm’s seasonal curve. It is based on regional data.
This chart indicated the proportion of a farm’s milk that is produced in the non – peak months (July, August and March to June). Peak months are in spring, when pasture growth is typically at optimal levels and milk production is at peak levels, subject to calving patterns.
Indicates the share of components – fat and protein – applicable, based on the region average. Fat and protein are the valuable components of milk on which prices are based.
Notes on the Farmgate Milk Value Tool:
- The weighted average milk value achieved has been calculated by applying the selected farm parameters in each case (that is, region, farm size, butterfat and protein composition, seasonality) to the minimum prices disclosed in each of the processor milk supply agreements that are applicable in the selected region for farms with those parameters. The resulting calculated prices are then averaged based on weightings for the respective estimated regional milk collections volumes by each processor.
- There are discretionary incentives paid by a number of processors above minimum prices, generally to attract larger suppliers and/or those suppliers located in strategic sub-regions. These are generally not publicly disclosed and are not included in the above analyses.
- The range shown in the chart on the right in the top row of charts reflects the highest and lowest milk prices that would be paid based on the relevant processor contracts on the selected farm parameters.
- The processor milk supply agreements used in each case by region represent at least 85% of milk collections in each region. On a national basis for the 2022/23 season, about 85% of all milk collections are represented in the weighted average calculations, as was the case for the 2021/22 season.
- The milk payments are calculated based on best available milk quality, such that the milk does not attract penalties but attracts available incentives.
- Example farms are used in each region to illustrate cases of “average” seasonality of milk collections and milk components (fat and protein content), which have been based on the monthly milk collections according to Dairy Australian data. Cases that vary from these for “flat” (or year-round milking), “highly seasonal” and “split” seasonality have been developed based on typical production systems that are referred to or known by those terms according to advice from farm consultants. Low and high components are also provided to illustrate different systems approaches in each case. The charts shown below the FMVT provide the assumptions that have been used in each case to enable users to understand the examples. Refer to the Dairy Australia site for further details.
- The defined peak and non-peak periods relevant to any applicable incentives are based on the formulae expressed in processor contracts. Those periods are in some cases do not correspond to the non-peak portion of annual supply shown in the chart above.
- The calculations include estimates for the retail price levy of 10c collected by major grocery retailers and passed on by processors to supplying dairy farmers on the basis of milk used in the milk products to which the levy applied in 2021/22 and 2020/21. Such payments were not included in processor milk supply agreements.
- The farmgate prices are calculated net of farm to factory cartage, and net of Dairy Australia levies.