By Ben Bennett, President, Australian Dairy Farmers
As you wake up early, don your boots and get to the dairy on this second day of the new financial year, you may be left asking yourself “what price have I really signed up for this year?”.
Tuesday was the deadline for all Australian dairy farmers to have locked in a supply agreement for the 2026-27 season. It’s a big decision.
Contracts are signed, volumes committed, and the next 12 months of production are already taking shape. But while the deadline may have passed, it is worth reflecting on the process farmers have just had to work through, and the level of uncertainty with which they completed that task this year.
For many farmers, this year’s contracting period highlighted a persistent, if not increasing challenge: a lack of clear, comparable and transparent pricing.
Milk supply agreements represent one of the most significant commercial decisions any dairy farmer has to make. Dairy is one of the few sectors where producers forward contract a full year’s production.
At a time when input costs remain high for feed, fertiliser, fuel and labour, those decisions carry even greater weight. And yet, many farmers have had to weigh up competing offers this year without a straightforward understanding of what they are actually being paid.
That is not due to a lack of effort or diligence on the part of farmers. Across the country, producers have done exactly what you would expect of any prudent business operator – they’ve sought advice, crunched the numbers, and compared offers where possible.
The challenge lies in the structure of the offers themselves.
This season, we saw milk pricing offers of all shapes and sizes. We saw average prices and price ranges, various incentives, bonuses and conditions that can shift depending on production patterns, quality specifications, location and seasonal factors. Not to mention penalty clauses that, when applied, could be akin to clawbacks.
These price structures can make it extremely difficult to identify a clear “base price” and compare one processor’s offer with another.
For many farmers, the key question is simple: “will this price cover my cost of production and allow my business to remain sustainable?”.
Too often now, that question is arguably harder to answer than it should be.
The Dairy Code of Conduct was introduced to improve exactly this issue – to deliver greater transparency, support informed decision-making and promote a competitive marketplace.
These are the right objectives, and there has been some progress since the code came into effect.
But the experience of this year’s contracting period suggests those objectives are being challenged.
Transparency is not just an abstract principle. It underpins confidence in the market and the ability of farmers to plan for the future.
To put it plainly, we are asking farmers to commit to contracts of a year or more, without always providing a simple, consistent way to understand the value of those contracts.
This is the issue Australian Dairy Farmers has been raising for some time, including through the Dairy Code review process. The aim has always been to ensure farmers can clearly see what they are being paid for their milk and how different offers stack up.
Looking ahead, there is an opportunity and a responsibility for both industry and regulators to reflect on the lessons from this year.
Processors play a central role. Clearer, simpler and more comparable pricing would not only support farmers at decision time, it would help build trust and strengthen relationships across the supply chain.
Regulators, including the Australian Competition and Consumer Commission (ACCC) also have a role to ensure that these pricing structures adhere to both the spirit and intent of the Code, are not ambiguous or misleading, and are being met in practice.
We must ask whether basic ACCC competition principles are being adhered to, and whether there is access to clear, accurate and comparable price information to make informed commercial market decisions.
For farmers, the focus now shifts to the season ahead. The decisions have been made, and attention turns to production, efficiency and managing the ongoing challenges facing the sector.
But as an industry, we should not simply move on once contracts are signed, we should strive for a more efficient, effective, and competitive market.