By Ben Bennett, President, Australian Dairy Farmers
As we move into another opening milk price period, the pressure on dairy farmers is as real as it has ever been.
Rising input costs, fuel, fertiliser, feed and labour continue to tighten margins, while uncertainty around opening prices leaves many businesses making critical decisions without full clarity.
Recent reporting highlights exactly what farmers are dealing with on the ground.
Input costs are being passed on, with diesel, fertiliser and contractor costs all rising sharply, and many farmers are rightly questioning how those costs can be recovered through milk price.
Against that backdrop, the importance of understanding your rights under a milk supply agreement has never been greater.
This is not just about the price offered. It is about the terms, the transparency, and your ability to make an informed decision.
Know what must be in your agreement
Under the Dairy Code of Conduct, milk supply agreements must clearly set out the minimum price payable for milk supplied, provided it meets the processor’s stated quality requirements. This is a fundamental protection.
The minimum price is not a guide, not an estimate, and not something that can be left vague.
It must be clearly specified so that farmers can assess whether the offer is commercially viable for their business.
At a time when many farmers are indicating they need significantly higher prices just to remain farming, understanding exactly what is being offered and how it is structured is critical.
Do not rely on headline figures or assumptions. Read the agreement in full and ensure you understand how that minimum price is calculated, what is included, and what conditions apply.
Seek information before making decisions
The opening price period can move quickly, and there is often pressure to sign agreements within tight timeframes. But this is one of the most important commercial decisions you will make each year.
Take the time to:
- Compare offers across processors;
- Understand step-ups, incentives and deductions;
- Clarify any unclear terms before signing; and
- Assess how the agreement aligns with your cost of production.
Information is your strongest weapon. If something does not make sense, ask questions. If answers are not forthcoming, that in itself is a signal to proceed with caution.
Varying and terminating agreements
Another key requirement under the Code is that milk supply agreements must clearly outline how they can be varied or terminated.
This includes:
- Circumstances where both the farmer and processor can agree to vary or terminate the agreement; and
- Circumstances where either party can unilaterally vary or terminate the agreement.
These provisions matter. They determine your flexibility, your risk exposure, and your ability to respond if conditions change.
Farmers should pay close attention to:
- Notice periods;
- Conditions that trigger change;
- Any clauses that allow unilateral variation by the processor; and
- Exit options and associated costs.
An agreement that locks you in without clear and fair pathways to vary or exit can create significant risk, particularly in volatile market conditions.
Use your support networks
You are not expected to navigate this alone.
If you have concerns about an agreement, or if something does not seem right, speak with your state dairy farming organisation. Your membership is there to provide support, guidance and advocacy.
These organisations deal with these issues regularly. They can help.
ADF will monitor closely
ADF will be closely watching this coming pricing period.
That includes:
- Monitoring the process and timing of price announcements;
- Utilising the Milk Price Transparency Tool Pilot launched in 2025;
- Tracking public statements and market behaviour; and
- Collecting evidence of any conduct that may undermine fair competition or transparency for the appropriate regulators.
Farmers should have confidence that the system is working as intended. Where it is not, it is critical that issues are identified, documented and addressed.
Take control of your position
This milk price season comes at a time of real pressure across the industry. Costs are high, margins are tight, and decisions carry significant weight.
But farmers are not without protections.
State dairy farming bodies and ADF are in place to support and advocate for dairy farmers. Use us.
Know what your agreement must include. Understand the price being offered. Be clear on your rights to vary or exit. Seek advice when needed.
Most importantly, take the time to make decisions based on full information, not pressure or assumption. In a season like this, clarity is not a luxury; it is essential.