A growing number of major New Zealand and EU dairy companies are increasing their farmgate milk prices, following improvement in dairy’s global supply/demand balance.
AHDB Dairy has said that New Zealand's two largest dairy co-operatives, Fonterra and Westland, have both raised their forecast farmgate prices for the 2016/17 season (ending May 2017).
Fonterra’s forecast is up 12% to approximately 19ppl (NZ$4.75 per kg of milk solids), while Westland’s has risen 4% to around 18-20ppl (NZ$4.55-4.95 per kg of milk solids).
However, both companies still warn they expect further challenges and volatility over the coming months.
In Europe, Friesland Campina has raised its guaranteed farmgate milk price by 5% for September, to nearly 22ppl (€26.25 per 100kg).
The company says this is based on the reduction in milk supply from the EU, combined with relatively stable demand.
In France, Lactalis is also reported to have agreed to a price rise, following a series of farmer protests and discussions.
The processor is expected to ensure an average of around 23.5ppl (27.5 eurocents per litre) is paid for milk supplied during 2016.
To achieve this, it will need to increase its price to nearly 25ppl (29 eurocents per litre) for milk supplied between August and December.
