Why dairy price increases will help sustain the future of the dairy industry

Riverina Fresh

Riverina Fresh CEO Rob Collier explains why dairy price increases will help sustain the future of the dairy industry and go straight back to farmgate.

In today’s current market, hardly anything is spared from price rises: petrol, potatoes, and even a Bunnings sausage.

With an “unprecedented lift” in milk prices, both on-shelf and farmgate across Australia, Riverina Fresh has also followed suit.

What’s important for café owners and consumers to understand, says company CEO Rob Collier, is that the recent increase in price per litre will go straight into the hands of dairy farmers.

“If we want our farmers to keep supplying high quality milk, we’ve got to pay more to ensure the sustainable future of our dairy industry,” Rob says.

“It needed to happen. If we didn’t, the risk is that one day we won’t have freshly supplied local dairy, and we’ll be importing it offshore. No-one wants that.”

Like most commodities that have seen inflationary pressures across supply chains, dairy farmers are also facing a significant lift in input costs. They include record high prices of fertiliser, feed, and grain, not to mention wage cost increases for farm labour, fuel prices, transport.

Rob notes that dairy production across Australia has declined in the last 10 years. There are a range of reasons for its decline, including adverse weather such as drought and flood, high capital costs for new entrants, long work hours, limited availability of labour, an aging dairy farming population, and marginal returns. As such, the shrinking milk pool has resulted in this year’s “bidding war for milk”, and “significant” on-shelf increases.

“Milk has been relatively stable in pricing for 10 years, which has been a problem for the industry. We’ve seen a big jump in pricing across the industry, including retail, with prices going up more than 50 cents for a two-litre bottle,” Rob says.

“Unfortunately, we’re in an inflationary period. It’s another cost cafés have to deal with. We understand that’s not easy, and we have empathy for that.”

The best way for the industry to understand the reasons for the overall price increases, Rob says, is education and communication.

Riverina Fresh has had early conversations with its customers to help them understand the circumstances and direction the dairy industry is headed. It’s because of this transparency that Rob says most customers have accepted the situation.

“Recent price increases will add another five to six cents to a typical milk- based coffee, and we would encourage café owners to pass the explanation of ‘why’ onto consumers. That’s the right thing to do. I’m confident that Australians value decent coffee and good dairy, and that the extra few cents won’t change their habits too much,” Rob says.

Just like coffee farmers struggle to attract the next generation of producers, dairy farmers also need to be reinvigorated to ensure they stay in the industry and continue to supply locally made, high-quality fresh milk. Rob says addressing farmgate milk prices is just one important piece to the puzzle, but it’s an important start.

“Our farmers are cautiously optimistic about this year’s season. Farming is always subject to weather and a range of other variables,” he says.

“Hopefully the higher farmgate milk price will trigger reinvestment into the industry so that farmers can continue to invest and get a reasonable return on their investment.”

Established in 1922, Riverina Fresh is a 100 per cent Australian- owned company that works with 20 dairy farmers in the Riverina region. This year, the company is celebrating 100 years of history and the multiple generation of farmers and employees that work have worked at Riverina Fresh’s Wagga Wagga factory over the years.

“A lot of customers resonate with Riverina Fresh being an Australian- owned business and the need to support premium quality, local food producers,” Rob says.

“People continue to want to understand where their food comes from, and what the background and story is behind it. We’re a company linked to the very place where the produce is sourced, and that’s pretty unique.”

For more information, visit www.riverinafresh.com.au

This article appears in the August 2022 edition of BeanScene. Subscribe HERE.

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