Dairy farmers: are you ready for the 24/25 supply season?

The time for the milk processors to release their opening farmgate milk price is just a few weeks away. Signs suggest it's likely to be a bumpy year for dairy farmers ahead.
May 20, 2024

Below Bec Alexander brings you three key points you should consider when looking at your 24/25 milk supply agreement:

  1. The big processors all have in-house legal teams to help them with their milk supply contracts. It's important for dairy farmers to consider levelling up the playing field and engaging  their own lawyer to work out the fine print;
  2. My way of approaching a milk supply agreement is to read it and then do some road-testing of different scenarios that could unfold during the term of the agreement. For example: What happens if my farmer client decides to retire during the supply period? What happens if they fall off a quad bike and can't continue milking the cows to maintain the milk supply? What happens if the milk quality slips? Although these questions may sound glass half-empty, it is important to remember things can change a lot during the course of a year;
  3. ⁠Things are changing: it's not the time to be complacent and rely on the processors fighting to maintain their milk supply as many farmers exit the industry. There are more international dairy products on supermarket shelves. Fonterra is looking to divest from Australia and, although the announcement is only recent, there's a good chance this will mean less competition in the dairy sector.

The processors are obliged to act in good faith with their suppliers and we have been able to negotiate conditions into dairy supply agreements to give farmers some stronger protection. If you're looking at your options this June, get on the front foot and book an appointment with us to go over your paperwork before you sign on the dotted line.

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