A Victorian milk processor is offering a higher price for selected milk after studying a Farming Together-funded report.
Burra Foods is offering a higher payment ratio for milk solids – a deal that benefits breeds such as Jersey cows, which have milk of a naturally higher fat content.
Jersey Australia sought support from the successful Farming Together program to prepare a report detailing the disparity between market demand, processor returns and farmgate earnings.
Burra Foods sought a copy of the report as part of its decision-making into the price differential, said Jersey Australia general manager Glen Barrett.
“Burra Foods was pro-active in hunting out that report. I think it’s really good,” he said.
The study found that high-density milk, that with higher milk solids, fat and protein levels (called components), were more cost-effective to transport and process. This higher-component milk was 8.5c/kg milk solids or 0.6c/litre cheaper for processors to cart and handle.
Milk from Jersey cows is typically higher in components than the dominant Australian dairy breed, Holstein-Friesian cows.
Jersey Australia president Chris MacKenzie from Timboon in western Victoria said: “Jersey breeders will welcome the move to provide them a fairer return for their higher fat content milk supplied to Burra Foods.”
Global shortages of butter and milk fat products for processing have led to increased emphasis on fat in farmer payments, however payments for protein still outweigh those paid for fat.
“Burra Foods should be congratulated for being the first processor to move to bring the fat payment in line with protein and we call on all processors to provide payment equality for fat and protein milk components,” MacKenzie said.
Farming Together program director Lorraine Gordon said: “The study quantified the financials behind a logistics differential between high- and low-density milks. Jersey Australia sought to put science behind a claim that should see premium milk recognised with premium pricing.”
The Farm Co-operative and Collaboration Program (known as Farming Together) is a two-year, $13.8m initiative from the Australian Government designed to help agricultural groups value-add, secure premium pricing, scale-up production, attract capital investment, earn new markets or secure lower input costs.