THE recent spate of milk price rises released by Coles, Harvey Fresh and Lion have received mixed responses at the farmgate.
As reported in last week's Farm Weekly, Harvey Fresh said it will increase its farmgate payments for protein, milk solids and butterfat effective from this week.
It says the price increase will equate to a $3.3 million investment back into the WA dairy industry.
The increase has been made possible due to negotiations between Harvey Fresh and Australian supermarket chain Coles, over an increase in wholesale prices of dairy products sold to the supermarket.
Although Coles wholesale price rise only applies to the portion of its output that Harvey Fresh sells to Coles, Harvey Fresh said it would be increasing the farmgate price on all the milk it receives.
Prior to the Coles-Harvey Fresh announcement, Lion indicated that it would be increasing its price paid to farmers by one cent a litre.
WAFarmers dairy section president Peter Evans said WAFarmers endorsed the decision to increase farmgate prices.
"It's good Coles are acknowledging the effect of forcing milk prices down," he said.
But Mr Evans said he thought it was cheeky of Harvey Fresh to refer to the $3.3m, as an investment in the dairy industry.
"I think of an investment as something like increasing processing capacity, not just paying farmers what they deserve for milk," he said.
Brunswick dairy farmer Michael Partridge said he hadn't yet seen a cents per litre value on what Harvey Fresh was offering farmers, but said news of a price rise was welcome.
"It's good to see Coles has responded to our concerns regarding the domestic market," he said.
With the relationship between fresh milk supply and demand already stretched and companies like Lion already having to truck milk into WA this year, Mr Partridge said the competitiveness of the retail sector made it hard for the processors to get money out of the domestic market.
"Production in WA dropped last year by six or seven per cent, so the issues of supply and demand needed to be addressed," he said.
"This is a step in the right direction.
"As dairy farmers we need some signals for long-term sustainability of the WA dairy industry, so we have the confidence to reinvest in the industry.
"Hopefully there is some more movement between other processors regarding farmgate prices."
Western Dairy chair Dale Hanks said the news represented a move in the right direction.
"It's a good thing for Harvey Fresh and Coles to be able to adjust their contract halfway through," he said.
"I think it shows that the supermarkets are a little worried about the sustainability of supply in WA.
"That said, it would be nice if supermarkets changed their retail price for dairy products as well."
In the face of a global oversupply of milk and other dairy processors cutting prices they pay to producers, Mr Hanks said the Harvey Fresh increase showed the supply and demand relationship in WA was finally starting to work.
Like many South West dairy farmers, Mr Hanks' milk contract with Harvey Fresh was about to expire.
He said it had been an interesting time for dairy producers over the past six to eight weeks, negotiating with the processor.
"Everyone supplying milk to Harvey Fresh was worried about the price they would offer and lots of farmers would be looking at what prices other processors had on the table," he said.
"WA dairy farmers have to make better business decisions.
"If there are times when we have to shop our milk around because of milk shortages, then that's what we have to do.
"I would like to see the dollar a litre for milk benchmark for the whole dairy cabinet removed by the supermarkets, so that all dairy can increase across the board."
