Some WA dairy farmers to get more of Lion's share

WA dairy farmers supplying milk to major processor Lion Dairy & Drinks will receive an extra one cent per litre for the 2012-13 season, translating to about 47 cents per litre.

This will be worth about $23,000 on-farm for the average producer.

Although any price increase is welcome, Harvey dairy farmer and Western Dairy chairman Dale Hanks said it would have been good to see a 10 per cent price increase - or about 4c/litre - to ensure the long-term sustainability of the industry in WA.

"With increasing power costs, the impending carbon tax and rising labour and insurance costs, we would have liked to have seen farmgate prices go up a bit more," he said.

Coles has announced it will pay processor Harvey Fresh, which supplies Coles with both branded and private-label milk, an extra 3.3c/litre as of next week.

In a statement Coles merchandise director John Durkan said the price increase came after discussions with WAFarmers about the future of the WA dairy industry.

Harvey Fresh has confirmed it will pass the increase in payment onto its 70-plus milk producers.

Brownes increased its farmgate milk prices by 5 per cent, to about 43c/litre, in April on the back of fears of diminishing supply.

Lion agricultural procurement director Murray Jeffrey said the 1c/litre increase for 2012-13 converted to an average farmgate price of 46.8c/litre - or $6.46c/kg of milk solids - for its 38 milk suppliers, who provided about 90 million litres to the company annually.

He said Lion recognised that dairy producers would have liked a bigger price increase for next season, but believed the latest incremental rise was a sustainable level for the industry and the best market price for milk in WA. "We know people would have liked more, but the market is quite tough and most growers in our regions outside WA are facing price reductions," he said.

"We realise our farmers are doing it tough and need support and, at 1c/litre, the price rise will be a significant boost to their bottom line."

Mr Jeffrey said Lion's WA brands Pura, Dare, Masters flavoured milk and Daily Juice - all produced at its Bentley manufacturing site - were performing well and the company had secured the supply and packaging of Woolworths home brand milk for 2012-13.