FONTERRA Australia has increased its average farmgate milk price for the 2021/2022 season to $7.10 per kilogram of milk solids (kgMS).

René Dedoncker, managing director Fonterra Australia, said since Fonterra’s last price review in August, market conditions globally had remained positive with solid demand and subdued growth in supply.

“We’ve continued to see strong domestic demand, particularly for our consumer brands and we expect to see the foodservice sector rebound as restrictions ease across Victoria and New South Wales,” Mr Dedoncker said.

“This gives us confidence in the fundamentals of our business and that we can continue to earn and pay a competitive milk price.

“However, the challenges of COVID-19 continue to put significant pressure on the supply chain. In particular, we are dealing with delays in getting product from our distribution and warehouse partners to our customers.

“We are also seeing lower than expected milk volumes off farm, owing to the unseasonably wet spring which is limiting our ability to capitalise on the strong commodity market conditions.

“Although we are hopeful that this price signal and the soil moisture will translate to a recovery in milk production in the back half of the season,” he said.