Australian dairy farmers face rising costs, demand milk price hikes due to Middle East war
Consensus Summary
Australian dairy farmers are facing severe financial strain due to soaring fuel and fertiliser costs triggered by the Middle East war, which has disrupted global supply chains. Key supermarkets like Woolworths and Lactalis have committed to temporary price increasesâ10 cents per litre for select farmers and 5 cents per litre for over 800 suppliers, respectivelyâstarting in April and May 2026. Advocacy groups like eastAUSmilk are demanding a 30-cent-per-litre rise in retail milk prices to sustain production, warning that current costs could lead to shortages and farm closures. Farmers in Queensland and New South Wales are already reducing herd sizes and cutting fertiliser use, while resin shortages for plastic bottles add further pressure. Supermarkets like Coles and Woolworths acknowledge cost pressures but emphasize balancing farmer support with consumer affordability, though industry leaders argue milk remains artificially cheap compared to global standards.
â Verified by 2+ sources
Key details reported by multiple sources:
- Woolworths will pay an extra 10 cents per litre to fewer than 20 direct farmer suppliers for its Farmers' Own brand starting April 2026
- Lactalis will increase milk payments by 5 cents per litre (equivalent to ~64 cents/kg milk solids) to over 800 farmer-suppliers from May 1, 2026
- Dairy farmers in Queensland and New South Wales are reducing production due to soaring fuel and fertiliser costs linked to the Middle East war
- The price of urea fertiliser has risen from $750 to $1,400 per tonne for one farmer (Lucas Kennedy), with broader shortages reported
- EastAUSmilk advocacy group is pushing for a 30-cent-per-litre increase in supermarket milk prices (15 cents for farmers, 15 cents for processors)
- Australian milk production is currently around 8 billion litres per year, significantly lower than New Zealandâs 21 billion litres
- Norco, a dairy cooperative with 190 farmer-shareholders in NSW and Queensland, will increase prices for farmers and retailers after a board meeting in April 2026
- The Middle East war has disrupted global fuel and fertiliser supplies, with 60% of Australiaâs urea sourced from the region now in short supply
- Coles acknowledged 'upward pressure' on agricultural expenses and is reviewing pricing for ~100 direct farmer suppliers
Points of Difference
Details reported by only one source:
- Lucas Kennedy, a Conondale dairy farmer, produces 2.5â3 million litres of milk annually from 350 cows and welcomed Woolworthsâ 10-cent increase
- ADF president Ben Bennett warned the Lactalis payment may be temporary and called for a July 2026 contract pricing review
- Maleny Dairies, a family-owned processor, is not planning to increase prices despite resin costs rising from $1,200 to $3,500 per tonne for plastic bottles
- South Australian dairy production dropped 6% in the past year due to drought, per DairySA chair Andrew Cavill
- Woolworths and Lactalis declined ABC Ruralâs requests for comment, while Coles cited 'managing cost pressures' in a statement
- A farmer quoted in 7News called the situation an 'absolute disaster,' stating every farmer he spoke to was making a loss
- The average regional diesel price is $3.20 per litre (up six cents weekly), per the Australian Institute of Petroleum
- 60% of Australiaâs urea supply is sourced from the Middle East, with shortages driving prices up
- 70% of truck operators fear bankruptcy if the fuel crisis lasts six months, per a recent survey
- Supermarkets currently sell full-cream milk for $1.60 per litre, which the industry calls 'unsustainable'
Contradictions
Conflicting information between sources:
- ABC reports Woolworths will absorb the extra 10 cents paid to farmers, while News.com.au states Woolworths did not confirm this to them
- ABC states Norco will announce price rises after a board meeting 'later this month,' while News.com.au does not specify a date beyond 'later this month'
- ABC mentions Maleny Dairies is not increasing prices, but does not link this to resin costs; News.com.au implies broader industry shortages may force price hikes
- ABC cites a 6% drop in South Australian dairy production over 12 months, while News.com.au does not provide a specific percentage for SA
- ABCâs Lucas Kennedy reports urea prices rising from $750 to $1,400 per tonne, while News.com.au does not specify a farmerâs exact price increase
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