AFTER years of stagnation, the cost of milk has gone up, as has the price of almost every food item in the average supermarket trolley.
Meanwhile farmers are dealing with rising fuel and fertiliser expenses as well as weather impacts.
A recently released report by agribusiness banking specialist Rabobank shows consumers were paying more for dairy products, with milk prices having risen at the fastest rate since records began.
Roadvale dairy farmer Gary Wenzel said price increases were necessary.
"It's a step in the right direction," he said.
"Milk really still needs to go up in price but I don't know how because the consumer with the cost of living ... I don't know how much the consumer will be able to cope with food prices in general going up.
"Dairy farming is certainly in a better position than it was 12 months ago but given that diesel has gone up and with all the extra costs of repairs after the floods, there are an awful lot of things that have to be repaired and replaced."
"Some areas were far worse off than others but I think all areas were affected to some degree."
After years scrabbling for every extra cent, Mr Wenzel said some farms were now getting just over $1 a litre for their milk.
"Those are the farms supplying some of the smaller processors but Lactalis, Norco and Bega farmers, the price depends upon your fat and protein content.
"No one gets a flat price, it all depends on the quality of your milk."
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In its Global Dairy Quarterly Q4 2022 - Walking the Tightrope into 2023, Rabobank said while the Australian consumer had shown resilience in the face of cost-of-living pressures, signs of dairy demand weakness are emerging as a willingness and ability to spend on discretionary items softens.
Rabobank dairy and consumer foods analyst Michael Harvey said declines in grocery and food service channels signaled a tough year ahead for consumers.
"For Australia's dairy producers, farmgate margins remain positive and are supported by the record milk prices," he said.
"Average farmgate milk prices across Australia's Southern Export regions range between $9.50-$10 per kilogram (milk solids).
"The high milk prices have mostly offset major cost headwinds - fertiliser, fuel and feed - for dairy farmers. While labour availability remains a major challenge for dairy farming businesses."
Mr Harvey said Rabobank was not expecting further major lifts in milk prices as the season drew to a close.
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