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How is milk priced?

To ensure fairer pricing for all, we have our Milk Price Calculator. Our Milk Price calculator allows suppliers and buyers to compare various pricing arrangements. It is used by milk suppliers and buyers to estimated milk revenues for individual farms.

Farmers are paid for their milk based on formulae which are expressed in terms and conditions offered by each dairy company – each company offers a slightly different payment structure in terms of rates, incentives and deductions.

Payments are made for the weight of milk solids – fat and protein – that occur in the milk. Fat is typically between 4.0-4.5% of milk volume; protein is 3.1 to 3.5% depending on farm management practices and cow breeds.

The typical payment structure is:

      • {Kg of fat and protein (respectively)} x {base rate per kg}
      • Plus Step-ups (price increase expectations to base rates)
      • Plus Incentives (productivity/farm size), growth, proximity
      • Plus/less quality adjustment
    • Less Cartage and volume charges (for collection and freight)

The payment is expressed in net terms in $/kg milk solids.