The index will provide independent and transparent market information to dairy farmers.
The index will be supported by a one-year forecast of prices that will be updated quarterly, along with regular global, national and regional commentary.
A Regional, Retrospective Farmgate Milk Price Index will accompany the index, with farmers urged to provide price data via an online form.
Federal Agriculture and Water Resources Minister David Littleproud said the index would provide farmers another source of dairy market information.
“Farmers will be able to see an index of commodity prices received by Australian dairy processors for cheese, butter, skim milk powder and whole milk powder exports,” he said.
“The more dairy farmers take part, the better this index will be.
“The commodity milk price index will be an extra tool to help dairy farmers plan ahead, with more market information on commodity dairy prices and global conditions.
“Better price transparency and market signals for farmers is a good thing.
“We continue to consult industry and welcome feedback.”
Australian Dairy Farmers president Terry Richardson said the index was developed so farmers would have a more comprehensive understanding and are able to better interpret price signals.
“This is just one tool that dairy farmers can use, and there will be a feedback channel available to allow an opportunity for input into any future adjustments that may be deemed necessary in the future,” he said.
“The purpose of the retrospective index is to help build a marker of actual prices received in each dairy region.”
Denison dairy farmer Brad Missen said anything that can help farmers make a better decision is “always helpful and valued”, but encouraged caution.
“As far as opening prices, it’s like trying to pick a winner from whoever jumps out of the barrier first, so having a retrospective look is important,” he said.
“Whatever you do, you have to use your own figures because the variation between farms is huge.
“It’s only a tool, at the end of the day, any of them can have a step-up through the season, but it’s absolutely crucial you use your own figures to compare as well.”
The Milk Price Index is being managed by the Department of Agriculture and Water Resources, with economic modelling and analysis conducted by Deloitte Access Economics.
The index is part of the government’s $579 million Dairy Support Package assisting farmers affected by retrospective cuts to farm gate milk prices in 2015-16 and is being managed by the Department of Agriculture. The department will also work with industry to educate farmers on how best to use and interpret market signals from the index.
Deloitte Access Economics is providing the economic modelling and analysis and RM Consulting Group is developing the education resources for dairy farmers. Farmers can access the index at www.agriculture.gov.au/milkpriceindex.