Dire warning prices of milk and cheese will soar by 20 per cent in yet another blow for hard-up Aussies

Dairy prices could soar by 20 per cent unless milk payments to farmers increase ‘immediately’, as soaring costs force producers to cut output and sell their cows. 

Farmers across eastern Australia are under mounting financial pressure, with the cost of diesel, fertiliser and other essential inputs surging as a result of the closure of the Strait of Hormuz and the Middle East war. 

Fertiliser shortages are exacerbating the problem, while fuel surcharges are pushing up the price of almost every farm input and transport costs along the supply chain.

Industry analysts have warned the financial strain is already being felt on farms, with production cuts underway and herd numbers falling.

A 20 per cent surge in dairy prices would hit household budgets hard. 

Based on current averages, milk priced at $1.72 per litre would rise to about $2.06 per litre, pushing home‑brand products above the $2 mark for the first time in years. 

Cheese selling for $16 per kilogram would jump to about $19.20, while yoghurt priced at $5 per kilogram would increase to around $6.

Dairy producers say they cannot absorb current cost increases and remain profitable. Industry groups warn that without urgent action, milk supply will fall sharply.

‘A delay of even a few more weeks will lead to farmers selling a lot more cows to fund the extra costs for fertiliser, fuel and other products,’ eastAUSmilk chief executive Eric Danzi said in a statement on Wednesday. 

‘Dairy farmers need a price increase immediately before milk production plummets.’

eastAUSmilk is calling for industry‑wide price increases to reflect rising costs. 

Mr Danzi said farmgate milk prices needed to rise by at least 10 cents per litre, or potentially as much as 15 cents per litre, to stabilise production.

‘We need to see all processors lift the milk price paid to farmers by at least 10 cents per litre if not closer to 15 cents per litre,’ he said. 

Mr Danzi said pricing should be reviewed again in June, with further increases considered in July if costs continued to escalate. He dismissed suggestions prices could later fall once energy and fertiliser markets stabilised.

‘There has been some talk that milk prices may come down after the market for fertiliser and fuel returns to more normal levels,’ he said. 

‘This is completely nonsensical since the impacts will be felt for at least the next year regardless of what happens in the Middle East.’

The warnings follow Woolworths’ decision to lift the price paid to its farmer‑owned suppliers in NSW and Queensland by 10 cents per litre, backdated from April 1.

NSW dairy farmer Tim Bale, who was elected president of eastAUSmilk in 2026, called on all retailers and processors to follow suit. 

‘We want to see all retailers and processors follow the lead set by Woolworths in lifting prices paid to dairy farmers by 10 cents a litre immediately,’ he said.

‘Any that do not act over the next week will see their milk supply plummet over the coming months. There is no time to wait… prices must lift now before it is too late.’

Agriculture Minister Julie Collins said the government is working to secure fertiliser supplies as Australia remains heavily reliant on imports from the Strait of Hormuz.

‘We are working day and night with our farmers, fishers and producers to help manage the impacts of the conflict in the Middle East,’ Collins told Daily Mail.  

She confirmed a cross‑government fertiliser working group had been established and that there was enough fertiliser available for the initial planting season.

‘We remain focused on working with industry to support dairy farmers through current challenges,’ she said.  

Cost pressures are also impacting the construction industry, with a leaked email warning builders of plastic price rises of up to 36 per cent, driven by higher oil prices and freight costs following disruptions through the Strait.

Industry leaders warn that without coordinated action across agriculture and supply chains, consumers will increasingly feel the price shock at the checkout.