Dairy News

Prices up, confidence still down

By Geoff Adams

The latest Dairy Situation and Outlook report points to an improving picture for dairy farmers, after a challenging season of sustained dry conditions which has impacted national milk production, farm profitability and farmer confidence.

Key findings:

  • Despite continued higher costs for key inputs like grain, hay and water, Dairy Australia sees some positive signs such as higher farm-gate prices as boding well for the new season starting on 1 July.
  • Nonetheless, results of the annual National Dairy Farmer Survey show only 34% of farmers feel positive about the future of the dairy industry, compared to 47% last year and 53% the year before. An increased proportion of farm businesses are in a ‘holding pattern’ rather than expansion phase as a result.
  • Whilst confidence has improved more recently, Dairy Australia forecasts a further drop of between 3% and 5% in total milk production for the 2019/20 season, weighed down by the impact of reduced herd sizes and strained finances from the 2018/19 season.
  • Farm-gate prices are being supported by a combination of market factors and local competition for milk. Global commodity markets remain well balanced, supported by a 3.2% increase in global dairy demand in the past year and growth in key markets such as Greater China and South-East Asia. Supermarket sales of major dairy products continue to generate value growth for the industry, with dairy spreads and cheese the best performers growing 7.3% and 4.9% respectively.

The read the report, go to: dairyaustralia.com.au/SandOJune19