News

Milk production lags amid cost pressure: report

By Dairy News

Dairy Australia’s February Situation and Outlook report revealed declining milk production and continuing cost pressure on farmers.

Milk production continues to lag behind 2017–18 levels, tracking 4.8 per cent lower for the current season to December and the impact of tough seasonal conditions is placing further pressure on many farmers.

Dairy Australia’s forecast for 2018–19 milk production has been adjusted to reflect a 7 per cent to 9 per cent decrease relative to 2017–18, equating a total of between 8.45 and 8.65 billion litres for the full season.

Whilst some farmers in the southern regions experienced a better than expected later spring and early summer this season, many farmers in NSW, Queensland, east Gippsland and northern Victoria have faced significant seasonal difficulties.

High prices for grain, hay and irrigation water persist with consequences being felt by the broader industry.

However, global dairy markets reveal healthy import demand with key markets continuing to grow including China (up 3 per cent), Japan (up 5 per cent) and Southeast Asia (up 6 per cent).

Dairy Australia’s senior industry analyst John Droppert said the ongoing growth in markets like China and Japan provided some comfort for the Australian dairy industry in an environment that was proving challenging for many farmers.

“It’s easy to lose sight of the positive in an environment of rising costs of production, a challenging domestic market and tough seasonal conditions. Many farmers have had to make difficult decisions, and the numbers often aren’t pretty, but there are positives to be found in the broader market, Mr Droppert said.

“As well as overseas, there are opportunities closer to home, and premium offerings are selling well in the Australian domestic market generating increased unit value,” he said.

“In addition, this week we’ve seen Woolworths announce plans to increase private label fresh milk prices by 10 cents per litre, passing that amount directly to farmers who supply the product. It’s too early to quantify the full implications of this decision, but for farmers it has been a welcome one.”

With farm input costs likely to remain high in the coming months, Mr Droppert highlighted the value of information and resources such as the Situation and Outlook, to inform farm business decision-making.

“As farmers prepare for autumn and winter, Dairy Australia will be dedicated to providing the latest international and domestic market trends, statistics and facts to Australian farmers, in addition to onground support through the Regional Development Programs,” Mr Droppert said.

The February Situation and Outlook report is available at www.dairyaustralia.com.au