The dairy year in review

Photo by Isabel Dando

Providing a wrap of the 2022-23 season that was, Dairy Australia’s Australian Dairy In Focus report was released on November 15.

The report provides both an overarching historical record and annual update utilising independent data and information from across the dairy supply chain, based on statistics for the 2022-23 year.

The report highlights that while the 2022-23 season brought its fair share of challenges, the Australian dairy industry again navigated an increasingly volatile market environment both domestically and internationally.

As such, dairy remains the third largest rural industry in Australia, generating close to $6.1 billion in farm gate value over the financial year.

This is a 25 per cent increase from $4.9 billion in the previous season, which was mostly driven by a continuation of historically high farm gate milk prices.

Strong competition for milk among processors led to Australian dairy farmers receiving an average of $9.80/kg MS. As such, the vast majority of farmers reported that they made an operating profit, with profitability at an all-time high in some regions.

Despite this, most dairying regions were disrupted in some way by flooding or prolonged wet weather.

This was a common feature across many parts of NSW, Victoria, Queensland, South Australia and Tasmania, and resulted in an increased reliance on purchased feed alongside the loss of pastures, laneways and fencing and other resources on farm.

This increased reliance, and rise in purchased feed costs generally, had significant impacts on the cost of production in these regions, with the increase in both variable and overhead costs somewhat tempering the increase in milk prices received.

The flood events and La Niña conditions brought acute impacts to both the cost, and volume of milk produced throughout the 2022-23 season.

As such, milk production contracted by five per cent compared to the previous season.

In addition to the significant flood and wet weather events that disrupted dairy farming and reduced feed quality across the country, a higher cost of milk production, labour availability, land use change to beef enterprises, and dairy farmers deciding to exit the industry all contributed to this decline.

As a result, the national milk pool ended the season at 8129 million litres.

The In Focus 2023 report also highlighted that Australia remains a significant exporter of dairy products, despite only accounting for close to one per cent of the world’s estimated milk production.

Over the season, 30 per cent of the milk produced was exported, worth A$3.7 billion.

While Australia currently ranks fifth in terms of world dairy trade, the share of total production destined for export has gradually fallen over time, from around 50 per cent two decades ago to about one-third in recent years.

The share of milk exported has contracted due to population growth here in Australia and an overall decline in milk production.

Within our own domestic market, dairy remains a ‘staple’ category in almost all Australian households.

Per capita consumption of cheese, butter and yoghurt consumption all increased over 2022-23, while drinking milk fell slightly to 90 litres.

While this has marginally declined over recent years; Australia’s consumption of drinking milk is high compared to other developed countries.

This can be partly attributed to the expansion of the ‘coffee culture’ in Australia and growth in flavoured milk products.

For more information about the Australian dairy industry and its positioning in the world, access the full Australian Dairy In Focus 2023 report at:

Isabel Dando is a Dairy Australia industry analyst.