AUSTRALIAN MILK production for the 2018–19 season has reduced by 5.7 per cent to 8.8 billion litres, down from 9.3 billion litres the previous year.
The number is a revision upward of Dairy Australia’s previous estimate of 8.45 billion litres, due to additional data received for milk supply in the volatile production regions of northern Victoria and southern NSW.
The news looks set to worsen this season with Dairy Australia anticipating a further drop in national milk production of between 3 and 5 per cent or around 8 billion litres.
Queensland experienced the biggest drop of all states with production reducing by 10.2 per cent to 358 million litres down from 399 million.
Production in Victoria has dropped from 5.9 billion litres to 5.4, a drop of 6.8 per cent.
NSW 1.1 billion to 1.082, a drop of 5.4 per cent.
Western Australia experienced a drop of 2.9 per cent, South Australia, 1.6 per cent while Tasmania a small drop of .4 per cent.
Regionally, northern Victoria has experienced the biggest drop in production of 12.3 per cent to 1.69 billion litres down from 1.9 billion.
Bernice Lumsden dairy farms in the northern Victorian town of Leitchville.
She said her dairy business had destocked more than 500 cows and heifers because of the water crisis.
“If we destock much more, there comes a point where it is not worth dairy farming anymore,” Mrs Lumsden said.
“Dairy is an intensive and high-input business, and once people leave the industry they will not return.”
Mrs Lumsden said many farmers had left the industry because they could not afford further operating losses on the back of the hard years of the 2015–16 and 2016–17 milk crisis.
“I talk with farmers daily who are buckling under the financial impossibility of the water market,” she said.
“The frustrating part is there was 100 per cent allocation last year, but the combination of reduction of water in the Goulburn Murray Irrigation District consumptive pool and the increased demand further down the river outside of the GMID has seen the water price skyrocket.”
Last year the average price of temporary water in Zone 7 Vic Murray traded for $487/Ml, up from $140/Ml in 2017–18.
This year it is trading above $650/Ml.
UDV president Paul Mumford said the situation was a clear reflection of the trouble northern Victorian farmers were facing around the issue of water.
“This is the hard evidence of what we could see happening, and we are delivering the message to industry and government, but it is an arduous task and we are well aware how critical timing is,” Mr Mumford said.
He said while there had been the introduction of some minor policy, he said there needed to be a whole lot more done to support the industry, including short-term solutions such as rate relief, which could put money straight back into the farmer’s pocket.
Murray Dairy chief executive officer Jenny Wilson attributed the loss to an increase in farmers exiting, along with those remaining milking fewer cows to reduce input costs.
“We estimate farm exits to have increased to 14 per cent in the last year across the GMID and the figure is even higher in the southern Riverina, which is facing another year of zero allocation,” Ms Wilson said.
“There is likely to be further exits this year despite a reduction in fodder and grain costs and strong milk prices.”
She said northern Victorian milk production was closely correlated with the temporary water price.
“The price dairy can pay for water is lower than other commodities that rely on the market, including horticulture,” Ms Wilson said.
“Dairy has alternatives to irrigation that horticulture doesn’t have, however, most dairy farms rely on irrigation, even if it is just the shoulder season to boost autumn and spring production.”
Ms Wilson said some farmers with little equity or high exposure to the water market were transitioning out of the industry, while those who remained were looking at diversifying their water portfolio and looking at options including leasing and co-investment as opposed to buying directly from a volatile market.