According to customs data, Australia’s January-April dairy exports increased by 5.4% in volume to 164,608 tonnes. The total number is led by a rise in deliveries of skim milk powder (SMP) which totalled 54,154 tonnes and was up by over 13% on the same period last year. Another major increase in the period has been witnessed in whole milk powder (WMP) exports, which were up by 39% and totalled 24,385 tonnes. Cheese exports dropped by 5% as compared to the same period in 2017 and reached 54,133 tonnes.

Australian imports of cheese seem to be losing steam from last year’s peak, with the shipments down by 6% in the first four months of the current year. The decline is being led by main supplier New Zealand, the supply of which dropped by 15%.

Dairy Australia in its latest Situation and Outlook report outlined that since the dairy industry’s deregulation, which implied the end of regulated sourcing and pricing of milk, Australia got caught up in a situation of a greater domestic demand amid reduced supply. This facilitated the transformation of Australia from a dairy net exporter to a significant importer.

Since then, Australia’s dependency on foreign cheese has been growing, peaking at a total of 115,878 tonnes in 2017. Most of the imports, experts suggest, went to further cheese processing for the foodservice industry.

“Imported cheese now occupies a considerable share of the total Australian market- around 34% of all cheese consumed in Australia in 2016/17 or 4.6 kilograms per person. A considerable amount of this cheese, and in particular most of the growth out of the US and New Zealand, has been in imports of cheese for a lower value, price sensitive segments of the Australian market, such as pizza cheese for food service,” Dairy Australia suggests.

Outlook

Dairy Australia’s initial forecast for 2018/19 milk production is for growth between 0-2%, which would equal between 9.3-9.5 billion litres. This is based on the likely full season 2017/18 growth rate of around 3%.

Australian milk production is “ahead of expectations” for the season to April, up 4.5% despite hard conditions in some regions in the country. Some farmers struggled from a very dry start to the calendar year 2018, notably the absence of an autumn break.

Low farmer confidence seems to be an ongoing issue in Australia.

“In the absence of any significant economic or agri-political developments to inspire risk-taking and expansion, average seasonal conditions can be expected to result in average- to slightly below average milk production growth. In an environment of fragile trust and ongoing financial challenges, many farmers will be waiting to see the benefits of enhanced competition for milk and a stronger commodity market.”

Article sourced from iegvu.agribusinessintelligence.informa.com