High grain, hay and irrigation water prices continue to put pressure on Australian dairy farmers.
But global markets are well-balanced, with potential for further farmgate price increases this year.
That’s according to Dairy Australia’s latest Situation and Outlook report released today.
Milk production continues to lag behind 2017-18 levels, tracking 4.8 per cent lower for the current season to December.
Dairy Australia’s forecast for 2018-19 milk production has been adjusted to reflect a 7-9 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.
The report also said there is 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 senior industry analyst John Droppert said the ongoing growth in markets like China and Japan provides some comfort for the Australian dairy industry in an environment that is 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 while it was too early to quantify the full implications of Woolworths’ decision to increase private label fresh milk prices by 10 cents per litre “for farmers it has been a welcome one”.
Healthy growth is evident in higher value subcategories including flavoured milk, premium dairy desserts and probiotic yoghurts. Both cheese and dairy spread sales have also experienced growth, the report said.
Original article sourced from https://www.weeklytimesnow.com.au