Monday, 20 June 2016 08:55

Oz milk production dips

Written by 
John Droppert, Dairy Australia. John Droppert, Dairy Australia.

Australian National milk production could drop as much as 5% next season, taking the national output to levels not seen since the drought.

According to Dairy Australia's June 'Situation and Outlook', a dry season and the recent drop in farmgate milk price has also smashed farmer confidence, a recent survey suggesting only 50%, or fewer, farmers feel positive about the industry.

The survey finds farmer sentiment was already in decline prior to the April cuts (from 74% positive in 2015 to 67% in 2016).

The report says farmers can expect the impacts of the deep and persistent trough in international dairy markets and the low farmgate price to persist until at least the start of 2017 when it is hoped the global supply glut will start to ease.

Despite more stable operating conditions and farmer sentiment, producers in northern NSW, Queensland and Western Australia are on high alert for flow-on impacts of the late season farmgate price cuts in southern Australia.

Dairy Australia senior analyst John Droppert says the impact of domestic and international events on many farm businesses could not be downplayed.

"Managing short term pressures to achieve longer term business plans will prove a greater challenge than usual in the months ahead," Droppert says.

The report predicts lower fertiliser costs and high cull cow prices could provide some relief.

However lower international grain prices have taken some time to flow through to the Australian market and hay stocks remained tight.

Droppert says national milk production is expected to be down about 2% for the 2015-16 season to between 9.55 and 9.65 billion litres.

The outlook for 2016-17 is heavily dependent on seasonal conditions, but with the pricing environment looking tough a further 2-5% fall in production is anticipated. "1-2% is a conservative estimate, but 5% is a pretty substantial drop in production so it's at the negative end of the spectrum," he said.

Droppert did not rule out a worse scenario but said, "We are looking at a season that by all accounts should be more favourable in terms of rainfall."

He says the reduced production would not impact domestic supply, but would be taken off export markets.

Despite the gloom, dairy demand has recovered in most importing regions over the past 12 months, with the overall volume of dairy trade up nearly 6%.

China has been responsible for much of this growth, with total exports to the country up 16% in volume.

Exports to Southeast Asian markets have continued to grow, with strong expansion in milk powder categories, while export volumes to the Middle East and Japan have eased slightly.

However, Droppert says supply continued to outpace demand, with inventories in many parts of the world building as production in Europe and the US continues to expand.

"Despite early signs, a global market turnaround remains unlikely until 2017," he says.

To read the report visit 

More like this

Farmer confidence riding high in Oz

With farmer confidence and consumer optimism high, much of Australia’s dairy industry has been riding on a wave of positivity over the past few months, according to Dairy Australia’s June 2021 Situation and Outlook report.

Steady as she goes

As now widely reported, dairy markets are in a somewhat balanced phase.


Tributes to a dairy champion

Fonterra chairman Peter McBride has paid tribute to dairy industry leader John Luxton, who passed away earlier this month.

Dairy tops organic exports

Dairy has been named as New Zealand’s largest organic sector with exports of $153.8 million, up 55% from 2017.

Machinery & Products

Gongs for John Deere

The tractor of the Year 2022 Awards, held at the recent EIMA show in Bologna, handed out a brace of…

Digital pre-start safety checks

According to numbers published by ACC, more than 60 farm-related injuries are reported every day, leaving much room for improvement.

JV for Bucket Test App

Irrigation NZ and global farm management company CropX have established a joint venture agreement for the Bucket Test app.

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Poo-powered BMW

OPINION: Car maker BMW is partnering with a California dairy farm to turn effluent into clean energy to power its…

Not bad

OPINION: New Zealand may be a minnow on the global stage but here’s another example how our ag sector punches…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter