Wednesday, 21 July 2021 06:55

Farmer confidence riding high in Oz

Written by  Staff Reporters
Dairy Australia senior industry analyst Sofia Omstedt says a vast majority of farm businesses are expecting to make an operating profit this season. Dairy Australia senior industry analyst Sofia Omstedt says a vast majority of farm businesses are expecting to make an operating profit this season.

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.

Improved operating conditions, robust domestic demand and supportive global fundamentals have continued to underpin a reasonably strong market outlook.

Dairy Australia senior industry analyst Sofia Omstedt says a vast majority of farm businesses are expecting to make an operating profit this season, and having seen favourable weather conditions, industry confidence has bounced back.

Several factors, including higher opening milk prices in 2021/22, suggest this momentum could be maintained well into next season. She adds.

Favourable operating conditions have had a substantial impact on industry sentiment, as demonstrated by the latest National Dairy Farmer Survey (NDFS) which shows that 64% of farmers are feeling positive about the future of the dairy industry, up 20% from last year.

About 88% of respondents are anticipating making an operating profit in 2020/21, with 63% of these farmers expecting profits to be higher than the five year average.

National milk production is expected to be stable in 2020/21, with minimal volume change compared to the season prior.

Omstedt says looking ahead, several factors point to possible modest milk production growth in 2021/22.

Dairy Australia’s initial forecasts suggest 0% to 2% growth relative to this year, which would equate to a national milk pool of between 8.80 and 8.97 billion litres. In light of otherwise supportive conditions, high beef prices and strong land values have continued to weigh on the national dairy herd and encourage farm exits, whilst flooding and the ongoing mouse plague have presented acute issues in the affected areas. The lack of available workers remains a concern across the country.

Consumer optimism is high with life in Australia starting to return to a pre-pandemic ‘normal’ (notwithstanding intermittent lockdowns and restrictions on movement), prompting recovery in foodservice spending and domestic dairy markets. There is an increased demand for branded products over private label variants, which is seeing the sales value of all major dairy products soar. Consumers are, however, going to the store less often and buying more items and bigger packs when they do.

Globally, milk output from the four largest exporters – New Zealand, the US, the European Union (EU) plus the UK, and Australia – has been steadily increasing. Growth rates have ranged between 1% and 2% for much of the past year. Global demand has so far absorbed the additional milk produced, by outpacing supply growth. Greater China (China, Macau and Hong Kong) remains the key driver of this. In light of otherwise strong fundamentals, the Covid-19 pandemic continues to challenge market dynamics.

Whilst global fundamentals remain positive for the Australian industry, the ongoing labour shortage remains a concern.

More like this

Aussie FTA leaves NZ meat sector envious

New Zealand's meat sector will be hoping to benefit from a yet-to-be-signed Free Trade Agreement (FTA) that its Australian counterparts are about to enter into with the UK.

Oz reforms in tatters

The Australian dairy industry has dropped an ambitious plan to form a single 'whole-of-industry' body.

A lesion for Aussies

OPINION: The recent signing of a revamped free trade agreement (FTA) between New Zealand and China has been noticed across the ditch.

National

Machinery & Products

Effluent injection goes XL

Dutch effluent specialist Vredo is testing 15 and 18-metre wide slurry injection rigs for the upcoming 2022 spreading season.

Choosing the right pump

Choosing the right pump for an effluent system is the key to ensuring a system works well and gives many…

Spreading muck with ease

Palmerston North headquartered Strautmann Hopkins Ltd imports the extensive range of Strautmann Muck Spreaders for farmers and contractors, built by…

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Liquid or powder?

Fonterra, the biggest exporter of milk powder to Sri Lanka, may have a new battle on its hands.

Failed legal action

UK vegan and animal rights groups have failed in a bid to ban an advertising campaign promoting meat and dairy…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter