Source: Dairy Australia
Overview
- Australia’s dairy industry has entered a period of recovery after two challenging seasons, with modest growth in national milk production anticipated.
- Cash flow and profitability remain under pressure, although favourable weather has helped keep costs down in a number of regions.
- The global dairy market has benefited from slow milk production growth and resilient demand, however risks to the current balance continue to mount.
- Dairy Australia Senior Analyst, John Droppert, said that while the market does appear to be improving from an overall perspective, challenges remain for suppliers in the domestic market.
- “Many farmers in domestic focused regions have seen milk prices ease over the past season. Coupled with the extreme weather events in parts of Western Australia, Queensland and New South Wales, this has squeezed margins and impacted farm profitability,”
- Data from the annual Dairy Farm Monitor Project reflects the wide range of circumstances in domestic regions, but reflects an overall outcome of steady or slightly lower earnings before interest and tax (EBIT) results compared to the previous 12 months.
- In the face of these headwinds, milk production in domestic focused regions is expected to be steady to lower this season, despite anticipated growth at the national level.
- “The challenges for domestic focused regions are still significant however, Dairy Australia’s forecast for 2017/18 milk production remains a growth range of between 2 and 3% on the 2016/17 total of 9.02 billion litres. This implies a forecast total of around 9.2 billion litres for 2017/18,” Mr Droppert said.