Milk production set to drop

The dairy industry is expected to record its lowest level of production in more than 20 years, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) latest forecast figures.

Released this week, the figures predict a three per cent fall in herd numbers and a four per cent fall in milk production for the 2018-19 year.

Poor seasonal conditions and rising input costs due to ongoing drought conditions in eastern Australia were listed as the driving factors.

“For many producers, the increased costs will not be offset by higher forecast milk prices,” the report said.

“Cow culling has increased and is likely to remain high as producers look to turn off less productive animals.”

Conversely, the Australian farm gate milk price is forecast to rise slightly to 47 cents a litre in 2018-19, influenced by a likely drop in the Australian dollar and strong competition among processors for milk supply.

According to the ABARES report, milk production in New Zealand and the United States are forecast to be higher, placing downward pressure on dairy commodity prices.

“US milk production has grown virtually uninterrupted for over five years due to productivity improvements and is expected to continue to do so,” the report said.

“Global prices for cheese, whole milk powder and butter are forecast to fall as a result.”

However, lower milk production is forecast for China which is expected to increase import demand.

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