25 January 2013

2 minute read

Australia’s dairy industry is one of the three most important local rural industries, with a farmgate value approaching $4.0 billion in 2011/12.

A 4% growth in milk production volumes— the strongest growth rate in a decade—saw 9.48 billion litres of milk processed and helped offset an average fall in farmgate milk prices paid to farmers of around 2% over the season.

Dairy ranks fourth in agricultural exports—valued at $2.76 billion—with little change in export volumes or values over the year. Value-added processing activities delivered an agricultural industry with a wholesale value of dairy products in excess of $10 billion last year.

In the local market, estimated total per capita consumption of the major dairy products of milk, cheese, butter / blends and yogurt remained at around 300 litres per person [in milk equivalent terms].

Significant regional variation remained a feature of the Australian dairy industry in the 2011/12 season.

Milk production generally expanded across the south-east corner of the country with broadly favourable seasonal conditions, plentiful irrigation water supplies, and the impact of slightly lower farmgate prices offset by lower feed costs. Consequently, most farmers in the key exporting regions saw the season as an opportunity for financial consolidation.

However, the drinking milk regions of Queensland, New South Wales, Western Australia and parts of South Australia saw continued intense retail competition, shifts in private label supply contracts and processor rationalisation, all of which served to undermine farmer confidence and supply stability.

Dairy commodity export prices eased through most of the season and, together with domestic market price discounting, lead to a large proportion of farmers surveyed in 2012’s National Dairy Farmer Survey once again citing milk price as their main challenge in coming months.

January 2013