Australian Milk Production Still on the Up

AUSTRALIA - Australian milk production over the past two decades has been above the volume required for domestic consumption. While Australia accounts for just an estimated two per cent of the world’s milk production, it is the third largest global exporter of dairy products after New Zealand and the EU, accounting for 11 per cent of the total.

3 March 2009

2 minute read

Oceania

The Australian Dairy industry has undergone significant structural changes over recent years. The number of dairy farms have halved since 1990 while the Australian Bureau of Statistics report that dairy cow numbers have fallen by 22 per cent to 1.7 million head since 2000. However, productivity has been increasing with yields per cow rising by 5 per cent to 5,231 litres.

Australian Milk production (million litres)

Source: Dairy Australia

It is estimated by Dairy Australia that milk production will increase by a further 1 per cent to 9.3 billion litres in the 2008/09 marketing season which commenced last July. Dairy Australia has reported that milk production to date in the 2008/09 marketing is almost 3 per cent ahead of year earlier levels. Production levels are expected to ease in the latter part of the 2008/09 marketing season as a result of the dry conditions affecting the key milk producing regions.

Australian exports of dairy products fell by 15 per cent in the 2007/2008 season to 650,100 tonnes. In a report compiled by the USDA, they forecast an increase of 2 per cent in cheese exports in the 2008/2009 season to 206,700 tonnes, this follows a decline in exports in the 2007/2008 season. Exports of butter are expected to recover slightly while a recovery of 3 per cent in SMP exports is forecast by the USDA.

Monthly distribution of Australian milk production
(million litres)

Source: Dairy Australia

In the Dairy 2009 Situation and Outlook report issued by Dairy Australia, they suggest that positive exchange rates will help offset the weak demand in the slowing global economy, especially in key countries like China. Also, some slowdown in the rate of growth in global dairy supplies is expected. Cheaper inputs are expected to help partly offset falling producer prices.