8 February 2013

4 minute read

Milk Production

While farm numbers have steadily decreased over the past three decades, milk output generally increased, due to increasing cow numbers and improved cow yields—up until the major drought of 2002/03. The following decade has been a period of consolidation for the industry, with falling cow numbers and dry seasonal conditions constraining production. While the last couple of seasons have seen a marked improvement in seasonal conditions across many dairying and grain growing regions, volatility in milk prices and lower cow numbers have limited growth in milk production.

There have been significant on-farm adaptation strategies employed to manage the highly variable conditions of recent years, particularly in the inland irrigation regions of northern Victoria, and central and southern inland New South Wales where water allocations were very low for a number of years. Interestingly, with much improved water supplies in the last three years, many farmers have re-adjusted their production systems back towards the more traditional pasture-based systems they used over a decade ago.

As Figure 12 indicates, the underlying trend has continued towards fewer farms, larger herds and increasing levels of milk production per farm. Farmers have made many changes to their general farm management practices and adopted a range of improved technologies, including soil testing, fodder conservation, supplementary feeding and the use of animal nutritionists to balance cow diets, improved animal genetics, artificial insemination programs, the use of new milking equipment and techniques, and the widespread use of computers to record and monitor herd and individual cow performance.

Milk production is concentrated in the temperate zone of Australia; as can be seen in Table 7 and the map of dairying regions in Appendix 1. Australian milk production remains strongly seasonal in the key south-eastern dairying regions, reflecting the predominantly pasture-based nature of the industry. Milk production peaks in October, tapers off until late-summer, and then flattens out into the cooler winter months (refer to Figure 13). The production of long shelf-life manufactured products in these parts of the country has enabled maximum milk utilisation within the seasonal cycle. However, the seasonality of milk output in Queensland, New South Wales and Western Australia is much less pronounced, due to a greater focus on drinking milk and fresh products in these states. Farmers in these states manage calving and feed systems to ensure more even year-round milk production.

Australian milk production increased by 380 million litres, or 4.2%, to 9,480 million litres in 2011/12—the strongest growth rate in a decade. This reflected a third consecutive season of improved conditions with plentiful water, lower input costs and reasonably strong milk prices. However, conditions always vary significantly around the country; from very dry conditions in south-west Western Australia over some of the season, to a repeat of flooding across northern Victoria and parts of the New South Wales coast. Wet winter conditions in eastern Victoria in particular also made dairying farming difficult for this period of the year.

Cows’ milk consists of solids (milkfat, protein, lactose and minerals) in water, with water making up about 87% of the volume. The milkfat and protein components are those on which companies base their farmgate milk prices. Milk composition varies between regions due to a number of factors, such as cow breed and age, nutrition and feed quality, as shown in Table 8.

While total milk output has expanded in the last couple of years, strong growth in the volumes of milk going into the drinking milk sector has seen its share of total milk production increase from a low point of 17% in 2001/02—the year of peak milk production—to over 25% in the 2011/12 season. Conversely, the proportion of milk used for manufacturing dairy products, and hence available for export, has been steadily declining over the decade, as shown in Figure 14.

The differential in the proportion of drinking milk to manufacturing milk by state is shown in Figure 15. It graphically illustrates the much greater focus on drinking milk in the product mix of the dairying industries within Queensland, New South Wales and Western Australia.

Further Reading You can view the full report by clicking here.

January 2013