Higher Farmgate Prices, Milk Production

AUSTRALIA - Australian dairy farmers should anticipate a slight upwards shift in projected farmgate prices to $4.70-$5.00/kgMS (34-36cpl) according to Dairy Australia’s latest Situation and Outlook update.
calendar icon 20 September 2012
clock icon 2 minute read

Trading conditions suggest a modest price increase by the end of season as global supply tightens, according to Dairy Australia industry analyst Norman Repacholi.

The report also expects milk production to grow around two per cent to 9.65 billion litres across all of Australia’s dairying regions.

“The Situation and Outlook update highlights industry changes since the main annual survey was undertaken in last February,” Mr Repacholi said. “It reveals a continuation of Australia’s two-speed dairy industry: the southern regions being focused on exports and the northern areas and WA on domestic supply.

“Seasonal conditions were largely favourable nationally – despite pockets of challenging weather – and most irrigation systems are at 100 per cent allocation.

“However, the industry has had to cope with negative price signals, particularly in the fresh-milk regions,” Mr Repacholi said. “Supermarket price competition is expanding and appears embedded in the retail landscape. Discounted retail milk and cheese prices are applying margin pressures on processors and the strong Australian dollar constrains export earnings.”

The effects of global conditions will continue to figure largely in the local industry, notably rising input costs for feed grain due to drought in the US and Black Sea regions, he added.

The update also incorporated face-to-face and phone interviews revisiting 340 farmers – or one-third of the main survey.

“We undertake this survey to get the latest information from our farmer stakeholders,” Mr Repacholi said. “It gives the industry valuable feedback and provides direction for future investment. “Across all regions except WA, milk price has been seen as the primary challenge for farmers, and this has seen an easing in growth projections.”

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