Spring delivers opportunities for dairy

The 2022/23 season is gaining momentum this spring. Record high farmgate milk prices and three years of favourable operating conditions have meant increased profitability for many farmers and confidence in the industry’s future.

Milk production is likely to remain stable this season, with farmgate prices remaining high, according to the September 2022 Situation and Outlook Report from Dairy Australia.

The report forecasts a smaller global milk pool due to droughts, high input costs and farm exits in the northern hemisphere, which may offer opportunities for Australian exporters.
In Australia, weather, workforce shortages and input costs will remain key issues for the industry.

A third consecutive La Niña weather event is likely, which may increase homegrown feed production, reducing the need for high-priced feed inputs. But wet conditions will be challenging, particularly for farmers in New South Wales and Queensland who have already received higher than usual rainfall.

“High farmgate prices mean most farmers are currently making good profits,” says Dairy Australia’s Industry Insights and Analysis Manager, John Droppert.

“In the coming season, farmers will need to manage these high prices against labour shortages and relatively high input costs.

“In addition, increased precautions and contingency planning are being implemented by many farmers to safeguard them against the elevated risk of Foot-and-mouth disease and Lumpy Skin Disease. These diseases are not in Australia but are of concern because of recent outbreaks in Indonesia.”

Dairy processors are paying high milk prices yet some of their markets are seeing falling product prices. Although margins are tight for milk processors, the domestic market has provided some relief. The ‘dairy products’ index published by the Australian Bureau of Statistics is up 5.2% over the 2022 financial year indicating that processors and manufacturers are recovering some costs from consumers.