Increased global demand and high opening milk prices have the dairy industry in good stead for the 2007-08 season.

However, a strong Australian dollar and the continued effects from the drought are causing many within the industry to move with caution.

Dairy Australia manager of industry relations John McKew said the most important thing for farmers heading into the new season was to balance uncertainty with optimism.

Mr McKew addressed a crowd of about 50 dairy industry members at GV Dairy Supplies last Friday as the company celebrated 10 years in business.

"We are still in the midst of one of the most difficult climatic conditions that this industry has faced," Mr McKew said.

"The industry is still suffering the impacts of the drought, uncertainty about what sort of water will be available to the industry in the coming season . . . and of course a shortage of hay and grain."

Mr McKew added that many farmers had incurred increased debt throughout the drought period and the strong Australian dollar was also impacting on returns.

He said despite this, Dairy Australia remained optimistic about the outlook due to the fact world prices for dairy commodities were at record levels and global demand was currently outstripping supply.

Farming machinery manufacturer DeLaval managing director Mark Brummel gave a presentation on the latest in cutting-edge dairy technology, the automatic milking system.

The system allows cows to choose their own milking time and interval and move voluntarily into milking stalls.

Teat cleaning, milking cup application and milking is entirely automatic.

Mr Brummel said the biggest advantage of the system was allowing dairy farmers to have a lifestyle.

"Time pressure is off the farmers," he said.

"The lifestyle change is by far the biggest advantage the system has."

rebecca.tampion@

sheppnews.com.au