High feed and water prices and tough seasonal conditions have taken their toll, with this season’s milk production expected to fall by eight billion litres.
Dairy Australia’s Dairy Situation and Outlook report for October points towards a five to seven per cent milk production shortfall on last year’s production levels.
Feed prices increased significantly in the Goulburn and Murray valleys, with the price for shredded cereal hay tripling to $402/tonne, while stockfeed wheat saw a price hike of 71 per cent to $425/tonne on average.
High water prices did nothing to ease the pressure, with many dairy farmers unable to invest in growing feed on-farm.
The September average for traded water in northern Victoria was registered at $321/Ml by the Victorian Water Register and Murray Irrigation, a jump of 202 per cent on the previous year and a 84 per cent hike on the five-year average.
This was despite water use in volume dropping 13 per cent on the previous year, although it remained eight per cent higher than the past five years.
Zone 7 (Barmah to Nyah) had the largest month-on-month price increase, jumping $110/Ml from July to August, while both Zone 6 (Hume to Barmah) and Zone 1A (Greater Goulburn) also had substantial increases of $83/Ml and $70/Ml respectively.
Dairy Australia senior industry analyst John Droppert said there was some positive news, with domestic sales markets strong, seeing an increase of 0.9 per cent in Australian milk, cheese and yoghurt sales.
He said while farmers’ key priority was to navigate their way through the immediate challenges, on-farm decisions made in the coming months would be fundamental to the industry’s ability to seize the opportunities when seasonal conditions improve.
‘‘While farmers continue to feel the impact of the feed shortage and increasing cost of production, domestic and global market trends provide a timely reminder that dairy has an important role in Australian diets and improving the nutrition of millions of people around the world,’’ Mr Droppert said.
‘‘Dairy demand has remained robust, with dairy exports from the six major exporters increasing 3.7 per cent over the past 12 months.
‘‘Greater China and Japan helped drive this growth, while demand from the Middle East and North Africa region increased for the first time in over three years.’’