A National Dairy Farm Survey found that while some Murray Dairy region farmers were expecting to decrease their herd size in the future, many more were anticipating an increase.
Nationally, about 77 per cent of farmers recorded a profit in 2019-20, while a higher number expected to return a profit in the year just ended.
The figures are contained in the recently released Dairy Australia Situation and Outlook report.
National milk production is expected to be stable in 2020-21, with minimal volume change compared to the season prior.
Dairy Australia’s initial forecasts suggest zero per cent to two per cent growth in national milk production relative to this year, which would equate to a national milk pool of between 8.80 and 8.97 billion litres.
In light of otherwise supportive conditions, high beef prices and strong land values have continued to weigh on the national dairy herd and encourage farm exits, while flooding and the ongoing mouse plague have presented acute issues in the affected areas, the Situation and Outlook report found.
The lack of available workers remains a concern across the country.
Consumer optimism is high with life in Australia starting to return to a pre-pandemic ‘normal’ (notwithstanding intermittent lockdowns and restrictions on movement), prompting recovery in foodservice spending and domestic dairy markets.
There is an increased demand for branded products over private label variants, which is seeing the sales value of all major dairy products soar.
Globally, milk output from the four largest exporters — New Zealand, the United States, the European Union (plus the United Kingdom) and Australia — has been steadily increasing.
Growth rates have ranged between one per cent and two per cent for much of the past year.
Global demand has so far absorbed the additional milk produced, by outpacing supply growth. Greater China (China, Macau and Hong Kong) remains the key driver of this.
In light of otherwise strong fundamentals, the COVID-19 pandemic continues to challenge market dynamics.
While global fundamentals remain positive for the Australian industry, the ongoing labour shortage remains a concern and any deterioration in feed supply also presents a risk.
Overall, most factors suggest another favourable season ahead.
Dairy Australia’s quarterly Situation and Outlook reports summarise national milk production, key dairy consumption data and international market impacts on pricing.
The June 2021 report is available at: www.dairyaustralia.com.au/sando
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