News

Milk production flat: report

By Geoff Adams

Australia’s dairy sector can expect continued growth in demand while overall production will remain flat to 2030 compared to 2018 levels, according to research released by ANZ recently.

The Milk Run report found despite recent challenges faced by the industry, the market opportunities that have driven dairy growth and innovation during the past two decades remained as strong as ever.

Commenting on the report, ANZ head of agribusiness Mark Bennett said as with most major agricultural industries, the Australian dairy industry had been through a period of significant structural change in recent years.

“However, for those producers who are profitable today, the outlook is strong for prices as processors look to secure supply,” Mr Bennett said.

“The outlook for exports also remains strong with demand from East Asia continuing its positive growth, particularly for fluid milk and cheese exports.”

The Milk Run - key findings:

● The continuation of current trends would see milk production remain flat for the next decade compared with 2018, as higher cash costs would see milk production rebounding on the dip in production felt in 2019 but rising to just over 9400ML/year compared with the 2018 production year;

● A constrained domestic production and ever-increasing demand for milk and dairy products in East Asia is likely to spell future strong prices for those dairy producers remaining in the industry;

● The impact of the recent bushfires, while locally devastating, is unlikely to have a significant impact on national milk supply;

● Australian milk production looks set to continue to be flat for the short term with trends resulting in production in Queensland continuing to decline, while the primary source of growth being seen in the southern states, particularly Tasmania, where production would rise by 20 per cent by 2030;

● Lower production in the major production countries should bode well for prices in the future, however, many in the industry are concerned that consumers have limited tolerance for higher prices; and

● Processors are likely to face the most significant challenges going forward as they look to make best use of manufacturing capacity and growing export markets with lower milk supply and a shifting supply base.