The recent challenges faced by Australian dairy farmers are the result of a mix of circumstances including depressed global markets, very dry conditions across much of South Eastern Australia and high water prices.
In late April, some major processors in Victoria, South Australia, Tasmania and parts of New South Wales announced an immediate price drop for milk at the farmgate. Some farmers must repay a portion of the previous milk receipts already paid in this financial year. It’s very unusual for such a price stepdown to occur so late in the season and in many cases, farmers now have no choice but to sell their milk below the cost of production while they readjust their farming systems.
Dairy is a global commodity. Australia has strong local demand for fresh milk and dairy products and is a major player in global export markets. However, we compete with other major dairy exporters and prices and exchange rates fluctuate. Other key supply regions like New Zealand and Europe have been similarly challenged by a growth in dairy production that is exceeding global demand at the current time. Volatility has become a common factor in global dairy markets and this has negatively impacted Australian exporters and their supply chains.
All of this makes for very challenging times for the Australian dairy industry and our farmers, many of whom hail from small, regional communities. However, Australia has strong local demand and a long and proven track record in servicing more than 100 export markets. We are a resilient, efficient industry competing in a global market place. We will be productive, profitable and sustainable for the long term.