The report forecasts a smaller global milk pool due to droughts, high input costs and farm exits in the northern hemisphere, which may offer opportunities for Australian exporters.
In Australia, weather, workforce shortages and input costs will remain key issues for the industry, according to the report.
A third consecutive La Niña weather event is likely, which may increase home-grown feed production, reducing the need for high-priced feed inputs but wet conditions will be challenging, particularly for farmers in NSW and Queensland who have already received higher-than-usual rainfall.
“High farm gate prices mean most farmers are currently making good profits,” Dairy Australia industry insights and analysis manager John Droppert said.
“In the coming season, farmers will need to manage these high prices against labour shortages and relatively high input costs.
“In addition, increased precautions and contingency planning are being implemented by many farmers to safeguard them against the elevated risk of foot-and-mouth disease and lumpy skin disease.
“These diseases are not in Australia but are of concern because of recent outbreaks in Indonesia.”
Dairy processors were paying high milk prices yet some of their markets were seeing falling product prices, the report said.
Although margins were tight for milk processors, the domestic market had provided some relief.
“Increases in the ‘dairy products’ index published by the Australian Bureau of Statistics (up 5.2 per cent year-on-year in June) suggest that dairy processors and food manufacturers are having some success in recovering higher costs from consumers,” the report said.
“Nonetheless, price rises to date remain small in comparison to the pace of increasing farm gate prices and on-farm costs.”
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