Dairy

Rural Bank Insights provides a monthly commentary on production and pricing trends for Australian agriculture, providing producers with a timely overview of current trends and an outlook for the coming months ... Cattle, cropping, dairy, horticulture, sheep, wool. 

Australian dairy producers can look forward to another favourable season in 2023/24, with the sector set for its fourth consecutive profitable year, Rabobank says in its recently-released annual Australian Dairy Seasonal Outlook.

Australian agricultural commodity prices took another downward turn last month with the NAB Rural Commodities Index* now 19.7 per cent below year-ago levels. Lower beef, lamb, canola, dairy and wool prices saw the Index fall 3.6 per cent month-on-month, according to the bank’s April Rural Commodities Wrap released on 26 April 2023.

Australian farmers continue to ride the rollercoaster of seasons, commodity prices and economic factors, with rural sentiment at the start of 2023 dipping to its lowest level reported since late 2018. The latest quarterly Rabobank Rural Confidence Survey, released on 16 March 2023, found after rallying late last year, sentiment in the rural sector had fallen again this quarter as farmers continue to navigate a range of economic and financial uncertainties.

The latest ABARES Snapshot of Australian agriculture shows the industry continues to grow and perform strongly in a number of key areas including exports, incomes and risk management. Industry production and export values are forecast to hit record levels in 2022-23, with broadacre and dairy farm cash incomes remaining well above historical benchmarks.

According to a new report from Rabobank, participants all along the dairy value chain are being squeezed. Producers’ milk prices have tumbled from 2022’s lofty levels while feed prices are at record highs.

Farm cash income for all broadacre farms is projected to decrease nationally by around 7 per cent to average $327,000 per farm in 2022–23 but remain 46% above the 10-year average ... “However, farm incomes are projected to fall slightly in 2022–23 because of lower prices for most commodities and input costs remaining high after significant increases in 2021–22": Head of Farm Performance at ABARES, Peter Gooday.

The liquid ‘drinking’ milk market remains of key importance to Australia’s dairy sector – with improved domestic retail pricing and opportunities for further export growth – Rabobank says in a newly-released industry report.

The Tasmania Farmers and Graziers Association (TFGA) supports the Australia-European Union (EU) Free Trade Agreement in principle ... However, the TFGA is concerned about recent demands from the EU to implement a Geographical Indications (GI’s) regime requiring Australian dairy producers to stop using traditional names such as Brie, Parmesan, and Cheddar.

Australian consumers are seeing significant price increases across dairy products – based on the national Consumer Price Index (CPI) data – with milk prices having risen at the fastest rate since records began, according to a new report by agribusiness banking specialist Rabobank. In its Global Dairy Quarterly Q4 2022 – Walking the Tightrope into 2023, Rabobank says while the Australian consumer has shown resilience in the face of cost-of-living pressures, signs of dairy demand weakness are emerging as a willingness and ability to spend on discretionary items softens.

Kirstin Nicholson. Mick Farrant’s dairy farm is on Flannery’s Road, McMillans and two thirds of his 1,100-acre property is underwater. Excess water from Pyramid and Bullock Creeks has inundated the farm. “It’s a big job moving cattle, it’s just a massive undertaking to shift a whole herd and get set up for them somewhere else. You don’t do that in five minutes,” he said.

Kirstin Nicholson. Pat and Michelle Quinn’s dairy farm at Mincha West is under real threat of flooding. The 700 head dairy property sits about 3km from Flannery’s flume, and the water coming out of Kow Swamp backs up and flows over the top of the property ... In 2011, the farm was completely inundated – and Pat is predicting this flood will be the same.

The deindustrialisation of milk production in Ukraine could prove to be a miraculous renaissance of the industry ... The cow becomes a source of hope and prosperity in an era of instability. This allows us to hope that, at least in private households, the production of dairy products will begin to increase.

Shadow Minister for Northern Australia, Senator Susan McDonald has warned the Federal Government to cut the “bull” and not the national cattle herd ahead of signing up to an international methane reduction agreement ... Senator McDonald warned that any move against cattle and sheep herds would be met with fierce resistance, especially from Northern Australia’s $1.35 billion live cattle export sector which supplies much-needed beef to South East Asian countries ... Senator McDonald said attacks on methane emissions ignored the contributions made by herbivorous and ruminant feral animals.

The Victorian Farmers Federation’s United Dairy Farmers of Victoria (VFF UDV) says Northern Victoria’s dairy industry would be further damaged by water buybacks and the recovery of the 450GL up-water target ahead of this week’s meeting of State and Federal Water Ministers to discuss the Murray Darling Basin Plan. VFF UDV President Mark Billing said the group strongly opposed the recovery of the 450GL saying it would lead to losses in dairy production and local jobs.

Finally, the announcement many workers in Lismore were hoping for – Norco will rebuild its ice cream factory in South Lismore although it will be smaller. The factory was left wrecked and non-operational after the February 28 floods.

Global dairy market fundamentals have shifted course in Q3 2022, from extreme tightness to visible but modest loosening. A potential collision between supply growth and demand is approaching, with Q4 year-on-year milk supply growth, weak Chinese import demand, and broader demand rationing in developing countries weighing on forecasts, according to the latest international dairy market report from Rabobank.

Kirstin Nicholson. Two of the region’s young farmers will represent Australia at the Young Breeders School in Battice, Belgium. Kaitlyn Wishart and Georgia Sieben are part of the team of five that will represent Australia on the world dairy youth competition stage next month.

While global milk production is set to have decreased for at least four consecutive quarters from Q3 2021 to the current quarter Q2 2022 expectations of weakening demand are creating a scenario for moderate price declines in dairy commodities during the second half of 2022, Rabobank says in its latest global Dairy Quarterly report.

NSW Farmers is encouraging dairy farmers to work with processors to secure the best farmgate deal possible for their milk, with the deadline for processors to publish their supply contracts around the corner... “Sustainable relationships are important, and farmers should work with processors to position their businesses for growth on the back of these prices.”

Norco dairy farmers are to receive an immediate price increase of five cents a litre to support them in farm production after the floods. Norco Co-operative’s 281 members will receive the extra five cents a litre paid as a co-operative premium above the normal milk prices, taking the average price to 84c a litre.