May 12, 2010

Australian farmers focusing on domestic supply unaffected by global crisis

According to the Dairy Australia's Situation and Outlook report, Queensland farmers who have been supplying domestically-focused milk processors have been largely insulated from the impacts of the global financial crisis.

Joanne Bills, Dairy Australia Strategy and Knowledge Manager, said conditions for dairy farmers in the northern states had been relatively benign over the past year.

"Contract prices have remained in place for most dairy producers and seasonal conditions have remained generally favourable, although some regions have experienced flooding," Ms Bills said.

As a result, milk production has expanded beyond the immediate requirements of fresh milk processors in the region. This adds to margin pressures being experienced due to the lack of wholesale price improvements in the retail market. As a result, processors are building in sharper signals designed to limit further growth into new contracts.

In far north Queensland, 63% of farmers were positive about the future of the national industry; however, confidence in the future of their local region was lower with 47% of farmers positive. Just 27% of respondents in this region believe production will be greater in three years' time, down from 63% last year.

In southeast Queensland, 83% of farmers are confident about the future of their dairy businesses and 71% are confident about the future of the national industry, compared to the national average of 65%.

The National Dairy Farmer Survey (NDFS) has found that Queensland's two dairying regions are split on whether milk price is the greatest challenge they face.