May 19, 2008

Eastern Australia, where the majority of the Australian dairy industry is located, continues to suffer drier than average conditions and irrigation water supplies continue to remain at historically low levels, reports the US Department of Agriculture. 

Steep declines in world prices for key dairy commodities have precipitated a decrease in farm gate prices for fluid milk in Australia during 2008-09. According to a recent government statistical report, world prices for cheese, butter and milk powders have fallen by around half in 2008-09, following record highs in 2007-08. Declining input prices have provided some relief from declining milk prices and continuing dry conditions. Also, on the positive side, prices paid for fodder (hay and grain) have declined significantly as has the price of fuel in 2008-09. Prices paid for irrigation water have also declined from record levels, although remaining at historically high levels.
 

A substantial increase in the value of the Australian dollar in 2007-08, combined with a decrease in milk supply slashed dairy exports for 2007-08. However, increased milk supply and a lower Australian dollar value will likely see dairy exports improve in 2008-09.

For more of the USDA report, please click here.