November 6, 2017

Suffering from a tight squeeze over the past two years, Australian milk production is expected to start recovering in 2018, according to USDA reports, as relayed by AHDB Dairy.

Positive weather forecasts for the remaining months of 2017 are expected to support a gradual increase in milk production to a total of 8.8 million litres for the year, still 5.9% lower than the previous three years' average.

Production for next year is expected to increase slightly to 9 million litres on the back of rising farm incomes and herd rebuilding.

It was reported that over half of Australian dairy farmers made a loss in 2016 due to very low farm-gate prices, and that 7% of farms ceased trading in 2016 to mid-2017, affected by poor seasonal factors, industry disruption and shrunken farm incomes.

The outlook for next year is seen to be better with improved international and domestic milk prices helping to boost incomes, though capital investment is still likely to be constrained.

Australia's milk production is only about 62% of the UK's, but its location makes it an important trading nation serving demand in the Asia-Pacific region. It is the biggest supplier of dairy products to Japan and the second-biggest supplier to China, after New Zealand.

Dairy exports have been down 2% this year from 2016 on the back of a reduced milk supply, but exports are expected to stabilise in 2018.