Situation and Outlook February 2017



  • Better balance in global dairy markets and lower input prices are positive signs for the Australian industry.
  • However, production margins remain tight or negative, and many farmers face a significant task rebuilding their equity position after the past 12 months.
  • International dairy commodity prices for most products are back above five year average levels and costs of major inputs continue to fall, with big grain and hay harvests bolstering supplies.
  • The year on year drop in Australia’s milk production has moderated, from over 10% for the first four months, to 8.5% for the July to December period. Dairy Australia expects this gap will narrow further but remain significant, forecasting full season production to be down 6-8% on the 2015-16 total of 9.5 billion litres.
  • Robust sales growth is evident in the domestic market, along with significant consumer shifts within categories

John Droppert on the February 2017 Situation and Outlook