Australian dairy farmers are at their most confident in four years according to Dairy Australia’s Situation and Outlook report released Wednesday 4 June 2008.

Dairy Australia Strategy and Knowledge Manager, Joanne Bills, said 78% of farmers were positive about the future of the industry compared to 54% of farmers in 2007.

“The results from our National Dairy Farmer Survey showed the industry is in the most optimistic mood since the survey was instigated in 2004,” said Ms Bills.

According to the survey, Tasmanian farmers were the most positive about the industry’s future (92%).

Ms Bills said, “Tasmanian farmers have consistently been the most positive in the country. They have had less impact from drought conditions compared to other regions and their lower reliance on grain feeding has meant their profit margins have been under less pressure from rising input costs.”

“WA farmers also enjoyed a significant improvement (67%) compared to last year when 47% were feeling happy about the future. Since the survey, an improved milk price outlook, industry activities and a good autumn break have probably seen further improvements in sentiment in that region.”

Other optimistic regions included Western Victoria (82%) and south-east Queensland (81%).

Milk production

Survey results indicate that milk production has been affected by a reduced national dairy herd and higher feed costs early in the 2007-08 production season, and is expected to be down around 5% to 9.1 billion litres.

“Milk production was sharply lower in the early part of the season, as dairy farmers faced fodder shortages and high supplementary feed costs – with many farmers opting to keep their herds intact in view of the strong milk prices on offer,” said Ms Bills.

Three year milk production outlook

Ms Bills said that forecasting milk production is especially difficult, given the current dynamic conditions experienced by farmers.

 “Decisions for individual farmers will depend on the rain they receive in autumn, what pasture growth eventuates from that rain, and available fodder reserves to carry herds through winter. The outlook for continuing strong milk prices will nonetheless sustain a commitment by most to optimise milk production to boost margins,” she said.

With the uncertainties facing production in 2008-09, the outlook for milk production in three years time is more difficult to ascertain – it will depend on the decisions farmers make regarding herd sizes in the next few months – and also their responses to possible changes in government policy in coming years.

“Assuming a return to normal seasonal conditions, three-year intentions from the survey in February indicate a scenario for milk production in 2010-11 of between 9.5 and 9.9 billion litres,” she said.

According to survey results, 58% of dairy farmers, representing 62% of current milk production, believe that over the next three years they will increase milk production.  About 30% believe their production will remain the same, and only 3% believe they will see a decrease.

The regions which are expected to experience the most significant production growth from 2007-08 and 2010-11 include Northern Victoria, where 71% of surveyed farmers are planning to grow, and Tasmania, where 68% of farmers have expansion plans.

“Of course in the ensuing months conditions have been unusual, and the production intentions farmers reported in February may have changed. So this year, we will re-survey a sample of the industry in September to assess how these plans are tracking,” said Ms Bills.

Drought

Dairy farmers across the nation believe they are still feeling the effects of drought and have had to adapt their on-farm practices accordingly, particularly through the use of grain to feed their herd.

Ms Bills said, “More than 75% of farmers felt they were adversely affected by drought in the last 12 months, meanwhile 11% were affected by flood – and some regions by both climatic extremes.

“The dry conditions farmers have been experiencing had a significant impact on feed usage in 2007-08 with increased grain use in general. Own-farm feed shortages affected a large number of farmers, with 47% of farmers required to rely entirely on bought-in feed for at least some part of the year,” she said.

Regions that are feeling the affects of drought the most include Northern Victoria (99% of farmers), Western Victoria (85%), Gippsland (84%) and south-east Queensland (84%). Western Australia is state that is least affected by drought (18%).

Investment

As a result of better milk prices, 67% of dairy farmers made on-farm capital investments in the last 12 months, up from 60% in the previous year.

Machinery remained the largest area of investment. There were also small increases in expenditure on dairy milking plant, irrigation plant, land and feed systems.

“More than half of the surveyed farmers (55%) have indicated that they intend to make on-farm investments in 2008-09. This is almost twice the intention expressed in the 2007 survey. It should be noted, however, that past surveys have confirmed that a significant proportion of investments – especially those relating to equipment – are, in fact, not planned,” said Ms Bills.

Around 1000 dairy farmers were surveyed across eight farming regions in Australia about the changes in their farm and herd size structure; milk production; on-farm production systems; use and purchase of supplementary feed and grain; farm finances; impact of drought; farm labour; achieved and planned growth; three-year outlook; and attitude to the dairy industry.

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