Situation & Outlook Report

Dairy Australia provides the latest international and domestic market trends, statistics and facts, with expert analysis and unbiased insights.

The December 2023 Situation and Outlook Report from Dairy Australia forecasts milk production to remain steady over the 2023/24 season despite the anticipated impacts of the El Niño weather event. Record profits were recorded in some regions last season, and high farmgate milk prices this season bode well for farmers. Meanwhile there are some challenges such as high production costs, Australia’s competitiveness of dairy products and economic constraints on consumers.

Australian dairy farmers in several regions made record profits during the 2022/23 season, strengthening progress towards Dairy Australia’s target of at least half of farming businesses achieving $1.50/kg MS EBIT (earnings before interest and tax) over a five-year average*.

The latest Dairy Farm Monitor Project results confirmed broad-based cost pressures on farms, with substantial rises in total herd and shed, feed and overhead costs, alongside high interest rates on borrowings.

Supplementary feed was brought in at high rates to combat weather damage and many farmers reported increased labour costs, in efforts not only to attract employees but also retain them.

“The Australian dairy industry enjoyed record profitability last season and is still benefiting from high farmgate milk prices this season, as well as strong retail revenues,” said Dairy Australia’s industry analyst, Eliza Redfern.

“High production costs, Australia’s price competitiveness in dairy markets and economic constraints on consumers are emerging risks. These challenges will be a focus over the rest of the season, in anticipation of Australian and global markets moving towards equilibrium.”

The Situation and Outlook report also confirms that Australia is becoming a much more prominent dairy importer, shipping in the largest volume of overseas dairy in a single season during 2022/23. In 1999/2000, imported products accounted for 11 per cent of Australia’s dairy consumption, whereas last season, 27 per cent of dairy consumed was from overseas. With Australian farmgate prices keeping prices of the local product high, imported dairy has proven increasingly attractive to businesses and consumers looking to limit cost pressure. This growing pressure from overseas dairy products is a sign that deviation from global markets is a temporary phenomenon and will likely have implications for next season’s farmgate milk prices.

*Dairy Farm Monitor Project 2023