About 75 per cent of Australian dairy farms in 2018-19 are expected to record lower cash incomes, recent analysis by ABARES found, with the average farm cash income projected to decline in every state except Tasmania as a result of lower milk production and high expenditure on purchased feed and irrigation water.
At a national level, the average farm cash income for dairy farms is projected to decrease from $160900 per farm in 2017-18 to $93000 in 2018-19.
The news comes as the latest milk production figures from Dairy Australia revealed milk production in northern Victoria dropped 27.2 per cent and more than 44million litres in January, a 16.1 per cent drop on the same time last year.
Milk production in northern Victoria has been in freefall for several months, with reductions of 22.2 per cent and 19.4 per cent in production registered in December and November respectively.
The outlook doesn’t look set to improve with ABARES also forecasting that the Australian milk price will drop each year until 2023-24.
The research body’s March quarter Agriculture Commodities report predicts dairy herd numbers — already depleted due to the drought — will continue to fall until 2021-22 with yield increases from improved productivity unlikely to offset the falling herd numbers.
The bleak future will see dairy exports fall with more production diverted to fresh milk to satisfy Australia’s growing population, meaning dairy product imports will also need to increase.
‘‘As a result, Australian milk production is expected to remain below 9.0billion litres over the period to 2023-24, recovering only moderately in the second half of the projection period,’’ the report said.
‘‘By 2023-24 Australia’s dairy exports are forecast to fall to $3billion in real terms ... This is partly because higher domestic consumption is projected to reduce supplies of milk that can be used to manufacture exportable products. Export premiums and global prices are also expected to be lower.
‘‘Non-traditional exports, including fresh milk and value-added products such as infant formula, are projected to account for a higher share of dairy export earnings.’’
ABARES said forecast global production outpacing demand would put downward pressure on most dairy product prices, with high exportable supplies expected from New Zealand, the European Union, the United States and Argentina as well as rapidly growing production in emerging markets, especially India.
