A relatively strong milk price, improved weather conditions and overall stable input costs all provided grounds for profitability.
Confidence in the Australian dairy industry is currently in its most stable period in a decade, as outlined by the 2024 National Dairy Farmer Survey.
Despite increased climate and market volatility over the past four years, the proportion of farming businesses feeling positive about the industry’s future has remained relatively steady (68 per cent in 2024) over that time.
Farmers are also feeling positive about their own businesses (83 per cent) and the vast majority are expecting to make an operating profit this season.
Back-to-back profitable seasons have led to a growing number of farming businesses reporting they are in a “stable and happy” position.
Australia’s total milk production for the 2023-24 season is now likely to exceed Dairy Australia’s previous forecast.
Larger-than-expected growth in February of five per cent year-on-year (leap year adjusted), further milk recovery in March despite conditions drying out in many regions, and a return to more average weather will propel national production two to three per cent higher than the 2022-23 season.
Looking ahead to next season, lower farm gate milk prices may lead to more conservative production decisions, especially in the southern export focused regions, while existing challenges around labour and farm exits limit growth more broadly.
As such, Dairy Australia is expecting volumes produced over the 2024-25 season to drop slightly, between zero and one per cent, maintaining a national milk pool around 8.3 billion litres.
The stabilisation of farm input costs may help mitigate pressures during the 2024-25 season.
Rainfall over eastern Australia has subdued demand for feed and water, with hay and grain values remaining below last year in most regions.
In parts of Western Australia, South Australia, and western Victoria, however, conditions have become much drier, with demand and prices for supplementary feed rising above long term averages.
At the consumer end of the supply chain, dairy continues to perform well in retail despite the now-entrenched cost-saving shopping behaviours of Australian households.
The volume sold of cheese, dairy spreads and yoghurts continues to grow, each increasing between one and two per cent in the 12 months to 24 March.
Australian dairy markets may still be under pressure from international product both globally and domestically, but Australia’s imports of overseas dairy products are slowing.
Season-to-date (July to February 2024) import data shows 7.4 per cent less product has crossed the border compared to the same period last season.
Australian buyers have imported similar volumes from New Zealand this season (+0.2 per cent), but shipping challenges around the Red Sea and inflated costs have likely deterred purchasing from Northern Hemisphere exporters (-28.6 per cent from the United States and -10.8 per cent from Europe).
After some initial recovery leading into 2024, global dairy commodity markets are still searching for balance between supply and demand pressures.
Lacklustre demand for dairy continues to limit commodity price increases — especially as importer inventories remain stocked and consumer demand is dampened by economic challenges.
Continuing stagnant global supply over 2024 will therefore likely provide underlying support for dairy export commodity prices in the near term.
Global dairy markets treading water and receding weather challenges for most Australian dairy regions have provided a mild backdrop to a profitable season and sustained farmer confidence.
Linkages to international market realities have re-emerged in new season milk price announcements; a tighter outlook for margins on farm will impact farmer confidence and ultimately milk production.
Eliza Redfern is Dairy Australia’s Analysis and Insights manager.
