Farm gate milk prices remain at a relatively high level for Australia’s dairy farmers, but climate, input prices and global markets are areas of concern, according to the Dairy Australia’s latest Situation and Outlook report.
United Dairyfarmers of Victoria (UDV) president Mark Billing reinforced these issues in an interview with Dairy News Australia on September 22.
“The good news is farm gate milk prices set for the season will help to lessen the impact of rising input costs,” the Dairy Australia report found.
Mr Billing said the milk prices were at a comparative high compared to global farm gate payments, and above the price New Zealand colleagues were being paid, which was, in his estimation, below the cost of production.
“That’s a situation we don’t want to return to in Australia.”
He said dairy farms were still carrying a load of debt, due to the historic low prices.
One outcome of the low prices across the Tasman was importing cheaper dairy products to the Australian market, competing with Australian products in Australian supermarkets.
However, the Situation and Outlook report found liquid milk and dairy products were holding their own in the Australian market.
“It’s good to see dairy prices are holding their own, due in part to the minimum price required under the dairy code and competition for the milk pool (now at about eight billion litres) encouraging processors to pay a bit more.”
Globally, Mr Billing said the recovery of the Chinese market was slower than expected, which was having a bigger impact on New Zealand than Australia because of their dependence on exports.
“We’re hoping that demand will come back, globally.”
Of the input prices, fertiliser remained high, despite a drop over the past year.
The Situation and Outlook report notes big decreases in fertiliser costs, but these falls have occurred from a high starting point.
“We need to keep in mind that Australia does not have the ability for large scale urea production, and the global market has been affected by the shortage of raw materials supplied by Russia, which has been interrupted by the war in Ukraine.”
Mr Billing said climate and weather were a major concern for farmers without irrigation.
Parts of Gippsland in July had the lowest rain on record, while south-west Victoria had experienced dry conditions in some parts of winter.
“There are some good looking crops in northern Victoria, but I have seen some which will soon need a good drink.”
The announcement of an El Niño on September 19 was a warning of warmer and drier weather ahead.