Dairyfarmer confidence takes a hit

The latest DA June Situation and Outlook report shows an improved picture for the industry with domestic dairy consumption steady, values increasing and an increase in global demand.

But the report also included results of the national dairyfarmer survey, conducted in February, which showed Australia-wide, 34 per cent of farmers were positive about the future of the industry, down from 47pc last year and 53pc the year before.

"In February, confidence was as low as it has been in 15 years," Dr Nation said.

"It did jump nine points in April and ideally, if we did a snap poll, it would have jumped again on the back of opening prices."

In SA, only 24pc of farmers were confident in the industry's future, while one in 10 respondents planned to exit the industry - the highest result nationally.

DA senior analyst John Droppert said it was somewhat surprising to see SA lead other industries in considering an exit, but it did not necessarily mean forced industry exits and could be succession planning.

He said this was the sixth consecutive year of declining sentiment, with the majority of farmers feeling negatively about the future of the industry in all dairy regions, except Tas, which was tipped to finish the season with a 1pc increase in production - a record for the state.

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Mr Droppert said it was also important to remember the survey was conducted in February, at a time of high cost of production and uncertainty about milk prices.

"We know that farmgate prices are still the number one driver of confidence and recent announcements have happened since the survey," he said.

In recent weeks, many of the major processors have announced opening prices ranging from $6.60 a kilogram milk solids to $7/kgMS.

Mr Droppert said SA dairyfarmers had faced a number of issues in recent years that could affect confidence, including high feed prices.

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"The flipside is that, along with southern Vic, SA is part of a milk pool with increasing competition because of a severe drop in production in northern Vic and the northern states," he said.

"There is continued demand for milk and competition for milk continues to grow."

Globally, as the end of the northern hemisphere's highest production period approached, Mr Droppert said things were looking "balanced".

"We haven't seen the flood of extra volumes on the global market as we have in previous years," he said.

"The risk is, we're heading into the new New Zealand season."

Dr Nation said overall, milk production in Australia was expected to be down between 7pc and 9pc for the 2018-19 year.

"It's a credit to SA that it's on balance," he said. "As a state, year-to-date, it's sitting flat on the previous year."

Mr Droppert said the state was forecast to end the year with 505 million litres, in-part aided by a "better" spring in the South East, which carried through with home-grown feed available.

This also came on the back of several years of decline in SA production.

Mr Droppert said DA was forecasting a 1pc increase for SA for the 2019-20 year.

"We're not expecting a massive response but it is looking good, compared to other regions where we will see further decline," he said.