IT IS almost a tale of two regions in the dairy industry this season with experiences varying between the northern and southern regions, according to a report from Dairy Australia.
In its latest Situation and Outlook report for December, DA said dairy farms in southern Australia had a mostly favourable season with strong farmgate milk prices, averaging about $7 a kilogram milk solids, while farmers in northern areas were still suffering through drought and high feed and water costs.
The latest report particularly focused on hay and grain markets and while prices for each remain above the five-year average, in most regions, they have eased up to 32 per cent and 22pc respectively, year-on-year.
This comes despite the national grain harvest not meeting expectations of an 11pc increase, year-on-year, and instead falling 3pc from the 2018-19 season.
DA industry analyst and report lead author Sofia Omstedt said results had been mixed across the country.
"Farmers in many parts of southern Australia are experiencing a favourable season with plentiful pasture growth and some have been able to capitalise on a strong farmgate milk price," she said.
But even with these favourable conditions, and hay prices falling 32pc since this time last year in the central region of SA, and 27pc in the South East, while grain prices dropped 22pc and 21pc respectively, the report said southwest Vic and SA had "unexpectedly weak results" with "substantial" year-on-year declines in milk volumes.
Overall, Australian milk production declined 5.8pc for the 2019-20 season to October, with DA forecasting the national pool will drop 3-5pc for the year to 8.3-8.5 billion litres.
"High purchase feed costs have impacted milk production for two consecutive years and are having a significant impact on the capacity for Australian milk production to recover," Ms Omstedt said.
There was positive news looking at markets, with good value growth in domestic sales of all major dairy products while cheese, yoghurts and dairy spreads each had volume growth.
Only milk had a decline in volume sales of 1.4pc while value had lifted 3.5pc in the 12 months to September, predominantly due to the higher average price of private label milk.
Global markets are also looking positive, with increased commodity prices, particularly for powders, while exporters were benefiting from a relatively weak Australian dollar. Exports to China lifted 10.5pc in the year to September.
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