Volumes lift but global demand under threat

Volumes lift but global demand under threat

Dairy
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CHANGED consumer behaviour is making forecasts difficult for the dairy industry, with a potential global depression looming, according to a Dairy Australia analyst.

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CHANGED consumer behaviour is making forecasts difficult for the dairy industry, with a potential global depression looming, according to a Dairy Australia analyst.

Senior industry analyst Sofia Omstedt, speaking at a DairySA service providers update this week, said shopping patterns had shifted significantly, on the back of 'panic buying' behaviour.

She said with Australia a "mature" market for domestic sales, any growth came through value lifts, such as flavoured milks or yoghurts.

"In the past two months, with panic buying, it has upended the value in the short-term," she said. "And longer term, things are likely to change."

Ms Omstedt said sales of long-life milk had almost doubled in that period.

"Lots of consumers that don't normally purchase long-life milk shifted to purchasing that," she said.

"Traditionally, one-third of households might buy long-life milk, but now half of households are buying it.

"But even fresh milk products saw a lift."

She said fresh milk sales lifted about 10 per cent.

"We have seen consumers change their purchasing behaviour, which means forecasts for the future are muddier," she said, "Things we can usually rely on purchasers to do, they aren't doing."

Globally, she said dairy was facing some big shifts due to COVID-19 and its impact on international markets - "as are all global commodity markets".

She said Australia had some advantages - a lower Australian dollar, approaching the end of the highest production season, and a stronger retail market, with less emphasis on food services than other international markets.

She said the United States' market was particularly dependent on schools and food service, with the US Department of Agriculture announcing this week it would be buying dairy products to donate to foodbanks and humanitarian aid to try and clear some of the oversupply.

RELATED READING:How the Australian dairy industry responded to COVID-19

Global dairy prices fall as coronavirus concerns hit

Ms Omstedt said there were still concerns, with global demand expected to reduce while supply lifted.

In Australia, milk production has grown year-on-year for the start of 2020 for the first time in 18 months, while February's production in SA was up 1.1 per cent.

The dairy industry has been working on other ways to support dairyfarmers, putting out fact sheets to help limit the spread on farms.

DA technical and innovation manager John Penry said there had been a cross-industry approach, involving DA, Australian Dairy Farmers and the Australian Dairy Products Foundation, to build resources in an "evolving situation".

He said this included advice about distancing, sanitation and other helpful information to keep those in the industry safe.

Some key information has been sent to dairyfarmers directly, and should arrive this week, while more is available at the DA website and PIRSA.

"Even if people had a look at the COVID pages on our website, it's worth looking at it once a week as things have changed as we find out more," Dr Penry said.

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