SA leads charge in milk production increase

SA leads charge in milk production increase

Dairy
There are positive signs for Australian dairy but some situations will require creative thinking. Photo: SHUTTERSTOCK

There are positive signs for Australian dairy but some situations will require creative thinking. Photo: SHUTTERSTOCK

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FOR the first time in three years, the national milk pool is expected to increase this season, but there are also trends emerging that will need to be managed carefully.

Aa

FOR the first time in three years, the national milk pool is expected to increase this season, but there are also trends emerging that will need to be managed carefully.

It comes after favourable weather, lower input costs and relatively firm farmgate milk prices have helped create good conditions, according to the October Situation and Outlook report from Dairy Australia.

Three dairy regions - Tas, the Vic Gippsland and SA - are leading the charge with positive results for the start of the 2020-21 season.

SA started the season 4.3pc up on July last year, while Gippsland was up 4.8pc.

Increased milk supply in most regions is also supporting 'cautious optimism' for improved farm profitability.

But the report also points to significant changes in consumer buying habits in the wake of COVID-19.

While foodservice and route channel sales have declined due to reduced hospitality sector activity and travel, retail dairy sales have been fuelled by increased levels of home cooking and baking.

Supermarket sales of butter have surged 18.2 per cent, cheese by 6.4pc and plain Greek yoghurt by 7pc in volume in the past 12 months, with larger value packs preferred above single serve items.

By contrast, route channel sales of flavoured milks in convenience and petrol stores fell 19pc.

"Two very different stories are emerging for the current season," DA senior industry analyst Sofia Omstedt said.

"One tells the tale of consistently improving conditions at the farmgate and a positive flow-on impact on milk production.

"The other reflects depressed global economic growth, disrupted dairy demand and significant shifts in consumer purchasing habits from COVD-19.

"From a farmgate perspective several things are going well, as input costs ease, confidence rebounds, and milk production continues to grow.

"While the story is far from finished, this year could finally provide the industry a much needed breathing window and farmers the time to build up equity again."

RELATED: Bright forecast for Aust dairy but global price warning

Data shows big gains in milk pool recovery

Ms Omstedt said dairy demand within Australia had been affected by COVID-19, with consumer habits and purchasing behaviour changed.

"With more people staying home than ever before, cooking and baking at home has experienced a renaissance and dairy products used in these recipes are the ones that have grown the fastest since the start of the pandemic,": she said.

"It's likely some of these new habits will become permanent lifestyle changes.

"If realised, the industry's ability to capitalise on new growth trends will be key to ensure strong ongoing demand for Australian dairy, as we settle into a new normal."

Global supply of dairy is reported to be mounting.

In the northern hemisphere, supply growth has picked up as incentives curbing milk production have been phased out.

Milk supply in the United States and New Zealand has exceeded expectations, with global production growth likely to weigh on commodity pricing unless resurgent demand can soak up additional milk.

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