the broader market provides some positivity with costs for major inputs contained and most farmers’ current milk price forecasts improved on 2016/17 levels.
Dairy Australia’s latest Situation and Outlook report highlights how the difficult 2016/17 season experienced by many farmers in the southern export focused states caused cashflow management challenges that impacted on farmer confidence and milk production.
However, despite a number of these challenges remaining, Australian dairy farmers can be cautiously optimistic about improvements for the season ahead.
Dairy Australia Senior Analyst John Droppert said the broader market provides some positivity with costs for major inputs contained and most farmers’ current milk price forecasts improved on 2016/17 levels.
Yet confidence about the future of the dairy industry among farmers measured by the National Dairy Farmer Survey (NDFS) and conducted in February and March has dropped from 67% in 2016 to 53% in 2017.
The survey also revealed profitability is at a three year low – 45% of farmers surveyed anticipated a profit in 2016/17. Mr Droppert said national milk production for the 2016/17 season is also expected to be down about 7.5% on the previous financial year to about 8.95 billion litres.
The NDFS survey revealed a third of farmers expected to grow their herd size in the next 12 months and close to two thirds anticipated their production to increase in the next three years which signals a modest growth in milk volume to around nine billion litres for the season ahead.
Input costs are a more immediate bright spot. Record international production, and strong harvests in Australia have kept grain prices contained. There has been little change to the hay market in the last few months with subdued demand, ample supply and low prices. Most irrigation systems are expected to receive a high seasonal determination in 2017/18, and temporary water prices ended the 2016/17 season well below the $100/ML mark.