World dairy prices are expected to grow each year to 2019–20, as consumption grows faster than supply.
After a challenging 2015-16 for Australian dairy, the Australian farmgate price of milk is forecast to rise by 2 per cent in 2016-17 to average 43.8 cents a litre.
The price is forecast to rise by a further 7 per cent to 47.0 cents a litre in 2017–18 and is projected to hit 50.1 cents a litre (in 2016-17 dollars) in 2019–20.
Senior ABARES Economist, Peter Collins, said the forecast improvement follows a turnaround on world dairy markets.
“World dairy prices are expected to grow each year to 2019–20, as consumption grows faster than supply,” Mr Collins said.
Mr Collins said that improving global prices are also forecast to contribute to a 5 per cent rise in the total value of Australian dairy exports in 2016–17, predicted to reach $3.2 billion.
“The expected rise in export returns this year is also driven by an increase in export volumes of high-value dairy products such as infant milk formula,” Mr Collins said.
“In 2017–18 the value of exports is expected to increase by a further 11 per cent due to rising world prices and some recovery in export volumes of other major Australian dairy commodities, such as cheese and skim milk powder.
“The value of Australian dairy exports is projected to grow consistently to around $3.5 billion (in 2016-17 dollars) by 2019–20.
“Over that period, Australia is expected to remain a significant exporter of dairy products to South-East Asia and North Asia.
“Cheese, skim milk powder and infant milk formula are expected to remain Australia’s largest export products, reflecting growing demand for these commodities in those regions.”
The analysis was presented at ABARES Outlook 2017, being held in Canberra on Tuesday 7 and Wednesday 8 March. Australia’s leading forum for public and private decision-makers in agriculture, Outlook marks its 47th annual conference this year with expert analysis of innovation in agriculture.
-ABARES