Dairy farmers might get another step up in their farmgate milk price this season but should not expect much more beyond that, Dairy Australia industry analyst John Droppert says.
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Mr Droppert, who spoke at a meeting of dairy farmers in Warrnambool this month, said competition for milk by Australian dairy processors in areas such as western Victoria was more of a chance to provide any price increase for farmers rather than any upswing in the value of global dairy commodities.
He said new entrants in the local processing market such as Bega Cheese, Union Dairy Company and the Adelaide-based Beston Global Food, plus likely moves by more established processors to defend their milk pools and shrinking milk production could all help lift milk prices.
But Mr Droppert said any increase in farmgate milk prices was already being overtaken by big hikes in farm costs.
The costs of buying in feed this year have exploded because of strong demand from other areas hit by dry conditions. Drier than normal conditions have also been forecast for the south-west to January.
Mr Droppert also said increasing milk production out of New Zealand could take some “heat out of the global market” and counter any benefit to Australia’s dairy exports from the drop in the value of the Australian dollar.
Veterinarian and nutritional adviser with Warrnambool Veterinary, Dr Blair Summerville, told the meeting south-west dairy farmers should budget carefully, but remain calm and optimistic through the upcoming season.
Dr Summerville contrasted conditions leading into this summer with those experienced in the district during the millennial drought of 2006.
“While it is important to plan carefully and tighten input costs where possible, it shouldn’t come at the expense of future seasons when conditions improve,” Dr Summerville said.
Australian Fodder Industry Association’s John McKew spoke about the “unprecedented conditions” that had taken fodder supplies from record surpluses in early 2018 to the shortage currently seen across Australia’s eastern states.
Fodder prices are expected to ease through the upcoming harvest but Mr McKew said further fodder shortages could occur in April or May 2019 without good autumn rain.
Warrnambool Veterinary encouraged farmers to seek early advice from their consultants, financial service providers and processor to make prudent decisions through this season. It said support was also available from WestVic Dairy’s free Taking Stock program.
