Australia’s seasonal milk production is up 2.6 per cent on the same period last year (July-December) to 5.33 billion litres and Dairy Australia (DA) estimates overall milk production for the 2014-15 production season will continue the trend.
DA predicts milk production could reach 9.3-9.5 billion, up 2pc on 2013/14, in light of predictions for a hotter and drier summer.
DA's Situation and Outlook Report for February released today also reveals the ongoing volatility in world dairy markets has done little to stem the growing interest of investors in the prospect of profitable long-term returns from Australia’s dairy industry.
“Consolidation in the Australian market has continued with Parmalat buying Longwarry Food Park while plans for a potential large-scale green field investment in the Widebay region of Queensland progress,” said Norman Repacholi, Commercial Research and Analysis Manager, Dairy Australia.
“Favourable international trade deals, such as the China Free Trade Agreement at the end of last year, have added to dairy’s appeal as an attractive investment opportunity,” he said.
While most major international dairy markets have seen steep price declines, Australian farm-gate prices have remained steady and this can partly be explained by the nation’s processors who are eager to maintain farm sector confidence to encourage growth in milk production.
“Other factors, such as the Australian domestic market, decline of the Australian dollar and fall in oil prices are helping to insulate the sector,” said Mr Repacholi.
“But farmers should remain on their guard as the international dairy market can change rapidly as global supply outweighs demand.
“Drought in New Zealand has potential to reduce supply, if this coincides with reduced EU production the situation will again change,” he said.
“Nationally, consumer sentiment has remained tilted towards pessimism despite most major dairy categories are showing better retail growth with cheese and dairy spreads moving to higher average prices and consumer spending at cafes and restaurants remaining healthy,” said Mr Repacholi.
The story Australian Dairy steady despite international market volatility first appeared on Farm Online.