Dairy Australia forecasts slight growth in national milk production

The report confirmed Australian milk production had grown in each month of this season, fuelled by better-than-expected weather conditions, particularly against lower comparable figures last year.

Dairy Australia's Analysis and Insights manager, Eliza Redfern, said there was an air of optimism among Australia's dairy farmers.

"Better-than-expected weather conditions, recovering milk production, increased retail volumes and a rebound in global commodity values have bred optimism in the broader context of a persistently challenging macroeconomic environment," Ms Redfern said.

"The Australian domestic market continues to perform strongly for the dairy supply chain, with the volumes sold of cheese, dairy spreads and yoghurt growing 1p, 0.4pc cent and 5.7pc, respectively, in the 12 months to 28 January.

In terms of exports, the report stated a drop in global milk supply over recent months had led to an export commodity price rebound.

Looking ahead, weak global supply growth was expected to remain the largest supporting factor, while global demand remained pressured by the challenging economic environment, Ms Redfern said.

Drought conditions affecting water availability for the Panama Canal locks and tensions in the Red Sea caused vessel delays, had tightened container availability and bloated freight costs.

"The weak global economy continues to limit importing activity from buyers in key dairy export markets, while shipping challenges along major trade routes have created an uptick in demand for Oceania, and therefore Australian, product," Ms Redfern said.

In Victoria, Mirboo North diary farmer Colin Wientjens said he was optimistic, although there'd been a significant impact from weather at his property this season.

He is milking 240 head of cows.

"I think things are going to cruise along, price is the thing - early in the season the processors tried to talk it down a bit," Mr Wientjens said.

But he said one of the biggest things working in farmers' favour was the rise in the cost of containers.

"One of the biggest drivers for milk price is how much it costs to get imports in," he said.

"Remember COVID?

"The container price went nuts, which was mainly because they couldn't get stuff in - it has an impact on what the processors are prepared to pay.

"If the supermarkets can fill their shelves with cheap dairy imports, they don't need as much from the local processors."

Mr Wientjens said the family bought a farm, last year, which required a lot of work to bring up to scratch.

"We had the El Nino that never happened, when it started pouring in November,"

That had a impact on upgrading farm tracks, "we just ran out of time, before it started getting wet".

"We had big downpours that washed all the fines out, so we had massive laneway problems since October - it was meant to be dry," he said.

EverAg Global Insights director Jo Bills said European production had improved in recent weeks and in the lead up to spring, that could signal some additional product from Europe, at a time of fairly lacklustre demand.

"The other watchout is the increase in US cheese capacity coming on later in 2024 - this is likely to increase competition for milk to fill those factories, and unless demand there picks up, some of that additional cheese will likely wind up being exported," Ms Bills said.

"This (2023/24) season's prices have been much higher than the value offered in commodity markets, and this will have affected dairy companies in different ways depending on their market exposures.

"If sanity prevails there will have to be a greater alignment between what the market is offering and the price being paid for milk.

WestVic Dairy chair Brendan Rea, Allansford, said farmers had faced some tough and challenging seasons in the last couple of years, even though prices were good.

He milks a 1000 head herd.

"Cost are up, farmers haven't really been able to take full advantage of the high prices," he said.

"Costs look as though they are easing a bit now and the hope is for a strong opening milk price, from the processors."

He said farmers were also looking for a good autumn break.

One of the biggest constraints was still labour, which was affected by the availability of housing in regional and rural areas, he said.

"We are hoping governments can help the industry work through those constraints," he said.

"It's a wonderful region in which to produce milk, with an incredible potential due to its good soils and natural rainfall - I think the future is bright for our region."

Housing issues had been exacerbated during, and since, the COVID-19 pandemic, he said.

"A lot of people shifted to the regions, and its made it harder, as it took a lot of housing supply off the market," he said.

WestVic was encouraging governments, at all levels, to look at what they could do to help the housing situation, he said.

WestVic was also looking at the courses it could run to attract and upskill workers.