Modest improvement in dairy prices is on the way, but many northern Victorian farmers are facing low cash flow, Dairy Australia CEO, Ian Halliday said this week.
"Cash flow is still very tight and for most farmers I think it will take 12 to 18 months to recover.''
Northern Victoria has suffered a 16 per cent drop in milk production volumes, compared to a Victorian drop of 8 per cent and a national reduction of seven per cent.
However with a improved spring conditions, milk production in the north is up five per cent in the first two months of the 2017-2018 year.
Overall input costs were not a major threat and fewer cows are being culled, but the national herd has dropped over the last 12 months.
"Cash flow and cow numbers will impede milk growth,'' Mr Halliday said.
Mr Halliday was speaking at the Murray Dairy Business Forum, held in Shepparton on Thursday morning.