Dairy

Falling milk production worrying for industry

by
January 04, 2018

This is the season to celebrate family and friends, and Farmer Power is happy to celebrate its own expanding network of dairy farmers and their supporters. Hopefully we can all gain strength from being part of a bigger movement.

Jane Stanley from lobby group Farmer Power says Australia could become a net importer of dairy products if the current trends continue.

This is the season to celebrate family and friends, and Farmer Power is happy to celebrate its own expanding network of dairy farmers and their supporters. Hopefully we can all gain strength from being part of a bigger movement.

One of our achievements in the past 18 months has been to challenge the ‘‘official’’ picture of the dairy industry which insists that all is well and the status quo should remain. There are strong vested interests in promoting this world view, but thankfully our reporting is gaining more respect among politicians, government agencies and serious researchers.

Farmer Power has been accused of being alarmist, and painting a bleak picture of our present and future industry. We would argue that we need to provide some balance to the Dairy Australia reporting, and those of its consultant ‘‘industry experts’’ who seem to be out of touch with what is happening on the ground.

We see our role as advocating for the interests of dairy farmers, and presenting the realities of the industry even if this is not what everyone wants to hear.

One of the projections we made last year was that the way the industry was heading, Australia could be a net importer of dairy products by the end of 2018.

There have been some recent improvements in milk production due to favourable weather patterns, as well as some unexplained retrospective revision of the official statistics on milk production, and we must wait to see the overall trends year on year.

However as most dairy farmers are still receiving less at the farm gate than the cost of production, and as most farmers are reported to be expecting to make a loss this year — again — we would be very surprised if there is an overall reversal in the trend of falling milk production. Even if production stabilises, domestic consumption of dairy products is rising so our net export capacity will fall.

The results of this downward slide are becoming evident, with reports of a well established ice-cream manufacturer having to close its doors because it was unable to source full-cream milk powder in Australia.

At the broader scale, the increasing proportion of imported cheese in our supermarkets provides more evidence for all to see.

We have previously criticised the industry monitoring service provided by Dairy Australia (at farmers’ expense) which fails to report on dairy imports.

This became embarrassing at the recent dairy panel convened by Corangamite Shire Council where the Westvic/DA representative was unable to answer basic questions from councillors about the balance of dairy trade.

At last some of this gap is being filled in the ACCC interim report, which is an impressive piece of research.

The ACCC reports that 2016-17 cheese imports accounted for almost half of all cheese sales, and this proportion is growing. Across all dairy products, imports have risen 75 per cent during the past 10 years. Butter imports increased by 30 per cent in just one year, and imported drinking milk (UHT) has been steadily increasing by about 30 per cent each year.

Last year Australian exports were valued at just over $3billion, imports were valued at $1.77billion, and the proportion of imported product is steadily increasing. The total value of our dairy products is reported as $13.7billion, so our net exports are now about 10 per cent of this total and falling.

Put another way, a continuing fall in milk production plus the ongoing increase in domestic consumption could well see Australia become a net dairy importer by the end of 2018.

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