Industry to bounce back as demand rises

January 31, 2018

On way back...The dairy industry is set to bounce back this year according to IBISWorld business analysts.

Dairy cattle farming is expected to be one of the top five growing industries in Australia this year, research for IBISWorld’s business analysts reveal.

The industry was ranked third on the list, with researchers expecting the industry to grow by eight per cent in 2017-18, adding an additional $320 million in value.

Following a number of years of difficulty in the industry, IBISWorld senior industry analyst William McGregor expected this year to be the year the dairy industry began to bounce back.

‘‘With the Australian dollar projected to depreciate this year, we anticipate local dairy products will become more competitive in export markets, boosting returns to domestic milk processors, which will then flow through to dairy cattle farmers,’’ Mr McGregor said.

‘‘We’re also expecting an increase in the size of the national dairy cattle herd, which will drive up milk volumes, and contribute to an expected eight per cent increase in revenue in 2017-18.’’

Following a year of low prices and depressed milk production, analysts said conditions had begun to stabilise, while demand and returns for domestic dairy products was rising.

Despite positivity, analysts have raised concerns regarding the wide fluctuations in domestic and global dairy prices, which have made industry revenue more volatile, and the reality that farm gate milk prices are largely determined by major dairy processors such as Fonterra and Murray-Goulburn.

However, the forecast rise in farm gate milk price is expected to boost industry revenue.

While the report signals a good year for the dairy industry, broadacre vegetable growers could be in for a tough year, with IBISWorld predicting the industry’s value to drop 13.5 per cent.

While the value of vegetables grown this year is predicted to increase slightly due to strong potato and onion output, the anticipated drop in domestic pulse production, including chickpeas, lentils and broad beans, will hurt the industry’s overall performance.

Record pulse output in 2016-17 means that although this year’s production is still projected to be high, revenue will decline this year, with lower yields hurting pulse growers’ revenue.

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