This implies a potential full-year average price around $5.50/kgMS, up from $4.90 to $5.10/kgMS in 2012/13. However the increase in milk price is not expected to result in any significant increase in milk production. In their latest Market Situation and Outlook report Dairy Australia have forecast “modest production growth to between 9.4 and 9.6 billion litres”. In the year to July 2013 milk production is expected to by just 9.35 billion litres, which is 1.4% less than was produced in the 2011/12 season. Both profits and farmer confidence have diminished this season as farmers have had to contend with relatively low milk prices and dry conditions has increased demand and prices for feed. As a result, only 28% of farmers intent to invest on farm over the coming year, down from 38% a year ago. The report indicates that global markets hold significant potential for the Australia dairy industry but acknowledges that, in the short term, Australia has limited export growth potential.
Australian farmers can expect higher milk prices
Dairy Australia are predicting that opening milk prices for the 2013/14 dairy season will be around AU$5.00 per kilogram of milksolds (kgMS).
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