Tough Times For Dairy Farmers But Some Good Signs Emerging

Tough Times for Dairyfarmers but Some Good Signs Emerging

Many Australian dairy farmers are currently operating at or below break-even levels with 95% having their farmgate price significantly reduced in 2009, a Dairy Australia survey has found.

Analysis undertaken by Dairy Australia as part of the 2009 Situation and Outlook Update released today shows that although farmers were doing it very tough in September, there are signs of market recovery with input costs easing and some good mid-spring rainfall assisting farm margins in many regions.

Dairy Australia.s Manager Strategy and Knowledge Jo Bills said 340 farmers who participated in the March National Dairy Farmer Survey were re-contacted in September to update any changes and outlook . an input in to the Situation and Outlook update.

"September was a particularly low point for dairy farmers. Many told us they were facing immediate challenges managing their cash flow and dealing with highly variable spring weather conditions."

"However since September we have seen a round of step ups in milk prices by major manufacturing companies as well as an increase in rain and better water allocations and weakening feed prices, so things are looking slightly better in some regions."

As well as good spring rains in some parts, international dairy commodity prices have increased.

Dairy Australia Managing Director Mike Ginnivan said DA market surveys have shown increases for several months now.

"We are seeing increased demand in key Australian dairy markets such as the Middle East and South East Asia, so there are good signs of ongoing recovery for dairy prices. This has been supported by the globalDairyTrade results for whole milk powder (WMP) which indicate sustained demand from buyers into next year at higher prices.

"At this stage the main risk to farmgate prices is the strong Australian dollar," Dr Ginnivan said.

The survey found that sentiment about the future of the industry varies across the country, but overall 60% of farmers surveyed remain positive about the future. Farmers showed even greater confidence in the future of their own businesses, with 66% positive. In some regions however, an increasing number of farmers are considering leaving the industry. Of all of those surveyed, 16% said they were considering leaving the industry within three years (up from 3% in March).

"We know dairy farmers are really hanging on at the moment and have been forced to implement a range of management responses to help get them through," Dr Ginnivan said.

"But we believe we have seen the bottoming of the international dairy market, and with feed prices, irrigation allocations moving in the right direction, and improved seasonal conditions in some regions the outlook is more positive for many farmers."

The Situation and Outlook update can be downloaded from the Dairy Australia website - www.dairyaustralia.com.au

For more information and/or interview requests:
Adele Buhagiar, Dairy Australia, phone 03 9694 3894 or 0400 923 221.

SOURCE: Dairy Australia