Australian milk production will lift 1.8% to 8.3bn litres in 2023/24 as higher yields offsets the effect of a smaller herd. That’s according to the  March 2024 Agricultural Commodities report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Projections for the following season are for production to fall 1% to 8.2bn litres driven by a decline in cow numbers as dairy farms exit in response to high land values and forecast higher cattle prices in 2024/25. Milk production is projected to fall through to 2028/29 as farm numbers  continue to decline, reducing the size of the Australian dairy cow herd.

Farmgate prices are forecast to fall 6% in 2024/25 to 67.6c/l ($8.91kgMS) as relatively low export returns impact farmgate prices offered. ABARES expects processor margins to improve compared to the current season as local farmgate prices align with world dairy prices.

Meanwhile, ABARES forecasts drinking milk consumption will rise slightly as population growth offsets declining per capita milk consumption. This is expected to lift the proportion of Australian output sold as drinking milk to 31% in 2028/29, up from 29% in 2023/24.