ABARES latest outlook sees agricultural production to jump 8% on last year to $65.9bn with Australian dairy products expected to be in demand from major trading partners as the global economy recovery is underway. Farmgate milk prices are forecast to increase 2% in 2021/22 as domestic milk production improves from historic lows.

ABARES forecast milk production to lift by 1% in 2020/21. Milking cow numbers are forecast to rise by 2.7% however average yield is expected to fall after three years of strong growth, due to restocking older cows with low-yielding replacements.

Dairy profitability is anticipated to improve in 2021 due to lower water allocation prices and higher farmgate milk prices, expected to improve industry confidence.

Cow numbers are expected to rise 2% in 2021/22 with the rate of rebuilding limited due to structural change and high live export numbers. Yields are forecast 1% lower as drier conditions return with milk production for 2021/22 forecast to rise 1%. Over the outlook period to 2025–26, milk production in Australia is projected to decline to 8.6 billion litres. With a return to drier seasonal conditions from 2021–22, herd numbers are projected to decline to 1.3 million head.