Dairy Australia (DA) forecasts domestic milk production will grow 3% in 2020/21 as the turnaround in milk production due to greater yield per cow continues. However, DA insight and analysis manager John Droppert said there would be limits to growth due to herd sizes which have stabilised as culling slows. Farmer confidence is reasonable, but COVID-19 continues to cloud the outlook as the broader economic damaged caused by the pandemic is expected to reverberate in the dairy industry as consumers reach for lower-cost products.
Meanwhile, Rabobank forecasts milk production to grow 2.8% in 2020/21 with senior analyst Michael Harvey saying a favourable rainfall outlook, lower feed costs, interest rates and a more balanced water market were positives. Harvey said Rabobank’s latest farmer confidence survey indicated farmers were looking to expand and grow their business. The lift in domestic retail sales had been a good safety net for farmers, however, exports remain uncertain due to COVID-19.