Despite one of the most profitable seasons for some time, Australian milk production has been affected by wet and cold weather and labour shortages in 2020/21. In addition, high beef prices and pumped-up land values offer ample opportunities to diversify or exit. Dairy Australia’s December Situation & Outlook Report cites Dairy Farm Monitor Project (DFMP) data from 2020/21 indicating 9% of farmers chose to leave the industry.
The production outlook for 2021/22 isn’t much better as wet conditions continue affect fodder harvest and quality. While an estimated 7% increase in milk price is expected for Victorian farms, a Farmanco analysis of DFMP data indicates 2021/22 net cashflow is likely to be reduced due to increased input costs – particularly for grain and fertilizer – although a robust profit is still likely. Managers balancing higher costs may choose to reduce inputs, with the most farm profitable settings likely to weigh on milk growth.