The milk pool is forecast to remain flat for the 2022/23 season, according to Dairy Australia’s latest Situation & Outlook report. Excessively wet conditions in some regions, high costs and critical staff shortages offsetting the incentive offered by historically high farmgate milk prices and improved farmer confidence.
The domestic dairy market remains stable, with higher retail prices evidence that some cost increases have been passed onto consumers. However, price rises to date are dwarfed by the increases in farmgate milk prices, energy and on-farm production. Slow to negative retail volume growth in supermarkets largely reflects the shift back to foodservice channels, however rising prices will increasingly influence purchasing behaviour. Indications are consumers are buying more on promotion, in bulk instead of single packs, trading down to private label and shopping less frequently.
DA notes the entire dairy supply chain is grappling with heightened risk and uncertainty, as well as conflicting signals this season. In addition to market and climate uncertainty, threats from Foot and Mouth Disease and Lumpy Skin Disease require increased precautions and contingency planning, but also significant opportunities to capitalise given local dairy farmers have two seasons of positive margins behind them.