A recent article in Bloomberg says that Australia’s share of the world export market has gone from 18% in the 1990s to about 6% in 2018. This is because Australian producers have been leaving the business one by one. Australia’s share of the global dairy market is shrinking, says Sarina Sharp, an analyst with the Daily Dairy Report. This is because other major exporters have been making gains, too.
Sharp said that Australia’s milk production has continued to drop, even though milk prices were high and the weather was good at the beginning of the season.
Sharp says that the amount of milk collected in Australia in September dropped 6.25 percent from the same month last year to just over 800 million litres. This is the lowest amount of milk collected in September in decades. The country’s milk production was 6.3% lower in September than it was in the same month last year. This is on top of a 3.4% drop in the 2021-22 season.
“It’s likely that production in October was also lower than it was last year,” Sharp said. “In October, heavy rains caused flooding in eastern Australia, where most of the dairy herd lives. In Victoria, which makes up almost two-thirds of Australia’s milk production, some farmers had to dump milk because they couldn’t get to their farms, but the floodwaters have since started to go down.
Australia, which is the driest continent with people living on it, has been dealing with heatwaves and droughts for decades. Bloomberg says that between 1997 and 2020, the country as a whole and the dairy industry were hurt by drought 27 of those 33 years.
Sharp said that on the bright side, unlike other large milk-producing areas of the world, feed supplies in Australia are plentiful and not too expensive right now. In a recent report from the USDA Global Agricultural Information Network, it was said that milk prices in Australia have reached record highs, hay prices are low, and feed grain prices are likely to go down, which will help dairy margins.
“However, production is in the dumps and is likely to stay there. The lack of workers is so bad that the USDA thinks it will hurt milk production in both 2022 and 2023,” Sharp said.
In fact, there are so few workers in Australia that some dairies have switched to beef cattle operations, which require less work, in part because beef prices are at record highs.
“Because Australia has less milk overall, it is putting more of its output into making cheese this year and less into making butter and powder,” Sharp said. This is likely to cause exports of butter, skim milk powder, and whole milk powder to drop by at least a little next year.
The change in production could also cut into Australia’s share of the world dairy market. This would lessen the effect of weakening global dairy demand this year and give U.S. exporters a chance to pick up a share of the world market in the long run.
