AUSTRALIA – A recent report from the United States Department of Agriculture (USDA) reveals that Australia’s dairy industry is gearing up for positive developments in 2024, with various factors contributing to a promising outlook.

The report indicates that Australia’s milk production is forecasted to experience a 0.6% increase in 2024, reaching 8.50 million metric tons (MMT).

This follows a stabilization in 2023 at an estimated 8.45 MMT after several years of declining production.

USDA highlights the cessation of economic circumstances that previously led dairy farmers to diversify into beef cattle production as a significant aspect influencing the projection.

“This shift has contributed to the stabilization of milk production, marking a positive turn for the industry.”

In addition, despite the persistence of an El Niño weather pattern from late 2023 into 2024, dryer and hotter conditions have been mitigated by timely rains in major dairy-producing areas.

This has in return resulted in better-than-expected hay and silage production, ensuring robust fodder stocks for the upcoming year.

Additionally, winter grain crops are anticipated to yield wheat and barley at near long-term average levels, providing an adequate supply of feed grain.

According to the report, fresh milk consumption is expected to continue its gradual decline, decreasing by 0.6% to 2.41 MMT in 2024, a trend consistent with the past five years.

Factory use consumption of milk is projected to slightly increase to 5.847 MMT in 2024, aligning with a slight overall rise in milk production.

Meanwhile, Australia’s strategic focus on cheese production is evident, with a forecasted record of 445,000 MT in 2024, utilizing 42% of total fluid milk production.

Cheese exports are anticipated to rise significantly by 28%, reaching 160,000 MT in 2024 compared to an estimated 125,000 MT in 2023.

While production volumes of butter, skim milk powder (SMP), and whole milk powder (WMP) are expected to moderately decline in 2024, exports for these dairy commodities are forecasted to remain stable.

For a long time, the report reveals that the dairy industry has been a cornerstone of Australian agriculture for decades.

In 2002, the milking herd size peaked at 2.369 million head, coinciding with the highest milk production of 11.608 MMT. This milestone occurred just two years after the government deregulated the dairy industry, breaking down state-based regulated liquid milk markets.

Deregulation allowed for a more competitive landscape, leading to substantial shifts in the industry. Dairy farmers received lump-sum compensations, enabling some to invest in their businesses and others to exit the industry.

Between 2002 and 2023, the industry underwent significant consolidation, reducing milking herd size by 46% to 1.27 million head and dairy farm numbers by 60% to 4,163.

Despite these reductions, productivity improvements have been noteworthy. Milk production only declined by 27%, from 11.6 MMT in 2002 to around 8.5 MMT in 2023.

This period saw a 50% increase in the average milking herd size and a 36% rise in average milk production per cow.

The majority of milk production, almost two-thirds, comes from the southern state of Victoria, with significant contributions from regions like Murray Dairy, West Vic Dairy, and Gipps Dairy. Tasmania also plays a role, contributing around 11% of the national milk production.

Unlike the United States, Australia has few free-stall barn dairy farms. However, notable large-scale feedlots have seen growth in recent years.

Some planned free-stall barns incorporate robotic milking equipment, addressing the challenge of sourcing suitable labour for milking parlour duties.

While the return on capital for dairy farms with robotic milking is reported to be lower, there’s an improvement in managing farm operations, particularly in labour-related challenges.