Australian Dairy Industry In Focus 2009 - Dairying For Tomorrow

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The products included in the Index are butter, cheese, skim milk powder and wholemilk powder, and they are weighted by their contribution to Australia’s dairy export volumes. The Index takes into consideration individual dairy product export price fluctuations and movements in the Australian/US dollar exchange rate. The Index shows that early in the decade Australian industry returns benefited from a low dollar. However, export returns were relatively weaker in Australian dollar terms during 2007/08, where the Australian dollar was ‘stronger’ compared to the US dollar and averaged US$0.90 over the season. More recently, a firming Table 6 Typical factory paid prices 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 (p) NSW cents/litre 32.8 30.9 32.9 34.3 35.7 48.6 52.4 $/kg milk solids 4.64 4.29 4.62 4.80 5.02 6.73 7.29 VIC cents/litre 24.8 26.7 31.5 32.9 32.0 50.0 39.1 $/kg milk solids 3.35 3.57 4.23 4.44 4.32 6.68 5.14 QLD cents/litre 34.8 33.8 35.0 36.6 38.8 51.8 57.2 $/kg milk solids 4.94 4.72 4.84 4.99 5.38 7.14 7.89 SA cents/litre 30.3 28.2 30.1 32.0 32.6 48.6 44.6 $/kg milk solids 4.22 3.90 4.19 4.49 4.57 6.75 6.19 WA cents/litre 28.2 27.4 27.2 29.0 32.0 41.3 49.2 $/kg milk solids 4.04 3.91 3.89 4.09 4.49 5.79 6.79 TAS cents/litre 25.9 27.2 30.9 33.6 36.5 50.2 41.3 $/kg milk solids 3.43 3.54 4.05 4.39 4.79 6.63 5.40 AUST cents/litre 27.1 27.9 31.5 33.1 33.2 49.6 42.4 $/kg milk solids 3.71 3.76 4.28 4.50 4.51 6.69 5.65 Source: Dairy manufacturers Figure 9 Australian Export Index 350 Jan 2000 = 100 300 $US terms 250 200 150 $A terms 100 50 0 Jan 00 Jul 00 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 14 Australian Dairy Industry In Focus 2009 Source: Dairy Australia and ABS
Australian dollar has lowered local currency returns from export markets. The long-term downward trend in inflation-adjusted farmgate prices (Figure 10) is in line with returns from other agricultural industries over the past two decades. Despite the occasional peaks – in 1992/93, 2001/02 and 2007/08 – the line has traditionally returned to trend and clearly illustrates the imperative to continually improve productivity throughout the industry. The annual ABARE Farm Survey estimates the financial performance of Australian dairy farms. The two main measures are farm cash income (defined as total cash receipts less total cash costs) and farm business profit (which takes into account the build up in trading stocks, less depreciation and the value of farm labour). Trends in farm cash income and farm business profit have shown increased variability over the past decade. Figure 11 illustrates how they were strong in the year of record high milk production volumes in 2001/02 – encouraged by a combination of favourable climatic and market conditions – fell due to the dramatic impact of the drought in the 2002/03 season; slowly recovered and consolidated over the following three years, before another financially crippling drought in 2006/07. Significant financial recovery occurred in 2007/08 driven by high farmgate milk prices only to be reversed again in 2008/09 by sharply higher input costs at a time of falling milk prices. ABARE estimates that the average farm cash income was $74,000 in 2008/09 – with a range between regions from $31,900 in the northern Victoria/Riverina region up to $151,300 in Western Australia. The national average farm business loss was estimated at $6,000 last year. However, figures ranged from a loss of $43,900 to a profit of $57,200 in the same regions. Figure 10 Factory paid prices (cents/litre) 60 50 Average prices adjusted for inflation using index of farmer prices paid (ABARE) 40 Market milk price 30 Cents/litre 20 Manufacturing milk price Weighted average of milk prices to 30 June 2000 10 0 Deregulation 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09(p) Source: Dairy manufacturers and ABARE Australian Dairy Industry In Focus 2009 15
Page 1 and 2: Australian Dairy Industry In Focus
Page 3 and 4: Contents Foreword .................
Page 5 and 6: Dairy 2009: Situation & Outlook Bac
Page 7 and 8: What did farmers say in September 2
Page 9 and 10: Withdrawing stimulus too early coul
Page 11 and 12: The Australian dairy industry An im
Page 13 and 14: Farm facts Australia’s climate an
Page 15: y factors such as product and marke
Page 19 and 20: Milk production While farm numbers
Page 21 and 22: Cows’ milk consists of solids (mi
Page 23 and 24: Dairy manufacturing As in the farm
Page 25 and 26: to which Australia is excluded from
Page 27 and 28: Drinking milk Regular or wholemilk
Page 29 and 30: Cheese Australia produced 342,000 t
Page 31 and 32: Fresh and frozen dairy products Aus
Page 33 and 34: outlets account for only a small pe
Page 35 and 36: Industry organisations and structur
Page 37 and 38: Australian Dairy Industry Council T
Page 39 and 40: Appendices 1. Regions 38 2. Milk pr
Page 41 and 42: Appendix 2 - Milk production Figure
Page 43 and 44: curd and whey. The curd is cut, hea
Page 45 and 46: Appendix 4 - Supermarket sales Milk
Page 47 and 48: Tablespreads Table A11 Supermarket
Page 49 and 50: Table A15 Australian exports of who
Page 51 and 52: Table A18 Australian exports of but
Page 53 and 54: Appendix 6 - Imports Table A22 Impo
Page 56: Dairy Australia ABN 60 105 227 987

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