Australian Dairy Industry In Focus 2009 - Dairying For Tomorrow

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Expectations of growth in production The proportion of respondents expecting higher production in three years time has fallen from 61% in March to 32% in September – with growth expectations falling significantly across the key southern dairying regions. Among those who are expecting to increase production over the next three years, 33% attributed the anticipated increase to increasing herd size, 23% to seasonal improvements, 24% to feeding cows better and 19% to better genetics. Those who expected to reduce production cited more off-farm factors with the main driver being low milk price (54%). Challenges facing the local industry Milk price was (understandably) the greatest current and future challenge mentioned by farmers in 2009; overtaking climate issues and the availability and cost of inputs. Figure 5 Grain prices – $A/tonne 500 450 400 Barley – Vic Wheat – Vic Climate issues and the cost and availability of irrigation water were the next most often mentioned challenges – both for 2009 and the future. Meanwhile, the availability and cost of inputs were less of a challenge in 2009. Grain costs have eased markedly in the current season with large northern hemisphere grain harvests, the strong Australian dollar pushing down international prices and greatly improved prospects for plentiful supply from a large local harvest towards the end of 2009. World demand improves as economy recovers Asian countries are leading the recovery from the global economic downturn. This reflects less exposure to financial derivative products, improved banking systems following the region’s own financial crisis in the late-1990s and large fiscal stimulus packages. However, despite some positive economic signals, significant downside risks remain. Source: Australian Crop Forecasters 350 300 $A/tonne 250 200 150 100 50 0 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 6 Australian Dairy Industry In Focus 2009
Withdrawing stimulus too early could undermine confidence and world economic growth would suffer if the economies of China or India were to falter. The IMF has reported economic stabilisation is uneven and that the economic recovery will be sluggish; forecasting a 1.4% contraction in 2009 and 2.5% growth in 2010. Global organisations such as the World Bank and IMF agree that the recovery from an economic downturn caused by a financial crisis tends to be deeper and slower than a normal downturn because debt-burdened consumers will be cautious and have an on-going propensity to save more – which is expected to slow growth for several years. Given this economic outlook, the prospects for global dairy demand remain mixed, with powders likely to fare better than butter and cheese. It appears that global supply pipelines have largely been cleared and southern hemisphere manufacturers have been running down inventories over the seasonal production low. Buyers appear to be strategically purchasing product now in anticipation of a potentially limited availability in early 2010. Chinese ingredient buyers are also back in the market purchasing large volumes of powders. Nevertheless, it is unclear how much renewed demand is strategic buying now that prices are moving upwards or whether it is consumer-led demand. Australian market situation & outlook Australia is now the fastest-growing economy in the Western world – and the only Western economy to grow in the year to June 2009. The Australian market continues to deliver volume and value growth with per capita consumption holding firm through 2008/09 at around 300 litres in milk equivalent terms. Volume growth has returned in the cheese category in recent months however consumers have continued to move from branded to private label products in the milk category. Figure 6 Supermarket growth by dairy category – six months to August 2009 Value Cheddar Volume Source: Synovate Aztec Dairy spreads All milk Private label milk Branded milk –4% –2% 0% 2% 4% 6% 8% 10% Australian Dairy Industry In Focus 2009 7
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: What did farmers say in September 2
Page 11 and 12: The Australian dairy industry An im
Page 13 and 14: Farm facts Australia’s climate an
Page 15 and 16: y factors such as product and marke
Page 17 and 18: Australian dollar has lowered local
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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