International commodity prices for milk products have shown signs of recovery which signals good news for Tasmanian dairy farmers, a new report by Dairy Australia has found.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The Dairy Australia outlook report is published three times a year, February, June and October with the 2016 October report released on Wednesday.
The report’s author John Droppert said one of the key findings in the report that would impact on Tasmanian dairy farmers was the recovery of international markets.
“We have seen a pretty substantial recovery on international markets and Tasmania is heavily tied to that, more so than some of the other mainland states,” he said.
A steep increase in dairy products from Europe that are exported into key Tasmanian and Australian markets had impacted on the commodity price seen in the past two years.
Mr Droppert said Europe was one of Tasmania and Australia’s key competitors as they both supplied to similar markets and were branded on similar market advantages.
Last financial year, Europe increased its export milk products to between 3-4 per cent of its overall production but this year the report showed that decreasing to about .5 per cent for the 16-17 financial year.
The oversupply in the global market was the reason Australian processors Murray Goulburn and Fonterra cited when they dramatically cut farmgate milk prices at the end of last season and the start of this season.
“Tasmania is linked strongly to the export markets so it’s really good to see them [Europe] start to slow down.”
Mr Droppert said demand had presented a more difficult picture, with China returning to growth but other markets more sluggish.
He said buyers had been more actively seeking product, but resistance to further price increases is building. On balance, further recovery into 2017 is likely, with product such as cheese and yoghurt strong performers.
It has been a shocking year for dairy farmers in Tasmania and Australia, with the recent prolonged dry period, the floods and the sharp drop in farmgate milk price all impacting on the industry.
“We are looking like milk production will be down this year, we were thinking it would be five per cent but that figure will have to be revised because of the ongoing floods in Victoria and Tasmania,” Mr Droppert said.
Tasmanian dairy farmers appeared to be on par with prior years of milk production but Mr Droppert said he wasn’t sure what the most recent floods would do to that figure. The Dairy Australia situation and outlook report is available online.