A recent report by Rabobank shows that global dairy prices have risen by 45% since July 2016. Although prices are expected to continue to increase, Australian milk production has created the lowest level in 20 years .
The Australian Financial Review reported on the 10th that Australia ’s largest dairy processor, Murray Goulburn, lowered the milk purchase price in 2016, which caused some farmers to slaughter cattle and stop operating farms. Although global milk prices have again been on the rise, they still cannot save the low level of Australian milk production. Rabobank predicts that the supply of milk in Australia will drop by 7% in 2017, while pushing milk production to 8.9 billion liters.
Michael Harvey, senior dairy analyst at Rabobank, said, “In 2016, Australian milk prices fell, and poor seasonal conditions led to a decline in milk production, which caused a further deterioration of the situation. Although the price rebound helped increase production. However, this will not save the decline in production in 2016. At present, seasonal conditions are good, farmers have more feed and irrigation water resources, and we expect milk production to gradually stabilize in the next 6 months. " Although Harvey believes that milk production will begin to increase, these new productions will not be used to make up for the lack of supply due to the structural decline in herd size.
Rabobank ’s quarterly report on dairy products pointed out that in the second half of 2016, the milk supply in Australia ’s dairy export areas fell by 2.6 million tons. In addition, due to the rising demand for milk from the United States and Europe, the number of Australian exports has also increased cut back. The report also shows that the current increase in milk prices is not due to an increase in demand, but due to a decline in supply.
It is understood that McGovern Dairy appointed Ari Mervis, the former owner of Carlton United Brewery, as its CEO in December 2016 to help the company improve efficiency and repair its bad reputation among farmers. Melvis said that in recent months, the farm's milk prices have undergone positive changes, while the continued rebound in global prices has also increased farmers' expectations. However, many forecasts still indicate that the annual milk price will be lower than the production cost.
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