Australian milk pool confirmed as lowest in three decades

Floods and farm exits have drained Australia’s milk pool, with the all-important dairy figures now at a three-decade low.

Floods and farm exits have drained Australia’s milk pool, with the all-important dairy figures now at a three-decade low.

Released today, Dairy Australia’s situation and outlook report confirmed the national milk pool was 8.125 billion litres during the 2022-23 financial year.

The last time the national pool was around that figure was back in the 1994-95 season when it tallied 8.2 billion litres.

In the closing months of the season, the low-ball figure was anticipated by analysts, with flooding in the key regions of Goulburn Valley and NSW’s northern rivers playing a role in the milk pool evaporation.

Dairy Australia industry analyst Eliza Redfern said the milk pool contracted about 5 per cent compared to the 2021-22 financial year.

“Australian farmgate milk prices have remained relatively high this season, and the milk pool has been a factor there,” Ms Redfern said.

“Significantly cheaper international dairy produce is undermining the profitability of Australian dairy both domestically and trade overseas.

“As we look towards harvest later this year and the potential with an El Nino event, we project that yields are likely to be average across most dairy regions.

“We’re seeing some signs of stabilisation in the milk pools of other dairy exporting nations, such as New Zealand, with the weakening international dairy prices dampening demand.”

Dairy cattle pictured at Zeerust. Picture: Yuri Kouzmin

Ms Redfern said farm exits were also a factor, as were dairy farmers shifting to other agricultural commodities.

Last month, Dairy Food Safety Victoria confirmed there were 2774 bovine dairy licences statewide at the end of last financial year, down more than 200 from 2984 recorded at the end of the 2021-22 reporting period.

The 2022-23 tally represents a drop of more than 36 per cent from the 2012-13 total of 4284 bovine dairy licences.

Victoria’s dairy farm numbers had been in steady decline since the early 2000s deregulation of the sector, but the 2016 clawback by Fonterra and Murray Goulburn accelerated the downward trajectory.

NSW Farmers dairy committee president Phil Ryan said Australia’s shrinking milk pool had kept farmgate prices high in the short to medium term.

But he said the contracting pool spelled longer-term problems for the sector.

“There’s been a clear disconnection between domestic farmgate prices and international dairy prices in the past six months,” Mr Ryan said.

“That helped to keep farmgate prices high going into this season. But obviously, no one wants to see the milk pool shrink further.”