Dairy Australia March 2022 outlook: Hospitality sales grow despite lockdowns

Sales of dairy products to restaurants grew last year — despite lockdown hitting Australia’s biggest cities.

Competition for milk is set to get stronger this calendar year as restaurant demand for dairy reanimates after a succession of pandemic-induced lockdowns.

Dairy Australia’s latest Situation and Outlook Report, released today revealed dairy sales in hospitality grew 24 per cent last year compared to 2020, despite lengthy lockdowns in NSW and Victoria.

Dairy Australia senior industry analyst Sofia Omstedt told The Weekly Times that hospitality sales were likely to return to figures recorded prior to the pandemic, as more Australians return to eating at cafes and restaurants this year.

“The omicron variant cases in January saw the return of pseudo-lockdown behaviour from consumers as fewer people ventured out,” she said.

“This temporarily slowed sales but there has been an easing of restrictions in February and that will have a positive impact on food-service sales for dairy.”

Ms Omstedt said Australia was not alone in witnessing a shrinking milk pool during the 2021-22 financial year with all major dairy exports hit by supply decline.

Due to dry conditions across the Tasman, New Zealand’s production fell over summer, down 6.1 per cent in January on a tonnage basis.

In the United States, high input costs and supply chain struggles have hit supply with overall national milk production down 1.6 per cent in January.

But it is in continental Europe where dairy farmers are being slammed most with rising input costs as Russia’s invasion of Ukraine squeezes grain supply from both nations.

Ms Omstedt said the recent conflict has made some buyers more eager to stock up on product now, to avoid being left short in the event of further disruptions.

“Global demand for dairy has firmed — in the 12 months to November last year, global

dairy exports increased by 6.5 per cent,” she said.

“Russia and Ukraine combined contribute more than one third of the world’s grain supply and with the recent war, supply out of both countries will be interrupted for the foreseeable future.”

Closer to home, Dairy Australia estimated more than 100 dairy farms have been hit by flooding in the past week — both in northern NSW around the Lismore region as well as southern Queensland.

“It’s hard to assess what the impact of the floods will be on milk supply. It’s too early to speculate but around 100 farms have been affected, some significantly,” Ms Omstedt said.