Dairy leaders predict Australia’s milk pool to drop this season

It’s the first week of the new dairy season, and farming leaders are predicting that Australia’s milk pool will drop below the eight billion litre benchmark.

Australia’s milk pool will evaporate this season, dairy leaders claim, with predictions the cumulative level will drop below the 8 billion litre benchmark.

Early estimates from Dairy Australia project national milk output to clock in at 8.37 billion litres for the 2023-24 financial year, recovering from gloomier expectations earlier in the calendar year.

But a dramatic slash in farmgate prices, confirmed this week with the start of the season on Monday, has farm leaders predicting those short-term gains will be eroded.

United Dairyfarmers of Victoria president Bernie Free said many within the industry expected the milk pool to dip below 8 billion litres this season.

“The main reason the milk pool lifted in the season just completed is mainly due to price,” the southwest Victorian farmer said.

“Like any business owner, dairy farmers reinvest in their businesses when the returns are there. When the returns aren’t there, then it stands to reason that they’ll either consolidate what they have and put off any thoughts of expansion or in many cases, decide that dairy isn’t for them any more and leave.

“You only have to look at the years after the clawback in 2016 to see the decline in the national milk pool. It was a process of several years and the milk pool shrank significantly.”

Australian Dairy Farmers president Ben Bennett said a green drought in southwest Victoria, where he operates a farm, showed little sign of abating.

“Most of southwest Victoria has endured a green drought since February. But it’s not just there, it’s dry in parts of Gippsland, parts of South Australia and the dairy region of Western Australia too,” he said.

“So there’s the drought to start with but the factor that will depress the milk pool the most is the weak opening prices.

“Strong prices were the main reason the milk pool made a slight recovery in the 2023-24 season and weaker prices will likely mean a decline in the milk pool. It’s pretty simple stuff and will ultimately hit the processors too.”

In May, Dairy Australia industry analyst Eliza Redfern projected the milk pool to stabilise in 2024-25, although she added forecasts were subject to change, like 2023-24.

“In the March situation and outlook report, we were then projecting milk production would increase by 1 per cent – to 8.1 billion litres,” she said.

“But since then, there has been a continuation of timely rainfall and a transition back to more average weather conditions in a lot of regions.’