Drought, feed costs: Why Australian milk production is in trouble
Australian milk production is set to slump to 8.05 billion litres as drought and feed shortages bite, and farmers call for fresh efforts to prevent further decline.
Australian milk production’s undeviating decline is running counter to rising milk pools abroad, with fresh forecasts it will drop to the lowest level in three decades
Rabobank is projecting the national milk pool will clock in at 8.05bn litres by the end of this financial year, based on current tracking.
The downbeat forecast is roughly 100m litres lower than last month’s Dairy Australia prognosis of 8.149bn litres for the 2025-26 financial year, although the organisation revises its milk pool figure throughout each season.
Dairy Australia confirmed last month that 8.315bn litres were milked for the 2024-25 financial year, marginally higher than the 2022-23 national result, which settled at 8.126bn litres.
RaboResearch senior dairy analyst Michael Harvey said July milk production was down four per cent nationwide, with the Victorian drought weighing down pool expectations.
“All we have to go on so far is the July figures and they were pretty sobering reading — Victoria was down 5 per cent, Tasmania down 6 per cent and South Australia was down nearly 10 per cent compared to July 2024,” he said.
“Sobering but unsurprising given the drought has really hit milk production hard, particularly in southwestern Victoria, and there hasn’t been much of a turnaround so far.
“Eastern Victoria and Tasmania have also endured an underwhelming start to the season. Hay price and availability are the main pressure points for dairy and that will take some time to ease. Stronger farmgate prices have been welcome but it’s not the whole story.”
The RaboResearch found milk supply growth across major dairy exporters including New Zealand, the European Union, Argentina, Uruguay, Brazil and the United States were all strengthening, with Australia a statistical outlier.
“On both sides of the Atlantic, the dairy sectors were hit with different disease outbreaks. American dairy had avian influenza and the Europeans had to deal with blue-tongue and foot and mouth disease,” Mr Harvey said. “Those concerns have eased with US dairy enjoying one of their best production results this decade.”
NSW dairy farmer Graham Forbes said farmers, processors and Dairy Australia all needed to unite their efforts to arrest the long-term production decline.
Mr Forbes, a former Dairy Connect president, said fresh efforts were needed to prevent further evaporation of the milk pool.
“Once you have that unity in the dairy sector, you can go to government with a plan. Because the lack of unity has created a real drag on the potential of Australian dairy,” he said.
