Australian milk pool 2024-25: Production forecast revised

The green drought has hit southwest Victoria. Floods are in Tasmania. And a milk pool forecast rethink is underway. Here’s why.

Australia’s milk pool will shrink this financial year, with green drought in one of the nation’s key dairy regions behind the downcast outlook.

Dairy Australia’s latest national milk pool projections are roughly 8.3 billion litres if current conditions play out as anticipated in the coming nine months.

It comes as southwest Victoria, southeastern South Australia and the dairy corner of Western Australia endure a green drought while northern Tasmania mops up from last week’s floods.

However, Goulburn Valley, parts of Gippsland and NSW are enjoying a spring flush — softening the overall dairy outlook.

Dairy Australia industry analyst Eliza Redfern said the 8.3 billion litre forecast represented a modest decrease of up to one per cent relative the 2023-24 financial year.

“The drier conditions have seen farmers make business decisions to manage risk, including, anecdotally, farmers in some regions reducing herd numbers to balance feed supplies,” Ms Redfern said.

“Fodder prices have been increasing nationally as demand for supplementary feed rises, especially in those regions where conditions are drier, and there is strong competition against other agricultural producers to secure feed.”

Mr Redfern said expensive fodder curbed the ability of many farmers to expand operations, even if outside the green drought zone.

“Some growers are holding on to their own bales, further tightening available supply, while some exporters are selling good quality hay domestically, albeit at high values,” she said.

“As such, cereal hay prices are above last year in most regions, ranging between five per cent and 30 per cent higher in August.”

As conditions change, Dairy Australia revises its milk pool forecast with a reassessment of production numbers usually occurring mid-season.

The national output figure during the 2022-23 financial year was 8.125 billion litres, the lowest since the 1994-95 season when it tallied 8.2 billion litres.

Rabobank dairy analyst Michael Harvey said it was too early to determine the impact of last week’s Tasmanian floods.

However, he noted there was some signs of production growth in NSW.

“Seasonal conditions have been poor in western Victoria and SA — the green drought has eroded fodder reserves and confidence generally,” Mr Harvey said.

“But NSW is looking strong, so too is northern Victoria and parts of Gippsland. It’s such a mixed outlook for Australian dairy because there’s an inconsistency when it comes to where your farm is.”