Production est. at 1.13 billion litres, up1 % yoy
Prices buoyed by export demand
The value of the industry was estimated at $637 million having increased by 16% year-on-year. An increase in the farm gate price and a generally improved global markets outlook was offset by the dry conditions and increased feeding costs for selected areas of the state.
Production remained relatively stable with a marginal increase of 1%. The NSW southern region performed particularly well recording a 4% increase in production, compared with declines of 3% and 2% in the central inland and north coast regions respectively38.
Production levels lagged somewhat behind the national trend, which grew at 3.1% year-on-year, with production in South Australia, Tasmania and Victoria all growing at higher rates38. These states followed a similar trend to southern NSW, which experienced relatively good seasonal conditions, and were able to capture export demand. Conversely, northern and central NSW domestic milk producers had drier seasonal conditions, which impacted on production39.
(Bubble size denotes production levels)
Southern NSW dairy farmers enjoyed solid demand from their export markets while farmers supplying the domestic milk market had a more challenging year with dry conditions impacting on milk prices41.
The acquisition of Murray Goulburn by Saputo in 2018 was met with a retrospective increase in price for the 2017–18 year to $5.68 per kilogram milk solids to suppliers. Saputo’s public intentions to increase the supplier base should also lend support to future farm gate milk price2. As a result, overall farm gate milk prices are estimated to increase by 15%, although off a low base2.
Exports remained steady at $9.6 million due to a changing market dynamic of trading partners. Trade with China and Hong Kong was up 84% and 63% year-on-year respectively, however this was offset by a 74% and 42% decline in trade with Taiwan and Singapore. China overtook Singapore as the largest export market, as higher prices contributed to a higher export value54.
Growth in global milk export supply from the major exporting regions slowed in the second quarter of 2018 to just 0.5% year-on-year, despite it being the peak supply season in the northern hemisphere and there being improved seasonal conditions in New Zealand. New Zealand plans to cull up to 22,000 dairy cows to try and eradicate Mycoplasma bovis disease, while Europe is in the process of liquidating its stock piles of skim milk powder7, 83.
Domestically, private (generic) label fresh milk regained some lost market share to reach 60% of all sales. These sales dropped after a consumer response drove increased sales of branded milk to support farmer returns. The other notable consumer trend was towards full fat milk varieties over skim and low fat types41.