• GVP $807 million est. Up 18% year-on-year.
  • Supply of raw milk continued to fall despite record high prices for dairy farmers.
  • Flooding, labour shortages and increased competition for land and water resources from beef challenged production.
Raw milk production continued to decline across Australia, despite processors offering record high farmgate prices which were up significantly on 2021-22. Some key dairy regions experienced significant flooding which damaged infrastructure and pastures and impacted production. Dairy farm exits also remain high as some farmers sold to take advantage of high land prices or switched to beef production.


Despite reasonable overall seasonal conditions and higher farmgate prices, NSW dairy production fell 7.7% to 990 million litres, dropping below 1 billion litres for the first time. 14 Production was once again hampered by extreme weather and flooding in key dairy production regions. Production fell the most on the north coast (-11%), however all regions experienced a year-on-year decline. 14

Prices for some key inputs, including fertiliser, diesel, electricity and some fodder costs were also high which may have hindered production.

Milk production in Victoria (Australia’s largest dairy production state) also continued to decline – down 5.9%. 14 Overall Australian milk production fell 5% with all states except Tasmania experiencing a decline. 14


Average NSW dairy farmgate prices increased 27.3% to $11.18/kg milk solids. 15 This is the largest increase in farmgate prices since 2008 and the first time the average price has exceeded $10/kg milk solids.

NSW Milk Supply vs Farmgate Price 14 15

  • Production (ML, LHS)
  • $/Kg Milk Solids (RHS)
The continued fall in raw milk supply has intensified competition from processors. A small price increase in 2021-22 failed to compensate farmers for higher input costs and production challenges. The NSW Dairy Farm Monitor Project indicated that average dairy farm profits fell 17% in 2021-22 despite higher prices, ending a two-year recovery in profitability following the 2017-2020 drought. 16 As a result, production continued to decline and in the last quarter of 2021-22 NSW raw milk production declined 9.5%. 14 Processors responded with aggressive opening prices for 2022-23. Even with higher farmgate prices supply remained subdued with significant declines continuing for the first 9 months of the year. However, towards the end of 2022-23 farmers appeared to have responded to the higher prices and production started to recover.

2022-23 monthly change in NSW raw milk production (%) 14

Higher farmgate prices also led to some of the largest rises in retail prices on record, up 15% year on year. 24 Dairy retail price rises during the year outpaced price rises for overall food and beverages (+8%). 24

Retail price changes NSW Dairy (Index) 24

  • Milk
  • Cheese


NSW Dairy exports increased 8% to $329 million which was a new record high. 35 Higher export prices for most products were achieved despite lower global prices. NSW exports contrasted with the national trend. Overall Australian dairy exports fell 3% to $3.1 billion as lower production in Victoria offset the higher export prices. 35 Export prices were supported by a lower Australian dollar however the overall increase in price was impressive given the Global Dairy Trade Price Index fell 25% over the year and weaker than expected demand from China and higher supply from key exporters such as Europe and New Zealand increased competition in key markets. 17 Despite lower demand from China, it remains comfortably Australia’s largest export destination for dairy, taking 36% and 66% respectively of Australian and NSW exports. 35 Australian exports to China fell in volume terms but were up in value terms for both NSW (+7%) and Australia (+1%). 35

High farmgate prices are making it difficult for processors to compete in export markets. A lower Australian dollar is providing some relief however competition from imports is also rising meaning processors are facing increased competition in both domestic and export markets. The value of dairy imports into Australia rose 33% to $1.9 billion a new record high. 35

Imports from New Zealand rose 47% to exceed $1 billion for the first time. 35 With farmgate prices falling in New Zealand but continuing to rise in Australia, imports are likely to continue rising.


Opening prices from dairy processors are indicating that farmgate prices will increase again in 2023-24 as processors compete for supply and attempt to halt the slump in farmgate production. NSW raw milk supply is recovering however volumes in Victoria continue to decline. With the Bureau of Meteorology forecasting drier conditions during the year it is also probable that input costs will rise, creating another challenge for production. Nevertheless, with farmgate prices at a record high, most dairy farmers are experiencing positive trading conditions which should encourage further investment in dairy.

However, processors are facing a very challenging outlook. Competition in export markets has increased in the last 12 months and, with some of the highest farmgate prices in the world, competing in these markets will become increasingly challenging. Imports are also rising which is increasing competition in the domestic market. Some of Australia’s largest processors have indicated that there may be too much dairy processing capacity in Australia unless there is a rapid recovery in farmgate supply.

Stronger Primary Industries Strategy

Emergency Animal Disease Hotline

Strategic Outcome

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Biosecure Industries and Environment
  • 1.2 Coordinate timely and risk proportionate response

The team in DPI Animal Biosecurity tend the 24/7 Emergency Animal Disease Hotline for NSW - a national toll-free telephone number that connects callers to the relevant state or territory animal health authority to report concerns about potential emergency animal diseases (EADs).

Between July 2022 to June 2023, the team responded to 723 aquatic and terrestrial EAD hotline calls – an average of two calls a day. Reports are risk assessed and progressed for further investigation as required.

The EAD hotline is a crucial part of NSW’s early disease detection armoury, where anyone can raise the alarm if they spot something unusual in our livestock or aquatic animals.