In its Global Dairy Quarterly Q4 2022 – Walking the Tightrope into 2023, Rabobank says while the Australian consumer has shown resilience in the face of cost-of-living pressures, signs of dairy demand weakness are emerging as a willingness and ability to spend on discretionary items softens.

“Households are trading down to private label offerings, with volume declines in grocery and foodservice channels being more evident – it looks set to be a tough year ahead for Australian consumers,” report co-author Michael Harvey, senior analyst for Dairy and Consumer Foods at Rabobank, said.

“For Australia’s dairy producers, farmgate margins remain positive and are supported by the record milk prices,” Mr Harvey said.

“The high milk prices have mostly offset major cost headwinds – fertiliser, fuel and feed – for dairy farmers. While labour availability remains a major challenge for dairy farming businesses.”

Mr Harvey said Rabobank is not expecting further major lifts in milk prices as the season draws to a close.