The majority of Australian households continue to purchase dairy (97 per cent) and more households (33.8 per cent) are shopping between four or more retailers, as they look for cheaper options.

Opting for private label products continues as a key cost saving strategy.

While the volume of milk sold has dropped slightly by 1.5 per cent, the volume of private label products sold rose 1.1 per cent in the 52 weeks to January 29, further increasing the portion sold compared to branded milk.

Volumes of cheese and butter are also falling, but yoghurt continues to buck the trend, growing 1.7 per cent.

Dairy Australia forecasts a contraction of between four to six per cent in the Australian milk pool this season, due to worker shortages, competition for land and resources, and wet weather conditions.

With milk production contracting, Australian dairy’s commodity prices are strong compared with other exporting countries, helping insulate the industry from some of the pressures emerging overseas, the report said.

Global commodity values have dropped, along with international demand for dairy.

“The level of dairy product available for export globally is growing, as production in other countries outweighs local demand,” Dairy Australia industry analyst Eliza Redfern said.

“Global commodity prices have reduced, with wholesale buyers more price sensitive as challenging economic conditions continue and many countries on the brink of recession.

“Australian dairy exports are extracting a larger-than-usual premium on the global stage, held firm by limited product availability.”

For more information and to view the latest Situation and Outlook report, visit: dairyaustralia.com.au/sando