In the bank’s latest Agribusiness Monthly report, senior dairy analyst Michael Harvey said further milk production losses in the Murray Dairy region could result if there was no respite in irrigation water prices.
Dairy Australia figures show milk production in northern Victoria sliding monthly, with February’s figures 26.4 per cent lower than the same month in 2017-18 and 17 per cent lower on a year-to-date basis.
Milk production in northern Victoria has dragged down state production, which is now 7.8 per cent lower than last season.
With both NSW and Queensland milk production 10.1 per cent lower than last season, year-to-date national milk production is 6.4 per cent lower than last season.
“RaboResearch is forecasting milk production to finish the season down 8 per cent, meaning that milk production numbers will get worse before they get better,” Mr Harvey said.
“The rapid decline in milk production leaves Australian dairy supply chains short of milk solids.”
The outlook in the immediate future is not good.
At its annual Outlook Conference in Canberra last month, the Australian Bureau of Agricultural and Resource Economics and Sciences forecast dairy cow numbers to continue falling through to 2021-22.
ABARES said yield increases through natural productivity gains were unlikely to offset falling cow numbers, with national milk production to fall to 8.6 billion litres by 2021-22 and remain below nine billion litres at least until 2023-24.
It said the Australian farmgate milk price was likely to fall each year in real terms until then.
With the pessimistic forecasts, dairy industry bodies will soon begin broad consultation with farmers, processors and service providers to develop its Australian Dairy Plan.
About 20 meetings have been called for May and June to feed into the plan.
Dairy Australia, Australian Dairy Farmers, the Australian Dairy Products Federation and the Gardiner Dairy Foundation want to identify key priorities to deliver “transformative and positive change for dairy” for the next five years and beyond.
