News Drought 2018
Australia has a unique start in milk supply
Australia is struggling with its worst drought in 50 years and that is starting to affect milk supplies. This means that the milking season has a unique start. For processors, this means that there is stiff competition for the liters that can be delivered.
The dairy farming in Australia had to take heavy blows in recent years and now the worst drought in 50 years has been added. Livestock has already been forced to be slaughtered in several places, but it could be worse. For example, a higher milk price is needed (or the drought must come to an end) to prevent a large group of dairy farmers from going bankrupt around Christmas.
Unique twist
High feed prices, fewer livestock and lower milk production mean a unique turn of events in July. Milk production almost always increases in that month (compared to June), but in 2018 it actually decreases. For example, the main milking region of Victoria delivered 4,9% less milk, the supply in New South Wales is 4,6% behind and Queensland delivered 10,2% less. As a result, the milk supply in total amounts to 630.700 tons, or 4,2% less than 1 year earlier.
The above predicts little good for the further course of the 2018/2019 season. At the beginning of September, the drought has still not come to an end, while the first forest fires have already taken place. There was only a shower in one place.
Support of $0,10
In an effort to help dairy farmers, a group of Queensland dairy farmers proposed to charge an additional $0,10 for drinking milk. And that money is then intended for the dairy farmers who can use it best. Minister David Littleproud has accepted the proposal. So far, only the company Parmelat has indicated that it will continue with this proposal. Woolworths and the other chains first want to make sure that everyone will participate.
However, there is also criticism, as only 28% of Australian milk is used for drinking milk. Also, $0,10 is insufficient to absorb the sharply increased feed costs and other additional costs due to the drought, but that is possible with $0,20. Yet there are also many farmers who do value it.
Battle for the liters of milk
Another development that may help is the battle for liters. In an interview with Financial Review, Bega Cheese indicated that the competition for milk is increasing and that therefore more can be paid for the milk.
That is something that can already be seen in early September. Milk prices are rising, especially in an attempt to keep the milk supply going. At the same time, the processors cannot jump too far, because they operate on the global market. That price is not only determined by the Australian supply.
1 Aus-$ = €0,6181
Herman van den Pol
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