How is the dairy sector in Australia doing?

At the beginning of this year, the southern continent was still under the spell of the fierce forest fires raging there. The fires had 'free rein' due to the persistent drought in the previous months. Many residents saw their properties go up in flames, including dairy farmers. The photos of burned animals and nature made headlines worldwide.

Increasing milk production
The forest fires have now been extinguished by heavy rainfall in late February and early March and the corona crisis appears to have had a minimal effect on the continent. In principle, ideal conditions to resume normal life for dairy farmers on the continent, among others.  

Resuming normal life seems successful. Australian milk production is getting back on track. More milk was collected in March than in the same month a year earlier and even more than the 5-year average. While an increase in milk production poses problems for other countries such as the United States, in Australia it is a welcome development. Especially now that daily life in major export partner China is getting back on track.

Asian dairy question
The increasing export demand could also cause problems. The number of dairy farmers in Australia has shrunk significantly in recent years. Nevertheless, production remains relatively stable. The milk price is also currently better than it has been recently because demand exceeds supply. But an excessive demand is something that ultimately does not have to be beneficial.  

The increasing demand from China and other Asian countries is a potential threat. Australian exports are highly dependent on demand from China and Japan, among others. Although the continent can meet this demand well, additional demand is difficult. Scaling up is difficult due to the declining number of dairy farmers, but the weather conditions are also not good. Another threat is the increasing importance of other countries. For example, China also sources more dairy from this country due to the deal with the US. Australia obviously does not want to be outplayed as a trading partner.

Currently, more than one third of total dairy production is exported, mainly to China and Japan. Until a few years ago, import demand from other southeastern Asian countries (Vietnam, Laos, Thailand, Indonesia, etc.) was limited. However, this has changed in recent years. In more and more of these Asian countries, the financial situation of its residents is improving. This also changes the food demand and this is reflected in the number of fresh (dairy) products that these countries attract.  

More money to the dairy farmer
Another development now taking place within Australian borders has to do with the milk price and the fallen '1-dollar-a-litre' consumer price. Although the current milk price is good, more is possible, according to a businessman from the state of Victoria. When the '1-dollar-a-liter' consumer price was abolished, the supermarket chains believed that the increase in the consumer price would also mean more money would go to dairy farmers. It was calculated at $0,10 (Australian dollars) per liter. This turned out not to have been achieved in the months that followed. The dairy farmers only received a paltry $0,03 extra.

John Dahlsen, a businessman from the state of Victoria, has submitted a proposal that would increase the price of milk in the supermarket by $0,40. This increase would mean that dairy farmers could earn an additional $13,30 per liter. As far as we know, the Australian government has not yet officially responded to the proposal.