Inside Milk
Will Australia continue its rising milk production?
Australian milk production in July was higher than last year. Dairy exports for the month in question were marginally above last year's level. Another important development is a new acquisition of Fonterra.
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In the month of July, Australian dairy farmers produced more than 620.400 kilos of milk. Compared to the same period last year, this is an increase of approximately 2,9%. On average, the fat percentage was 4,10% higher than the 4,01% of the previous year. The protein content was 3,44% compared to 3,40% last year.
The state of Victoria was the leading producer of Australian milk last year, and dairy farmers within the region managed to achieve an even greater share in July. Production increased by 3,8% to 417.000 kilos. This means that the share in total production has increased from 66,6% to 67,2%.
Not all states individually produced more milk, Queensland is the only state where milk production was lower than last year. The milk supply there fell by no less than 7,4% to 26.200 kilos. The state of Queensland is not at the bottom of the list of milk producing regions, that is Tasmania with a milk supply of 23.800 kilos.
Expected further increase
Dairy Australia expects milk production to continue to grow for the 20200-2021 season after a decline at the end of last season. Last season, a decline of 3% to 5% was expected, while in reality production fell by only 0,2%.
Experts relate the more positive outcome to the improved seasonal conditions. In the coming months, milk production will work towards its peak in October and growth is forecast to continue as confidence in the dairy sector returns.
Dairy export
For the month of July, Australia exported 63.252 tonnes of dairy products. Compared to the same period last year, the level is slightly higher, namely 0,2%. The export of butter oil is the biggest outlier, which is 114% higher. Approximately 16,8% more butter was also exported. Export growth does not apply to all dairy products. For example, almost 30% less cheddar was exported and the export of whole milk powder also fell somewhat, by approximately 24,2% respectively.
| July 2020 | July 2019 | % change | |
| Butter | 1.183 | 1.013 | + 16,8 % |
| Butter oil | 904 | 422 | + 114 % |
| cheddar | 2.394 | 3.368 | -28,9% |
| Other cheese | 8.800 | 8.506 | + 3,4 % |
| Milk | 23.223 | 21.445 | + 8,3 % |
| Skimmed milk powder | 6.135 | 7.014 | -12,5% |
| Full milkpowder | 2.888 | 3.808 | -24,2% |
| whey powder | 2.048 | 2.489 | + 22,4 % |
| Mixed products | 7.861 | 7.767 | + 0,6 % |
| Other | 6.861 | 7.264 | -5,6% |
| Total | 63.252 | 63.095 | + 0,2 % |
Fonterra makes acquisition
If we look at further developments in the Australian dairy market, there is also a new acquisition of Fonterra Australia. The company is acquiring cheese processor Dairy Country for $14,03 million. The agreement includes the acquisition of the cheese processor's processing and packaging facilities in Campbellfield and Tullamarine in the state of Victoria. The deal will reportedly see the majority of permanent employees transfer to Fonterra.
René Dedoncker, managing director of Fonterra Australia, said the acquisition supports its customer and consumer-focused strategy. “By having these types of capabilities in-house, we can work more efficiently and make the most of opportunities for value creation and product innovation.”