Global market conditions are set to deliver better milk prices for dairy farmers on the mid-north coast and Hunter but high input costs mean significant challenges remain.
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Dairy Australia today released its latest Situation and Outlook report, including the findings of the latest National Dairy Farmer Survey.
While global market conditions and increased competition for domestic milk supply indicated better milk prices for NSW farmers over the coming season, dry conditions had driven up operating costs and was expected to erode margins in 2018/19.
Dairy Australia senior industry analyst John Droppert said a poor European spring had resulted in upward price pressure that would eventually flow through to the NSW dairy regions, which primarily supplied Australia’s domestic market.
“Farmers more closely linked to export markets in southern regions will likely see benefits soonest, but the developments in Europe will ultimately be to all farmers’ advantage,” Mr Droppert said.
While the state’s farmers would welcome any price improvements, difficult seasonal conditions presented lingering challenges.
“There is already a real squeeze on margins across the NSW dairy regions and that will continue to be felt into the 2018/19 season.”
Meanwhile, the National Dairy Farmer Survey, undertaken in March, showed NSW had resisted a national trend of falling farmer confidence levels, with 45 per cent of the state’s farmers saying they remained confident about the industry’s future. This remained steady from last year but was slightly below the national average of 47 per cent.
“Low farmgate prices was the main factor impacting on negative sentiment among NSW farmers, followed by high production costs and the dry conditions,” Mr Droppert said.
Mr Droppert said NSW farmers were more likely to feel positive about the state of their own business than in the industry as a whole.
“Overall, farmers are happier with their own businesses but less so about the industry which is a reflection of uncertainty around the structural changes and that will take some time to settle,” Mr Droppert said.
Only half of the NSW farmers surveyed expected to make a profit in 2017/18, with 59 per cent recording a profit in the 2016/17 financial year.
Dairy Australia’s Situation and Outlook contains the most comprehensive and up-to-date analysis of international and domestic market trends to guide farm business decisions.
The full report is available at www.dairyaustralia.com.au
