Australia is only a small global dairy producer, manufacturing just 2% of global dairy production, however our relatively small population means that 34% of our milk production is exported, earning $3 billion and making Australia the third largest exporter. In 2001, the industry was deregulated and unsurprisingly a rationalisation (a euphemism for the financial hardship of thousands of people despite $1.73 billion being paid to farmers for restructuring) has occurred leaving a core of more efficient producers that are trying to compete against international competitors who, unsurprisingly, are heavily subsidised – thank our Liberal National Party’s level-playing field ideology for that!
Last season was described by many as ‘tough’ for dairy farmers, with the impact of low international prices being compounded by a step-down in farm gate prices. More recently, modest growth in milk production, generally favourable seasonal conditions and contained input costs all pointed to the Australian Dairy industry entering a ‘recovery phase’, according to the latest Situation & Outlook report from Dairy Australia.
Longer-term, the growing global population, along with increasing per capita annual consumption should bode well for Australia’s high-quality products. Moreover, while annual cheese consumption in Japan is between 2-4kg per capita, and close to two kilograms per person in Korea and Taiwan, it is currently less than 100 grams per person in China.