Analysis undertaken by Dairy Australia as part of the 2009 Situation and Outlook Update shows that, although the going was tough in September, there are signs of market recovery with input costs easing and some good mid-spring rainfall assisting farm margins in many regions.
“September was a particularly low point for dairy farmers,” said Dairy Australia manager strategy and knowledge, Jo Bills. “Many told us they were facing immediate challenges managing their cash flow and dealing with highly variable spring weather conditions. However, since September, we’ve seen a round of step-ups in milk prices by major manufacturing companies, as well as an increase in rain and better water allocations and weakening feed prices, so things are looking slightly better in some regions.”
As well as good spring rains in some parts, international dairy commodity prices have increased. Dairy Australia MD, Mike Ginnivan, said DA market surveys have shown increases for several months now.
“We’re seeing increased demand in key Australian dairy markets such as the Middle East and southeast Asia, so there are good signs of ongoing recovery for dairy prices. This has been supported by the globalDairy Trade results for whole milk powder (WMP), which indicate sustained demand from buyers into next year at higher prices.
“At this stage, the main risk to farmgate prices is the strong Australian dollar,” Dr Ginnivan said.
The survey found that sentiment about the future of the industry varies across the country, but overall, 60% of farmers surveyed remain positive about the future. Farmers showed even greater confidence in the future of their own businesses, with 66% positive.
In some regions, an increasing number of farmers are considering leaving the industry. Of all of those surveyed, 16% said they were considering leaving the industry within three years (up from 3% in March).
“We know dairy farmers are really hanging on at the moment and have been forced to implement a range of management responses to help get them through,” Dr Ginnivan said. “But we believe we’ve seen the bottoming of the international dairy market, and with feed prices, irrigation allocations moving in the right direction, and improved seasonal conditions in some regions the outlook is more positive for many farmers.”
Source: Dairy Australia
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