Australia’s milk production to hit 9.2 million tonnes for 2021

A “dramatic turnaround” in conditions and an excellent pasture and crop growing season has paved the way for Australia’s milk production to hit 9.2 million tonnes this year.

It is up from 9.1 million tonnes last year, but a smaller year-to-year increase than expected as more and more farmers opt to exit the embattled industry.

According to the latest Global Agricultural Information Network report penned by Zeljko Biki, while the national herd size is down 8 per cent, production per-cow is compensating, jumping 5 per cent in the past two years and on an upwards trend in 2021.

The report detailed three key factors in the production increase — above average rainfall, improved hay and silage reserves and declining hay and grain prices.

WA’s 120 dairy farmers — which make up 4 per cent of Australia’s total national milk production — have enjoyed above average summer and autumn rainfall this year, with many South West areas receiving between 300-400mm to date.

It has seen green feed germinating months earlier than usual, off the back of last years “bumper” hay crops.

“This has enabled dairy farmers to have a much better reserve of fodder in the lead up to the autumn and winter periods of 2021, when they would be mostly utilized, compared to the same time the previous year,” Mr Biki said.

Forecasts of another record-breaking harvest — tipped to hit over 18 million tonnes in WA — could also see domestic feed grain prices decline.

“Winter grain production conditions in Australia are favourable in 2021 with FAS/Canberra forecasting a big planted area, following on from record production in 2020,” Mr Biki wrote.

“If another large winter crop is realized in Australia, a further reduction in domestic feed grain prices could likely occur towards the back half of 2021 in the lead up to harvest.

“This would provide further benefit to dairy farmers and encourage increased milk production.”

The findings revealed milk consumption across the country was high compared to global levels, with consumption predicted to remain stable for the remainder of the year.

“With reduced travel and the closing of cafes and restaurants due to COVID-19 restrictions — which varied from state to state for much of 2020 — the result showed strong resilience in this market sector,” Mr Biki said.

However, Mr Biki noted the types of milk consumers are opting to purchase have somewhat shifted, with an increase in UHT likely driven by people spending more time at home during COVID-19 lockdowns.

“Consumers over the last year have shifted their milk preference towards regular (full-fat) and away from reduced fat/skim milk, which is a continuation of the trend over the last decade,” he said.

“Supermarket sales data shows that regular milk accounts for 58 percent of milk sales and reduced/non-fat has over time declined to be 24 percent and UHT milk is 18 percent and they have remained relatively constant over the last decade.

“Of the total fresh milk sold via supermarkets, around eight percent is flavoured milk.”

“There was a noticeable six percent increase in UHT consumption in 2020 with a correlating decline in fresh white milk consumption, which is likely to be related to COVID-19 lockdowns during the year,” he said.

Cheese production is anticipated to rise three per cent to make up 60 percent of the manufacturing milk volume.

Initially forecast at 9.4 million tonnes , COVID-19 labour shortages, record beef prices and elevated property prices are reported to have encouraged a number of farmers to retire from the industry earlier than anticipated, with the national herd forecast to drop from 1.42 million head in 2020 to 1.41 million.