Australia’s dairy industry facing ‘further erosion’
A major Australian dairy industry group has warned that the industry is facing “further degradation” as the cost of milk production in Australia increases.
Key points:The Australian Dairy Farmers’ Association said that costs are increasing faster than wagesIn an annual report, the association said it expects to lose $7.2 billion in 2020The group, which represents 1.3 million farmers, said the industry was “at risk” of losing $7 billion in revenue in 2020.
The organisation’s report says milk prices have risen in the past year at a time when wages have been rising at the same time.
“The current milk price situation is clearly unsustainable for our industry and the future of the dairy industry depends on it,” the report said.
“Our industry has been experiencing substantial economic losses over the past two years and the situation in 2020 will be further exacerbated by increased costs and the increased costs of milk processing.”
The dairy industry has suffered from the global commodity price shock since the global economic downturn, and the recent downturn in the global economy has had a significant impact on dairy farmers.
Australia has more than 5 million dairy farms, according to the Dairy Industry Council, with about 700,000 cows produced.
However, the cost per kilogram of milk has increased faster than inflation since 2009, the report found.
The cost of dairy products in 2020 is projected to be $1.19 per kilo, up from $1 at the end of the previous year, it said.
The report said costs were increasing faster and in line with a 1.7 per cent rise in wages.
“We estimate that we will lose $13.2bn in 2020,” the association’s chief executive officer Mark Hargreaves said.
“We expect this loss to be a significant one in 2020, given the continued erosion of the industry’s value.”
The Australian dairy sector is Australia’s third largest consumer of milk, behind Australia and the United States.
Its costs are rising at an “unprecedented pace”, the report says.
Mr Hargraves said the dairy sector’s current position was “fraught with uncertainty”.
“This means we are facing further erosion in our future, as the dairy market continues to face its greatest challenge to date,” he said.
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