Industry leader urges farmers to hang tight during dairy crisis

A “volatile” international dairy market is to blame for recent milk price cuts and prices will pick up in 2017, according to Dairy Australia’s managing director.

Speaking to The Express following a GippsDairy breakfast in Traralgon yesterday, Ian Halliday admitted the country’s dairy farmers were doing it tough, but said a decline in milk pricing was a worldwide issue.

The current crisis, he said, stemmed from Australia’s record global dairy prices three years ago which saw other countries increase production to “keep up”.

But he said in 2014 the global market imports declined to the amount of one million tonnes, coinciding with Russia leaving the dairy market and China reducing imports by about 300,000 tonnes from the previous year.

Mr Halliday said this created an oversupply of product and a lower demand which led to significant international dairy price cuts.

“With New Zealand, three years ago their prices were about $8.30 per kilogram of milk solids, we didn’t see that peak; our farmers here probably saw about $7/kg on milk solids,” Mr Halliday said.

“Then last financial year they dropped right down to about $3.90/kg on milk solids. So they (NZ) went from $8.30 to $3.90 and we’ve gone from about $7 to between $4 to $5/kg.”

He credited the domestic milk market for “cushioning” Australia from the true extent of the global crisis.

“We’ve still got a fairly strong domestic market, 65 per cent of what we produce in Australia is sold domestically,” Mr Halliday said.

He said while the country was not completely immune to the global volatility, the domestic market was continuing to expand.

“Our milk consumption continues to grow and that’s the difference to some other developed countries where milk consumption is on the decline. Our domestic market is still a pretty solid market for us,” Mr Halliday said.

He said internationally the excess product was starting to “work its way through” but did not expect Australia to see recovery prices until next year.

Until then, he has urged Gippsland farmers struggling with the current market to use the free support services available through the dairy industry and government.

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