Dairy confidence high

Business confidence among Tasmanian dairy farmers is among the highest in the nation.

Dairy Australia’s latest Dairy Situation and Outlook report shows 91 per cent of Tasmanian dairy farmers expect to make a profit in the 2022-2023 season.

However, the number of Tasmanian farmers who feel positive about the industry has fallen back to 67 per cent, in line with the national average.

The report says a contributing factor to this drop in industry confidence in Tasmania could be difficulties sourcing labor.

Across the country, 86 per cent of Australian dairy businesses expect to be profitable this season, after being offered historically high farmgate milk prices over the past season.

Milk processors had until 2pm yesterday to announce this season’s opening milk process, which are expected to be lower than last year.

After seeing a drop in production early this season due to extremely wet conditions, the report says production across Tasmania gained momentum, returning to growth from December and sustaining that through the season shoulder.

Nine out of 10 Tasmanian dairy businesses have been profitable over the past three years.

As a result, 35 per cent of the state’s farmers are likely to be in an expansion phase, the highest level in the country.

Over the next six months however, about four in 10 Tasmanian survey respondents anticipate challenges with input costs and labor and compared to a year ago the proportion expecting issues with farmgate prices has more than doubled.

Overall, the report says that past downturns and variable seasonal conditions mean many farmers are taking a conservative approach to operating their businesses and prioritising stability over expansion as a worker shortage and weather challenge business growth.

Climate is a concern for 40 per cent of Australian farm businesses, partly driven by the unpredictability experienced over recent seasons.

However, previous wet seasons have helped prepare the dairy industry for the drier conditions of an El Nino event likely to form later this year.

With plenty of irrigation water around and some improvements in feed availability, this will help take the edge off  high input prices and market challenges.

The report says Australia’s milk pool will stabilise in the 2023-2024 season.

While workforce challenges and farmers exiting the dairy sector continue to weigh on production, it says there is some modest potential for growth.

Dairy Australia’s industry analyst, Eliza Redfern said competition to secure milk will continue to be strong in 2023-2024 and farmgate milk prices are likely to remain above average.

“Falling export commodity prices are impacting dairy processor returns and incentivising imports,

but a tight milk pool ensures the need for supply is strong,” she said.