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Dairying remains a hard cash cow for many farmers
29 Jul 2004
The impact of deregulation in the dairy industry may have been blunted by the drought, which cut incomes and output, but four years after the removal of government-mandated farm-gate prices it has achieved one thing: improved productivity.
In the first two years after deregulation, milk production volumes rose to record levels. But since 2002, production has fallen by 11 per cent, largely due to the drought. The number of dairy farmers has dropped 13,000 in July 2000 to around 10,000 in 2004. Total herd numbers have fallen 8 per cent over the past two years, but the average herd size has increased from 195 in 2000 to about 210.
Dairy Australia says the greatest reduction in farmers and stock levels has occurred in NSW and Queensland high-cost production areas. The proportion of Australia's milk produced in low-cost states has increased. Retail milk prices are, on average, lower or about the same level as 2000 prices.
A more efficient industry is cold comfort to farmers still feeling the pain of deregulation and the drought. A Dairy Australia survey in June found 46 per cent are negative about the future and 15-25 per cent expect to exit the industry in the next three years. But 59 per cent say they'll increase production if prices rise by 2-3 cents a litre and if weather conditions improve.
Australian Financial Review, 29/7/04.
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