Market Insights, News

Dairy farmers “in reach” of another profitable year ahead

Australia’s dairy farmers are “in reach” of a fifth consecutive year of overall profitability, despite a lower minimum farmgate milk prices forecast, according to a new industry report.

“All signs indicate that, with diligent budgeting and planning, the average Australian dairy farm business will post a fifth consecutive season of profitability in 2024/25,” Rabobank said. 

However, RaboResearch senior dairy analyst Michael Harvey said with the deadline for the new season milk pricing looming (on June 3), Australian dairy companies find themselves “walking a tightrope.”

“In a market short of milk – and with an ambition to build momentum around the current milk supply recovery in Australia – dairy companies need to present sustainable milk price signals to suppliers to remain competitive.

“Parts of the industry need to brace for a reduction in farmgate milk price in 2024/25,” said Harvey. 

Rabobank said that any upside to minimum farmgate milk prices will likely need to come from further global dairy commodity market recovery.

Harvey said however that broadly cost inflation should continue to moderate in the coming season. 

“And this will be welcome news for Australian dairy farm businesses which have been battling high overhead cost inflation,” said Harvey. 

“Nonetheless, the outlook for Australian dairy farmer margins for the 2024/25 season remains positive, but it will require diligent budgeting and planning that, hopefully, underpins some longer-term investment.”

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