According to a Rabobank report, Australia’s dairy import and export mix is slowly trading places, with export volumes falling sharply in recent years while imports have spiked.
In its Australian Dairy Sector Outlook, slowing trading places, the specialist agribusiness bank says the overall trade profile for Australian dairy is in a period of transition.
The bank expects dairy imports to play a more significant role in Australia’s domestic supply chain into the future with local milk production remaining constrained and as the industry further adjusts to accommodate these shortages.
And while dairy exports are under pressure, the report says, Australia still has a sustainable dairy export sector in the long term, albeit more focussed on value-add rather then being volume driven, which means investment at manufacturing level is required.
Report author, RaboResearch senior dairy analyst Michael Harvey says Australia’s dairy trade mix in the future will primarily be influenced by milk availability cycles in both domestic and export markets, with the sector highly exposed to global markets and largely integrated into global supply chains.
Chronic shortage
The report says Australia produced 8.129 billion litres of milk in 2022/23, marking the third consecutive year of decline in milk production.
“Since the most recent production high in 2020/21, more than 700 million litres of milk have been lost from the supply chain,” said Harvey.
“Resulting in a chronic shortage of milk for manufacturing – that is the total milk available outside what is used for domestic and export drinking milk.”
In 2022/23, the country’s milk supply available for manufacturing fell to its lowest level since the 1990s.