Australian farmgate prices bucking global trend

Published 16 July 15

Australian farmgate prices have largely been unaffected by the current global supply/demand imbalance that has impacted milk cheques around much of the world. Dairy farmers in Australia have been protected by the downturn by a few different direct and indirect factors.

Like the UK in 2013 and early 2014, there is robust competition for milk between processors which is supporting farmgate prices. Processors are also targeting added value products to help limit the impact of volatility and gain more value from milk e.g. UHT and infant milk formula.

Domestic demand is also pretty strong – especially for butter – which is helping to absorb the increase in milk production.

Finally the Australian Dollar has been depreciating against the US Dollar, falling circa 20% over the year and making exports from Australia more competitive on the world market.

While global markets will still impact Australia, the unusual situation shows how many factors can influence milk prices.

 Australian farmgate prices bucking global trend 15.07.15