P E R F O R M A N C E H I G H L I G H T S
SITUATION & OUTLOOK 2006/07 Business group: T&S Program: Information Collection & Analysis o Unprecedented drought has limited the industry’s ability to capitalise on a strong market o Resilient farmers have backed the industry by planning for the future and continuing to invest in maintaining herds and improving on-farm capital The Dairy: Situation & Outlook Report has become a major tool for building the industry’s capability through gathering critical information about the operating environment. It provides a clear picture of what is happening in the Australian dairy industry and expectations for the future. This information enables dairy farmers, companies and industry groups to make informed business decisions. The report also provides factual material for banks, governments and suppliers of products and services to the dairy industry. The report is produced by Dairy Australia, with support from Australian Dairy Farmers, Australian dairy companies and farmers. It draws upon the National Dairy Farmer Survey results, along with the views and opinions of global dairy market analysts, retail analysts, dairy company management, farm consultants and farm leaders. According to the Dairy 2007: Situation & Outlook Report, which relates to 2006/07 and the prospects to 2009/10, the outlook for the Australian dairy industry is finely balanced. World dairy demand remains positive with both local and international markets showing great strength and world prices reaching record levels. But the outlook at the farm level is much less certain as farmers face tough decisions about their future due to the effects of the drought, uncertainty about future water access and rising feed costs. The report shows that 88 per cent of dairy farmers were affected by drought (compared to 78 per cent in 2002/03). While almost 80 per cent of dairy farmers had implemented drought management plans, farmer confidence has understandably been affected. The financial impact on farmers was severe and most will record an operating loss for 2006/07. Dairy farm cash incomes are expected to be 77 per cent lower on average due to reduced milk production and a 45 per cent increase in feed costs. Despite the tough times, many farmers have shown resilience and backed the industry by planning for the future and continuing to invest in maintaining herds and improving on-farm capital, resulting in national milk production for 2006/07 of 9.57 billion litres – only 5 per cent down on the previous year.