Situation & Outlook Report

The latest information about international and domestic market trends, statistics and facts, with expert analysis and insights, is in the May 2023 Dairy Situation and Outlook report.

The May 2023 Dairy Situation and Outlook report indicates that competition to secure milk will continue to be strong in 2023/24 and farmgate milk prices are likely to remain above average. Falling export commodity prices are impacting processor returns and incentivising imports, but a tight milk pool ensures the need for supply is strong.

Most Australian farming businesses (86 per cent) expect to be profitable this season, after being offered historically high farmgate milk prices. In addition, 84 per cent are feeling positive about their own businesses. With past downturns and variable seasonal conditions, many farmers are taking a conservative approach to operating their businesses and prioritising stability over expansion as labour and weather challenge business growth.  

Climate is a concern for 40 per cent of Australian farm businesses - partly driven by the unpredictability experienced over recent seasons. However, previous wet seasons have helped prepare the dairy industry for the potential dry conditions of an El Ñino  event forming later this year. With plenty of irrigation water around and some improvements in feed availability this will help take the edge off high input prices and market challenges.

Dairy Australia is projecting the milk pool will stabilise in the 2023/24 season. While labour challenges and farm exits continue to weigh on production, there is some modest potential for growth.

Consumer purchasing power has tightened and high-priced plant-based products are taking a hit, falling 4.6 per cent in volume sold. There are now less households purchasing both milk and plant-based beverages, with more households exclusively buying dairy – up 2.1 per cent.