Australia: Dairy and Products Semi-annual

Milk production in Australia in 2022 is forecast to decrease by over four percent to 8.6 million metric tons (MMT). Despite generally good production conditions for 2022, the slump in milk production is largely due farmers continuing to exit the dairy industry through farm sales and some dairy farms partially or fully transitioning to less labor-intensive beef cattle production. This started in 2021 and has continued into 2022 but its impact on milk production will largely be borne out in 2022. Fresh milk consumption in 2022 is forecast to decline slightly. A seven percent decline in factory use consumption is driving processors to prioritize their production towards products with higher returns. As whole milk powder prices have not kept pace with the other major dairy commodities, it is expected to see the largest production decline.