{"id":4471,"date":"2025-03-25T15:46:39","date_gmt":"2025-03-25T10:46:39","guid":{"rendered":"https:\/\/vetnewsandviews.com\/en\/?p=4471"},"modified":"2025-03-25T16:01:12","modified_gmt":"2025-03-25T11:01:12","slug":"australias-dairy-industry-remains-competitive-amid-rising-global-costs","status":"publish","type":"post","link":"https:\/\/vetnewsandviews.com\/en\/australias-dairy-industry-remains-competitive-amid-rising-global-costs\/","title":{"rendered":"Australia&#8217;s Dairy Industry Remains Competitive Amid Rising Global Costs"},"content":{"rendered":"\n<p>Australia remains one of the most cost-competitive milk producers among major dairy-exporting regions, despite rising global milk production costs over the past 5 years, according to a Rabobank report.<br>The report, \u2018The cost of milk: dissecting milk production costs\u2019, highlights a 14% increase in average total milk production costs across 8 key exporting regions \u2013 Argentina, Australia, China, Ireland, New Zealand, the Netherlands, California, and the Upper Midwest of the US \u2013 equating to an additional US$0.06 per litre between 2019 and 2024. More than 70% of this increase has occurred since 2021.<br><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"780\" height=\"480\" src=\"https:\/\/vetnewsandviews.com\/en\/wp-content\/uploads\/2024\/11\/Ads-DairyLac.jpg\" alt=\"\" class=\"wp-image-4066\" srcset=\"https:\/\/vetnewsandviews.com\/en\/wp-content\/uploads\/2024\/11\/Ads-DairyLac.jpg 780w, https:\/\/vetnewsandviews.com\/en\/wp-content\/uploads\/2024\/11\/Ads-DairyLac-300x185.jpg 300w, https:\/\/vetnewsandviews.com\/en\/wp-content\/uploads\/2024\/11\/Ads-DairyLac-768x473.jpg 768w\" sizes=\"(max-width: 780px) 100vw, 780px\" \/><\/figure>\n\n\n\n<p>Australia remains among the lowest-cost producers, second only to New Zealand, despite significant labour cost increases. It has also consistently achieved strong gross milk price margins since 2019, alongside New Zealand and the Netherlands.<br>Rabobank senior agricultural analyst Emma Higgins notes that rising dairy production costs have been widespread. \u201cMost cost pressures have come from on-farm working expenses rather than ancillary costs such as debt servicing, taxes, and depreciation.\u201d<br><\/p>\n\n\n\n<p>Higgins explains that the latest cost surge, beginning in 2021, was driven by a unique combination of factors, including supply chain disruptions, elevated shipping costs, extreme weather, the Ukraine war, rising energy prices, and increased feed and fertiliser costs. Monetary policy shifts responding to Covid-induced inflation further compounded these challenges.<br>China the highest-cost milk producer<\/p>\n\n\n\n<p>By 2024, costs had started to ease across all 8 regions, bringing production expenses back in line with 2019 levels. \u201cFeed expenses have been the primary driver of rising costs, with average feed bills across the 8 regions increasing 19% since 2019,\u201d Higgins says.<br><\/p>\n\n\n\n<h4 class=\"wp-block-heading has-vivid-red-color has-luminous-vivid-amber-background-color has-text-color has-background has-link-color wp-elements-62425908d3c2207d1fb38e79104d4cf2\"><a href=\"https:\/\/tinyurl.com\/2deasnw7\">Forza Roma Achieves Major Milestone in Poultry Exports to Tajikistan &amp; Afghanistan<\/a><\/h4>\n\n\n\n<p>However, improved yields and favourable weather conditions in 2024 have led to a decline in feed bills, while fertiliser costs have also eased due to stable supply. Lower interest rates in many regions are further reducing financial pressures.<br><\/p>\n\n\n\n<p>Higgins points out that cost structures vary by region. Pasture-based systems in Australia, New Zealand, the Netherlands, and Ireland typically have lower feed costs as a percentage of total expenses. In contrast, intensive systems, such as those in China and the US, rely more on imported feed, making feed costs a larger proportion of overall expenses.<br><\/p>\n\n\n\n<p>Labour costs have surged in Australia, rising over 50% in local currency since 2021, the highest increase among the 8 regions assessed. Meanwhile, New Zealand, Australia, and Argentina have faced the greatest pressure from high interest rates.<br><\/p>\n\n\n\n<p>While China remains the highest-cost milk producer, the country has improved its cost competitiveness in recent years. \u201cFeed costs account for over 60% of China\u2019s total dairy production expenses due to heavy reliance on imported feed. However, weaker feed prices in 2023 and 2024 \u2013 driven by double-digit declines in corn and soybean prices \u2013 have helped lower production costs,\u201d Higgins says.<br>Cost and price volatility continue<br><\/p>\n\n\n\n<p>Since 2019, New Zealand, Australia, and the Netherlands have consistently generated the highest cashflow based on gross milk price margins (milk price minus operating costs). These regions have maintained positive margins through market cycles with lower volatility compared to others.<br>Higgins emphasises that dairy markets will continue to experience cost and price volatility. \u201cGeopolitical instability, inflationary risks, economic uncertainty, climate variability, and potential declines in international trade will shape the sector\u2019s future.\u201d<br><\/p>\n\n\n\n<p>China is expected to remain a dairy importer in the medium term. However, as its cost competitiveness improves and domestic milk supply grows, exporters who have relied on strong Chinese demand may face greater price volatility. A lower Chinese base price could impact import price arbitrage, increasing financial uncertainty for dairy farmers supplying these exporters.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Australia remains one of the most cost-competitive milk producers among major dairy-exporting regions, despite rising global milk production costs over the past 5 years, according to a Rabobank report.The report,&hellip; 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