Greener pastures are ahead for dairy farmers that survive the current downturn
Melbourne, Australia (PRWEB) June 20, 2012
Drought, flood, volatile demand for dairy products and the ongoing effect of industry deregulation are all challenges faced by Australia's dairy farmers. According to IBISWorld industry analyst Kiera Outlaw, “Over 2011-12, revenue for the Dairy Cattle Farming industry is expected to rise by 1.3% to reach $3.76 billion”. The January 2011 floods across Queensland and Victoria are expected to continue to hamper industry revenue growth. In addition, farm gate milk prices are expected to decline. The contraction in the farm gate price of milk and continued slow demand for dairy products, combined with an appreciating Australian dollar, have weighed down returns for dairy product exports. Revenue is expected to decline at an annualised 0.3% in the five years through 2011-12. Over the past five years, the industry has had to cope with deregulation and drought. Both factors have increased consolidation in the industry, which has resulted in fewer, larger and more-efficient dairy farms. It has not all been so sour, however. In 2007-08, industry revenue rose substantially on the back of historically high milk prices.
There is the promise of improved industry growth over the next five years, based on the growing demand in developing countries for dairy products. Revenue is expected to grow at an annualised 2.7%, to reach $4.29 billion in 2016-17. “Greener pastures are ahead for dairy farmers that survive the current downturn”, Outlaw adds.
The industry is made up of a large number of relatively small dairy farms, the majority of which are family owned and operated. This indicates a low level of market share concentration for the Dairy Cattle Farming industry. There is a trend within the industry towards fewer but larger dairy farms, with the average herd size increasing over the past thirty years. The average area of land operated has also increased. One factor driving increasing concentration is the purchase of dairy farms by investment funds and other agribusiness investors. It is expected that the number of individual dairy farmers will continue to decrease over the next few years. However, the concentration level is expected to remain low. The largest operator in the industry is Leppington Pastoral Company.
For more information, visit IBISWorld’s Dairy Cattle Farming report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry consists of farms that primarily raise and milk dairy cattle. The industry is made up of a large number of small dairy farms, the majority of which are family owned and operated, and produce raw milk.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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