Stabilising weather conditions have improved pasture quality and substantially reduced reliance on grain feed.
Melbourne, Australia (PRWEB) April 27, 2014
Favourable conditions are finally aligning for the Australian Dairy Cattle Farming industry. Volatile weather conditions and a high Australian dollar plagued the first half of the past five years, resulting in substantial declines in revenue. Industry revenue is forecast to decline at a compound annual rate of 1.9% over the five years through 2013-14, as operators have struggled to compete in a challenging climate. The tables now appear to be turning, with the industry's almost 1.7 million dairy cows expected to produce 9.4 billion litres of milk in 2013-14. Favourable weather conditions, higher farmgate prices, increased global demand and a depreciating Australian dollar are expected to contribute to revenue growth of 3.3% over 2013-14, to $4.0 billion.
In good news for the industry, domestic milk consumption has grown marginally over the past five years. IBISWorld industry analyst Brooke Tonkin states, “the majority of consumption growth in milk and dairy products has stemmed from overseas markets in Asia and the Middle East. This has translated into increased demand for raw milk from dairy manufacturers and processors, which export products to these markets.” This is a significant factor in the forecast rise in revenue in 2013-14. Global production of dairy has increased marginally to meet growing global demand. Australian dairy is expected to meet a significant portion of global demand for processed milk and milk products. Favourable weather conditions over the past three years have resulted in improved pastures, substantially reducing reliance on grain feed. Herd numbers and milk production are expected to increase over the coming five years. According to Tonkin, “developments in new farming and milking technologies are expected to provide a competitive advantage for farmers that are able to invest further in capital.” Moreover, demand from overseas markets, where incomes are rising, is expected to support growth over the same period. Greener pastures are ahead for dairy farmers that survive the increased pressure of consolidation, provided weather conditions remain favourable. However, the likely return of the El Nino effect has the potential to wreak havoc on the industry once again.
The Dairy Cattle Farming industry is made up of a large number of small dairy farms, the majority of which are family owned and operated. This indicates a low level of market share concentration for the industry. There is a trend within the industry towards fewer but larger dairy farms, with the average herd size increasing from 85 cows in 1979-80 to 320 in 2013-14. The average area of land operated has also increased, reaching approximately 250 hectares. One factor driving an increase in concentration is the purchase of dairy farms by investment funds and other agribusiness investors. 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 mainly 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, that 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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