Herd numbers and milk production are expected to increase over the next five years.
Melbourne, Australia (PRWEB) April 21, 2015
Volatile external factors have come into play for the Dairy Cattle Farming industry over the past five years. Demand fluctuations, global market shifts, changing rainfall levels and moving farmgate prices have all influenced industry revenue. Over the five years through 2014-15, industry revenue is projected to grow at an annualised 2.2%, to reach $4.1 billion. An anticipated improvement in rainfall over 2014-15 will help boost national milk production. However, farmgate milk prices are expected to drop in response to increased supplies. Global dairy prices, which heavily influence domestic farmgate prices, are also set to fall in 2014-15 as milk production expands in key exporting countries such as New Zealand. As a result, industry revenue is forecast to decline by 13.2% over 2014-15. Domestic milk consumption has grown marginally over the past five years. According to IBISWorld industry analyst Brooke Tonkin, “growth in consumption of milk and other dairy products in overseas markets in Asia and the Middle East has translated into increased demand for raw milk from dairy manufacturers and processors.” Australian dairy is expected to meet a significant proportion of global demand for processed milk and milk products. In 2014, successful fresh milk export trials to China by Dairy Connect NSW, Norco Co-Operative and Peloris Global Sourcing paved the way for export growth. While dairy farmers will not benefit directly from high retail prices for drinking milk in Chinese markets, they will benefit from strong demand growth for raw milk.
Greener pastures are ahead for dairy farmers that survive the increased pressure of consolidation – provided weather conditions remain favourable. “Herd numbers and milk production are expected to increase over the next five years,” says Tonkin. Developments in new farming and milking technologies are likely 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. However, the possible return of the El Nino effect has the potential to wreak havoc on the industry.
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 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 an estimated 245 in 2014-15. The average area of land operated has also increased, reaching about 290 hectares. One factor driving an increase in concentration is the purchase of dairy farms by investment funds and other agribusiness investors. The number of individual dairy farmers is forecast to continue decreasing over the next five years. However, the industry's market concentration level is expected to remain low.
For more information, visit IBISWorld’s Dairy Cattle Farming industry in Australia report page.
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.
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IBISWorld industry Report Key Topics
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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