NAB forecasts 2.2% increase in Australian milk production during 2011/12

Posted by AFN Staff Writers on 28th November 2011

A new industry report released by the National Australia Bank (NAB) forecasts a 2.2 per cent increase in milk production in Australia for the 2011/12 season.

In its November 2011 Rural Commodities report, the NAB said that it expects Australian dairy production to reach 9.3 billion litres in 2011-12, as a result of favourable conditions and healthy water storage levels along the east coast.

The NAB report noted that while production is lifting, the 2011-12 outlook is only consistent with what is considered an average season.

NAB’s Agribusiness General Manager, Khan Horne said, “Industry confidence is still somewhat tentative, given the impact of floods in early 2011, as well as the impact of milk price discounting and the fact that the industry has only recently emerged from drought conditions.

“Added to that, global economic uncertainty is likely to weigh on industry confidence,” Mr Horne added. “Taken together, we don’t expect to see too much in the way of expanded production beyond the current season. Many producers will be tempted to use improved cash flow to pay down debt rather than expand capacity.”

The forecast differs slightly from Dairy Australia’s forecast that milk production will increase by 1.5 per cent in 2011/12, to 9.25 billion litres.

Milk production varied considerably by region

According to the NAB report, despite the solid national figure, dairy production has varied considerably by region. Much of the increase in production is coming from northern and western Victoria, where year-to-date production is up 11.4 per cent and 5.5 per cent, respectively. Similarly, Tasmanian dairy has looked solid so far this year, with year-to-date production up 10.2 per cent while New South Wales is up 2.9 per cent. In contrast, Queensland and Western Australia are down over 8 per cent while South Australia is down 3.1 per cent.