The cost of producing milk in Australia remains competitive compared to other dairy-exporting regions, despite a structural increase in global milk production costs over the past five years.
Rabobank’s report, The Cost of Milk: Dissecting Milk Production Costs, highlights that dairy farmers in many exporting regions have faced rising production costs in recent years.
According to the report, factors such as a changing operating environment, increased regulatory pressures, industry consolidation, and the need to optimise dairy cow nutrition and genetics are adding complexity to dairy farming businesses.
“These challenges mean dairy producers must focus on maintaining strong milk margins to fund productivity improvements in an increasingly complex business environment,” the report states.
Dairy exporters and traders will also need a deeper understanding of supply dynamics and profitability drivers to navigate the evolving market landscape.
China is expected to remain a dairy importer in the medium term. However, as China’s milk supply base grows and becomes more cost-competitive, exporters that have historically relied on strong Chinese demand and higher base prices may face increased price volatility.
