The Outback is Out of Step: Where is Australia’s Dairy Industry Heading?

Since 2015, Australia’s dairy farms have bucked the global trend of increasing milk production.1 Severe drought from 2017 to 2019 followed by a persistent labor shortage have spurred declines in dairy cow numbers, dairy farms, and consequently milk production. Meanwhile, farmgate prices–the price of milk that dairies receive–has continued to strengthen. These compounding factors have contributed to weakening exports and to consolidations among dairy processors. Australia is the world’s fifth largest dairy exporter by value and competes with the United States in several important global markets.2 This briefing discusses the competitiveness of Australia’s dairy industry which may continue to erode without an increase in milk production.