Australia remains among the lowest-cost producers of milk, according to a new report by agribusiness banking specialist Rabobank.
However, the cost of producing milk in Australia is more expensive than ever, according to one Queensland dairy farmer.
Despite significant increases in labor costs over the past five years, Rabobank said Australia was one of the lowest-cost producers in 2024 compared to other major exporting regions, including Argentina, China, Ireland, New Zealand, the Netherlands, California, and the Upper Midwest of the US.
The pressure of increasingly higher milk production costs over the years has led to an average total cost increase for milk production in major exporting regions by around US 6 cents per litre from 2019 to 2024 (a 14 per cent rise), with more than 70 per cent of the increase occurring since 2021.
The report said Australia and New Zealand had competed neck and neck with each other over the past six years to hold the title of lowest-cost producer, in US dollar terms, among the eight assessed regions.
Report author, RaboResearch senior agricultural analyst Emma Higgins said globally, dairy production cost increases had been broad-based.
“New Zealand is currently in the lead [as lowest-cost producer of milk], having increased its cost advantage to USc5/litre in 2024 (up from USc2/litre in 2023) as Australia has grappled with higher labour costs,” Ms Higgins said.
President of the advocacy body for Queensland dairy farmers, East Aust Milk, Joe Bradley runs 210 cows at Oakleigh in Dayboro, northwest of Brisbane.
He said many farmers in the state had experienced an increase in production costs of up to 20 per cent over the past few years.
“Production costs have increased significantly due to a number of factors, mainly input costs,” Mr Bradley said.
“This includes labor, power, fertiliser, feed grain, interest rates, and chemical costs. There’s not one thing that hasn’t gone up.
“In the last couple of years, labour, power and interest rates have certainly been consistent input increases. Some of the others—grain, chemicals, and fertilisers—have gone up and down.
“The cost of repairs on milking machines and tractors has also increased over the years. As farmers, we are price takers. We can’t dictate a price—even if input costs have gone up, we can’t choose our price.”
“Producing milk is as expensive as ever.”
