global milk demand outstrips our supply

http://www.standard.net.au/news/local/news/general/global-milk-demand-outstrips-our-supply/2259263.aspx

ALEX SINNOTT
16 Aug, 2011 04:00 AM
INTERNATIONAL demand for milk will outstrip the ability of Australian dairy farmers to supply the product, according to a new market report.

Financial group Rabobank claimed in its latest dairy industry bulletin that many export markets were concerned about Australia's "future dependability as a supplier".

The report claimed the industry had the capacity to accommodate international demand but contended that greater capital investment was needed to capitalise on the trend.

Rabobank senior analyst Michael Harvey said growth in Australian milk production was expected this financial year due to improved seasonal and market conditions.

However, he said reduced production in recent years had resulted in the national milk pool dropping well below the record levels achieved during the 2001-02 financial year.

"Australian dairy producers remain focused on sustaining profitability, rather than production growth," Mr Harvey said.

"The sector is lacking confidence and tenacity for capital investment needed to drive sustained growth.

"This lack of appetite across the farm sector is a by-product of a decade of very difficult seasonal conditions ... eroding equity levels and undefined price signals beyond the immediate future."

Fonterra Ingredients managing director Simon Bromell said Australian dairy farmers were well-placed to capitalise on the global demand.

"We agree with Rabobank assessment of strong global demand for dairy - we're experiencing strong demand from our own international customers," he said.

A Murray Goulburn spokesman said the co-operative would continue to ensure strong farmgate returns from international markets.

Warrnambool Cheese and Butter representatives were unavailable for comment when contacted by The Standard.