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Australian dairy export increase due as production recovery continues - USDA

By Mark Astley , 16-Oct-2012

The Australian dairy sector will experience an exports explosion in the coming year as milk production in the country continues its recovery, a report from the US Department of Agriculture (USDA) has forecasted.

The US Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report, Australia Dairy and Product Annual 2012, projects that Australian dairy exports will hit 673,000 tonnes in 2013 – a 14% increase on exports in 2012.

Cheese is expected again to be “the standout performer” in terms of export growth, with international demand expected to increase by 24% in 2013.

The USDA predictions correlates with a forecasted increase in Australian milk production in 2013. It is expected that production will hit 10.14m tonnes in the coming year – a 1.2% increase on the estimated 10.02 produced in 2012.

The report adds, however, that rising production costs and the strong Australian dollar could pose a challenge to the international and domestic competitiveness of Australian dairy products.

Robust international demand

“A growing demand will ensure growth in domestic demand, and robust international demand for dairy products would suggest that the Australian dairy sector should be embarking on a prolonged expansionary phase,” said the USDA GAIN report.

“The end of a near decade-long drought in 2010, followed by two consecutive years of above-average rainfall in key dairy producing areas, has enabled the Australian dairy industry to successfully rebound.”

Growth in international demand for Australian made cheese is expected to drive the forecasted export growth, the report added.

“Cheese is considered to have the best promise at the moment as product of choice to export once liquid milk requirements are taken care of,” said the report.

Domestic competition

Despite its export growth predictions, the USDA report also warns that Australian dairy processors face competition in the country’s domestic market.

The Fonterra-dominated New Zealand dairy industry is well positioned to supply dairy products including butter, cheese and dairy ingredients to the Australian market at competitive prices, the report added.

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