Milk Production

While farm numbers have decreased over the past two decades, milk output has steadily increased, due to improved yields and rising cow numbers – with the exception of the latest drought-affected year.

The underlying trend to fewer farms, larger herds and increasing levels of production continues. Farmers have made many changes to their general farm management practices and adopted a range of new technologies – including soil testing, fodder conservation, supplementary feeding, improved animal genetics, artificial insemination programs, new milking technology and computers to record herd performance.

ABARE estimates that dairy farmers have achieved growth in outputs over the past decade of 5.4% a year. Increased feeding of supplementary grains and fodder has been a major factor contributing to the high rate of growth of output. To achieve these increases, inputs have increased by 40% a year. Consequently, the annual rate of increase farm productivity has averaged just 1.4% over the past decade – excluding the last year of severe drought. While the rate of productivity increase has been positive, the industry's term of trade have actually declined over the same period by 1.5% a year. Terms of trade refer to the ratio of prices received by farmers for their products (milk and other farm outputs) to prices paid for inputs (feed, fuel, labour, etc). It is clear to maintain farm incomes; productivity growth has to exceed any decline in terms of trade over any length of time.