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May 21, 2002

AUSTRALIA: Local market warned on dairy prices after global slump

Australian farmers could be facing a 25% fall in milk prices this season, cautioned John McQueen, CEO of the Australian Dairy Farmers Federation (ADFF). McQueen’s warning came in response to a global slump in dairy prices, bought on by subsidized overproduction of milk, cheese and butter in the EU and the US. The US, he says, for example, has nearly 500,000 tonnes of skim powder in storage.

Australian farmers could be facing a 25% fall in milk prices this season, cautioned John McQueen, CEO of the Australian Dairy Farmers Federation (ADFF).

McQueen’s warning came in response to a global slump in dairy prices, bought on by subsidized overproduction of milk, cheese and butter in the EU and the US. The US, he says, for example, has nearly 500,000 tonnes of skim powder in storage.

“In October last year EU export subsidies on skim milk powder were zero. We now have export subsidies equivalent to US$600 a tonne. So as export subsidies have gone up, world market prices have come down,” he explained to ABC Rural News.

“With skim milk powder over the last six or seven months we’ve seen prices fall from above US$2000 a tonne to around about US$1200-1300 a tonne.”

In neighbouring New Zealand, dairy farmers are already encountering the effects of the global slump. Processing behemoth Fonterra recently dropped its milk price for the coming season by 50 cents (US$0.23), and because the dairy industry generates 7% of the country’s GDP this move will have a large impact on the New Zealand economy.

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