Milk production forecasts have been subject to a downgrading due to the ongoing drought that is affecting eastern Australia.

The Australian Bureau of Agriculture and Resource Economics had previously forecast that milk production for this fiscal year would be 11.51bn litres. A spokesman for Australian Dairy Corp (ADC), however, has announced that milk production for this fiscal year ending 30 June 2003 is now estimated at 11.1bn litres. ADC has also warned that if the drought in eastern Australia continues, the re-estimated figure will likely come under threat.

The drought is affecting pastures, both rain-fed and irrigated, as well as driving up prices of alternative animal feed such as grain, molasses, cottonseed and hay.

Australia currently exports around 50% of its milk, but exports may decrease if milk production levels fall, reported Dow Jones International.