A severe drought and higher world prices have contributed to a slump in the value of dairy exports from Australia in the first nine months of 2002/03.

The value of Australian dairy exports fell by 21.1% to A$1.9bn (US$1.26m) in the nine-month period to 31 March, despite volumes rising 8.1% to 727,950 tonnes, reported Reuters.

Milk production in Australia fell 7.9% to 9.138m litres in the ten months to April because of the drought, which lowered the amount of cattle feed available.

The Australian dairy industry reacted to the drought by switching output away from high-value cheese, according to Dairy Australia.

The value of Australian dairy exports was also hit by lower world prices in the first half of the year to end-June.

"(The) change in product mix, together with lower world prices prevailing in the first half of the year, had a significant impact on the value of Australian dairy produce exports for the period," Dairy Australia was quoted by Reuters as saying.