Milk prices to rise up to 30c a litre as a production shortfall hits Australia

Shoppers could be paying up to 30c more for a litre of milk in coming weeks as Australia’s dairy industry is crippled by a production shortfall.

A mix of widespread wet weather, rising production costs, labour shortages, and an exodus of farmers from dairy production have been blamed for the price hike.

Rabobank’s Senior Analyst of Dairy and Consumer Foods Michael Harvey told Daily Mail Australia production fell short by up to 350 million litres. 

Dairy and consumer food expert Michael Harvey (pictured) from Rabobank said slow recovery could be on the way as recent rains have brought greener fields and full dams to the farming regions.

‘There have been milk losses due to flooding in Queensland and NSW and seasonal conditions have been unfavorably wet in other regions like parts of Tasmania and Victoria,’ he said. 

‘This has impacted feed availability and quality.’

Mr Harvey said labour availability issues and ongoing farm exits had been an added blow to the industry.

‘This is why the production declines are widespread,’ he said. 

‘I think we are in for a period of elevated food inflation and this will include higher prices for dairy across most categories.

‘The simple reason being the drivers behind high prices are still at play. High cost of production, firm commodity markets and elevated costs in packaging and distribution.’

The production issues affecting milk production were expected to also hike the price of other dairy products such as butter, cheese, and yoghurt.

‘We are expecting (and already seeing) higher prices across all categories and in all geographies,’ Mr Harvey said. 

The production issues affecting milk production are expected to also impact the price of other dairy products such as butter, cheese and yoghurt (stock image)

Rabobank’s Senior Analyst of Dairy and Consumer Foods Michael Harvey told Daily Mail Australia production has fallen short by up to 350million litres (stock image)

‘Dairy consumers all around the world are paying a lot more for milk and cheese.

‘Labour shortages are a key issue for Australian dairy farmers. There is also an element of lifestyle choice with some older farm owners just wanting to exit. 

‘And there is also an element of strong competition for resources and capital from other agricultural sector such as livestock.’

Dairy farmer advocate Shaughn Morgan from eastAUSmilk told ABC the sector was under a lot of pressure, and these workers had no choice. 

‘There is a continuing decline in the number of dairy farming enterprises, with many of the dairy farmers and their families deciding that enough was enough,’ he said. 

Bianca Woodford manages a dairy in the west of Brisbane and said the price rise was necessary to cover her costs. 

She hoped shoppers would understand the need for industry to up the price.  

‘It’s certainly just keeping with those price increases at our end to sustain our business,’ she told ABC News.     

Milk is the latest staple to rise during Australia’s cost of living crisis, with households forced to pay exorbitant prices for groceries, petrol and electricity (stock image)

Vegetables, fruit, breakfast cereals, bread, eggs, oils, butter and margarines have all jumped sharply in price in the last year according to an Australian Bureau of Statistics (ABS) July report (stock image)

Milk is the latest staple to rise during Australia’s cost of living crisis, with households forced to pay higher prices for groceries, petrol and electricity. 

Vegetables, fruit, breakfast cereals, bread, eggs, oils, butter and margarines have all jumped sharply in price in the last year according to an Australian Bureau of Statistics’ July report. 

Vegetables were up 7.3 per cent across Australia but the hikes were even higher in some capitals.

In Darwin the cost of veggies was up 9 per cent, while both Sydney and Melbourne saw veggie prices jump 7.7 per cent.

In the 12 months to June 2022, fruit and vegetables went up 7.3 per cent.

Non-alcoholic drinks like coffee, tea, juice and soft drinks went up even more – 7.9 per cent.

Dairy farmer advocate Shaughn Morgan from eastAUSmilk said the sector is under a lot of pressure, where these workers have no choice.