How international trade delivers value for Australian dairy farmers

The option to export high value products into international markets gives Australian dairy producers the opportunity of diversification as an alternative to the highly concentrated domestic retail market.

If export was not an available option, then the Australian milk pool would need to contract to the level of domestic consumption.

In 2022-23, Australia exported 30 per cent of milk produced worth $3.7 billion, which helps generate significant value for Australian farmers and exporters.

This provides opportunities to build the overall industry profitability and sustainability while maintaining resilience in an increasingly competitive global marketplace.

Improvements to market access, reductions in dairy tariffs and charges and the management of technical market access barriers will provide a greater diversity of market options.

It will also reduce the cost of exporting, contributing to higher returns through the supply chain and ultimately farmers getting paid a fairer price for the milk that is exported.

Dairy Australia is continuously working to ensure that Australian dairy farmers and dairy products are valued around the world for their high-quality production, sustainability and premium products.

A key part of this is ensuring that Australian farmers and industry have a broader customer base beyond Australia's borders preferring Australian dairy.

Supported by years of market development work, today there is a strong demand for Australian dairy products in international markets. And developing those overseas markets has value for everyone across the industry supply chain.

The highest value and volume of Australian dairy products exported in 2022/23 were cheese, skim milk powder, whole milk powder, liquid milk, followed by a range of other products - including whey powder, casein and yoghurt.

The higher the value-add, the higher the profit margin, so cheese exports have always been an important and profitable export for Australia.

Likewise, demand from overseas markets for products - like skim milk powder and whole milk powder, for example - is vital as there is less demand for these in Australia.

"When global demand for value-added dairy aligns with global price expectations is when Australian dairy can be more competitive and we can grow and strengthen our industry," Dairy Australia's senior manager - sustainable international trade Catherine Taylor said.

"An important part of exporting is keeping access to international markets open for our products.

"And to do this we must continue keep demand for Australian dairy strong across all our key overseas markets. Otherwise, we risk losing market access and therefore a profitable destination for our products."

Many markets across south-east Asia, China and Japan, represent untapped opportunities for growth for Australian dairy where local milk production can't keep up with consumption due to population growth and westernisation of diets - driving increased demand for imported product.

These international markets provide Australian companies with greater options to get the best possible return on products that cannot find a home in the Australian market. In other words, the global dairy market provides a critical alternative to the domestic market for Australian dairy products.}

In Australia, there has been a rapid increase of cheaper imported dairy in the past couple of years - putting extra pressure on sales of Australian made products.

According to Rural Bank, in 2023 Australia has imported more cheese by value than it has exported.

According to Dairy Australia's Situation and Outlook December 2023 report, imported products accounted for 11 per cent of Australia's dairy consumption in FY2000 - whereas in FY2023, this rose to 27pc.

"As an industry, we are exposed to the global markets whether we like it or not and our future as an industry will depend on maintaining our competitive positioning," Ms Taylor said.

Consumers now have more dairy options, often at prices below Australian-made products. Export markets are increasingly becoming more important as a channel for Australian dairy, providing opportunities for both farmers and processors to further build and grow their businesses beyond Australian supermarkets.

Dairy Australia builds and maintains strong relationships in key export markets, working with industry and government to provide critical support when the government negotiates trade deals. This includes securing improved market access and reducing trade barriers for Australian dairy products to China, Japan and south-east Asia.

To find out more, visit dairyaustralia.com.au/internationaltrade.