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

Shoppers could pay up to 30 cents more for a liter of milk in the coming weeks as the Australian dairy industry is crippled by a production shortage.

A mix of widespread wet weather, rising production costs, labor shortages and an exodus of farmers from dairy production are responsible for the price hike.

Michael Harvey, senior dairy and consumer food analyst at Rabobank, told Daily Mail Australia that production fell short of 350 million litres.

“There have been milk losses due to flooding in Queensland and NSW and seasonal conditions have been unfavorably wet in other regions such as parts of Tasmania and Victoria,” he said.

‘This has consequences for the availability and quality of feed.’

Mr Harvey said: Problems with labor availability and constant abandonment of farms were an additional blow to the industry.

“That’s why production declines are widespread,” he said.

“I think we are entering a period of high food inflation and this includes higher prices for dairy in most categories.

“The simple reason is that the drivers behind high prices are still in play. High production costs, strong raw material markets and high costs in packaging and distribution.’

Production issues affecting milk production are also expected to increase the price of other dairy products such as butter, cheese and yogurt.

“We expect (and are already seeing) higher prices in all categories and in all regions,” said Mr. Harvey.

‘Dairy consumers all over the world pay much more for milk and cheese.

‘Labour shortages are a major problem for Australian dairy farmers. There is also an element of lifestyle choice where some older farm owners just want to leave.

“And there is also an element of strong competition for resources and capital from other agricultural sectors, such as livestock.”

EastAUSmilk dairy farmer advocate Shaughn Morgan said: ABC the sector was under great pressure and these workers had no choice.

“The number of dairy farms is constantly decreasing, with many dairy farmers and their families deciding that enough is enough,” he said.

Bianca Woodford runs a dairy farm in western Brisbane and said the price increase was necessary to cover her costs.

She hoped shoppers would understand that the industry needs to raise the price.

“It’s sure to stick with those price increases on our side to support our business,” she told ABC News.

Milk is the latest ingredient to rise during the cost of living crisis in Australia, which has forced households to pay higher prices for groceries, petrol and electricity.

Vegetables, fruits, cereals, bread, eggs, oils, butter and margarines have all risen sharply in price over the past year, according to a July report by the Australian Bureau of Statistics.

Vegetables rose 7.3 percent across Australia, but the increases were even higher in some capitals.

In Darwin, vegetable prices rose by 9 percent, while both Sydney and Melbourne saw vegetable prices rise by 7.7 percent.

In the 12 months to June 2022, fruits and vegetables grew by 7.3 percent.

Non-alcoholic drinks such as coffee, tea, juice and soft drinks rose even more – 7.9 percent.