Australia’s milk-producing costs have been found to be among the lowest in the world, despite a global increase, according to Rabobank
A new report by Rabobank has found the cost of producing milk in Australia compares favourably with other dairy-exporting regions, despite a rise in global milk production costs over the past five years.
In the report, the agribank found Australia to be one of the lowest cost producers in 2024, second only to New Zealand.
Australia was also found to be one of the regions generating the best gross milk price margins since 2019, along with New Zealand and the Netherlands.
This is despite significant global increases in the average total cost of milk production across major exporting regions, which Rabobank says has increased by around US6c/litre from 2019 to 2024 (up 14 per cent) with over 70 per cent of the increase occurring since 2021.
“The majority of the cost pressure has been on-farm working expenses rather than other ancillary costs, such as serving debt, taxes and depreciation,” RaboResearch senior agricultural analyst and report author Emma Higgins says.
Higgins adds the latest cost jump began in 2021 due to a range of factors, including feed and fertiliser cost increases from severe weather, trade disruptions, elevated shipping costs and broader supply chain disruptions.
Eight key exporting regions including Argentina, Australia, China, Ireland, New Zealand, the Netherlands, California and the upper midwest of the United States experienced this production cost rise in 2021-2022, Rabobank says, remaining elevated through 2023 until 2024.
The reports says all areas experienced relief over the past year, narrowing the cost band back to 2019 levels.
“Feed expenses have been the largest culprit in cost increases, with average feed bills across the eight regions rising 19 per cent from 2019 to 2024,” Higgins says.
“Feed bills started to pull back due to yield improvement and good weather in 2024, while fertiliser costs have also retreated as supply remains ample for demand.”
Australia and New Zealand’s low cost of production has been supported by the Oceania region’s strong reliance on pasture grazing, supplemented with home-grown feed stuffs or locally produced feeds, Higgins adds.