Aust'n dairy industry struggles to meet growing Asian demand

The dairy industry crisis in Victoria and Tasmania has dashed Australia's hopes of doubling milk production to meet demand in Asia.

Dairy Australia, the peak body, released figures on Wednesday which show that milk production Australia-wide is continuing to fall.

Dairy Australia forecast that the total amount of milk produced in Australia in 2015-16 would be 9.55 billion liters, a two percent drop on the 2014-15 figure.

The figures released by Dairy Australia comes on the back of Murray Goulburn and Fonterra, two of Australia's largest dairy processors, slashing dairy prices by up to 15 percent in April.

The cuts by the two companies mean that the cost of production has surpassed the price of dairy in Victoria and Tasmania.

Experts predicted that as many as 20 percent of dairy farmers in Victoria and Tasmania will either have to sell cows or quit the business to remain afloat.

Chief Executive of Dairy Australia, Ian Halliday, said on Tuesday the bleak outlook for the industry has overseas buyers questioning how long Australia will remain a viable exporter of dairy products.

"Overseas customers are asking what is the future for Australia; they ask are we reliable long-term suppliers if our production continues to fall like this," he told News Ltd.

"There is no doubt there are opportunities in export markets in the medium term, and that we can remain competitive on world markets; but we will only get production growth with profitable farmers and a milk price above the cost of production, higher than 4.3 US dollars a kilogram of milk solids (33 U.S. cents a liter of milk)."

Murray Goulburn cited low world prices, corporate mismanagement, a global glut and overly optimistic sales figures when announcing the decision to cut dairy prices.

Victoria is the biggest producer of milk in Australia, its dairy farmers accounting for 65 percent of Australia's total milk production in 2015. Endit