Dairy Australia has released its Situation and Outlook Mid-year 2026 report, predicting solid production levels for the rest of the year.
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Jeanette Severs
Dairy Australia’s Situation and Outlook Report mid-year 2026 points to a strong turnaround in milk production, underpinned by improved seasonal conditions.
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Milk output, which had fallen 2.4 percent year-on-year in October, narrowed to just 0.7 percent down by March, as timely autumn rainfall boosted pasture growth and soil moisture.
Production through the remainder of the financial year is expected to remain solid.
Dairy Australia analysis and insights manager Tom Youl said the well-timed rain had eased immediate fertiliser demand, but warned cost pressures would persist.
“Farmers will face margin and cash flow pressure with input cost and broader supply chain price pressures from fuel and fertiliser expected to remain a factor heading into the new season,” he said.
Despite some easing in fuel price signals and rising stockpiles, uncertainty remains, with Dairy Australia forecasting a two per cent decline in milk production in 2026-27, within a range of one to three per cent depending on global conditions.
Mr Youl said external factors would play a key role.
“External factors will be the driving influence behind production next season, a timely resolution to the Middle East conflict and favourable weather conditions could see production ease by one per cent; however, it could fall by as much as three per cent if elevated input costs are sustained over the year,” he said.
Dairy Australia analysis and insights manager Tom Youl
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The annual National Dairy Farmer Survey highlights a more resilient and confident industry, despite ongoing challenges.
Improved rainfall, stronger profitability and easing grain and fodder costs have helped lift sentiment, with 63 percent of farmers reporting a positive outlook for the industry, up eight percentage points on last year.
Confidence is also translating into expansion plans, with 26 percent of farmers looking to grow their business in the coming year, also up eight percentage points.
About 76 percent of farmers reported making a profit in 2024-25, although this was down six percentage points on the previous year.
It is worth noting about three-quarters of survey responses were collected prior to the outbreak of the conflict in Iran.
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