WA dairy farmers remain reluctant to expand their business despite positive conditions in the upcoming season

WA dairy farmers remain reluctant to expand their business despite favourable weather conditions and forecasted higher farmgate prices and business profits for the upcoming season.

Dairy Australia’s 2025 national dairy farmer survey suggested improved seasonal conditions are contributing towards greater positivity about the future of the industry yet WA farmers remain cautious in the short-term.

Similarly, Tasmania and Gippsland farmers remain positive but mindful, while in South Australia and Murray confidence in the industry’s future and their own businesses have dropped significantly since 2024.

New South Wales farmers are most optimistic about profitability, with many planning to make on-farm capital investments over the next two years and are more likely to make major investment decisions compared to other regions.

Dairy Australia analysis and insights manager Eliza Redfern said extreme weather was the largest industry concern currently with 69 per cent of farmers affected by it.

“While the worst impacts have been in western Victoria and SA, at least half of all businesses in every dairy region have experienced some effects of extreme weather conditions,” she said.

Industry is also facing higher operational costs and global headwinds that continue to impact profitability and decrease producer sentiment.

With most WA milk going to the domestic market, the state is least likely to be impacted by trade and economic uncertainty.

However, Rabobank’s 2025/26 Australian dairy market outlook — released on May 28 — has noted an uncertain global backdrop could lead to a dampening of dairy demand locally and in Australia’s export markets.

Senior dairy analyst Michael Harvey said recent tariff measures introduced by the US administration have unsettled many international markets.

“While this is likely to see minimal direct disruption for Australia’s dairy sector – given the local industry’s product mix and market exposure – from a broader perspective, several key dairy trade flows remain under scrutiny,” he said.

In terms of the domestic retail market, Dairy Australia’s situation and outlook report — also released on May 28 — indicates dairy continues to perform well, supported by behaviour linked to inflation and emerging consumer trends.

Ms Redfern said year-on-year milk was up 0.7 per cent, dairy spreads were up 3.3 per cent, cheese was up 4.2 per cent and yoghurt was up 8.4 per cent.

“Australia is on track to maintain a national milk pool of 8.3 billion litres this season,” she said.

However, Ms Redfern said lingering climate impacts, margin pressures and a lower appetite for farm business growth may result in easing milk production for the 2025/26 season.

“Dairy Australia currently forecasts a 0-2% reduction in national milk production for next season, likely dropping to around 8.24 billion litres, however, it is a rapidly developing situation,” she said.

In terms of WA, Ms Redfern said milk production has also been tracking down this season, despite favourable weather conditions.

“Both the dry conditions and cull cow backlogs from the 2023/24 season have been resolved, however the latter has left the state with a significantly smaller herd,” she said.

“There have been approximately eight farm exits this season, with all reportedly maintaining the same ownership but converting to beef as a hobby as part of their retirement plans.

“While the above has weighed on WA production this season, the state will likely maintain a milk pool between 300-350 million litres and will possibly do so again in the 2025-26 season, if weather remains favourable and farm exits slow.”