International dairy prices are set to increase by 2% in the 2016-17 financial year, and are predicted to rise a further 7% in the 2017-18 financial year.
International dairy prices are set to increase by 2% in the 2016-17 financial year, and are predicted to rise a further 7% in the 2017-18 financial year. Trevor Veale

International milk price expected to increase

QUEENSLAND Dairyfarmers' Organisation president Brian Tessmann said an international rise in the price of milk would not be felt by Queensland dairy farmers.

"That has been an issue that is riling the local farmers,” Mr Tessmann said.

"When international prices are on the way up, some local processors are trying to drop prices.”

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), a division of the Federal Department of Agriculture and Water Resources, predicted the farmgate price of milk would rise by 2% in the 2016-17 financial year.

That would average 43.8 cents a litre.

Senior ABARES economist Peter Collins said the prices would continue to rise by a further 7% to 47 cents a litre in 2017-18 and hit 50.1 cents a litre in 2019-20.

"World dairy prices are expected to grow each year to 2019-20, as consumption grows faster than supply,” Mr Collins said.

Mr Tessmann said globally the industry was returning to a strong economic position but this was not the case locally.

"It's not been reflected to local farmers,” he said.

"It's contradictory for local farmers in Queensland as pressure is still on from the suppliers to drop prices, not put it up.”

Mr Tessmann said the industry had bounced back following a decline after trade sanctions placed on Russia because of the Malaysian Airlines Flight 17 crash in 2014.

"Prices can drop because of really unusual things,” he said.

"While that is still going on, the world prices have now overcome that and are going up.

"The world is looking at dairy products and there is potential for Australia get in there.

He said it was important to make it worthwhile for local farmers to produce milk.

"The medium to long term looks good, it's just what we do here inside of Australia that is the issue,” Mr Tessmann said.

While the majority of milk produced in Queensland was sold here, there was potential to tap into the international market.

"There are a lot of people interested in that,” he said.

"There are groups working their way through developing an instant formula plant near Wellcamp Airport, which would need a heck of a lot of milk” he said.

"We'd love to supply that out of the South Burnett and Darling Downs, but we need to be able to survive in the meantime.”

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