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Aust, NZ dairy export prospects improving

Dairy Plant.The global dairy market may be starting to return to balance as China’s imports of dairy products jumped 26 per cent in the 12 months to June 30 while growth in the EU milk production has slowed for a third month.

Fonterra’s Global Dairy Update says European milk production growth is at its slowest since early 2015 and rose just one per cent in May compared to May 2015, for a 12-month gain of four per cent.

Milk output fell two per cent in both Australia and New Zealand in the 12 months to June 30 and US production gained one per cent.

Global dairy exports, which lag behind production data as milk is processed and brought to market, remain strong based on data in Fonterra’s monthly update.

Australian exports were up eight per cent in the 12 months to May 31, while New Zealand dairy exports rose seven per cent in the June 30 year, EU exports climbed 12 per cent in the year to April 30, and US exports fell eight per cent in the year to May 31.

Meanwhile, Australian Competition and Consumer Commission chairman Rod Sims told the ABC while he didn’t want to pre-empt any decision, the dairy industry was “a very strong candidate” for the next major agriculture review, likely to start in November.

The commission is already investigating several specific issues surrounding Murray Goulburn and Fonterra’s decisions to slash milk prices and clawing back the difference from farmers.

Consumer watchdog Choice says there has been no guarantee any increased profit will be passed onto farmers by dairy processors Murray Goulburn, Fonterra and others.

Choice spokesman Tom Godfrey said “If Australians continue to buy branded milk at the current rate, Choice estimates they will end up spending an extra $113.7 million, taking total sales to $1.5 billion up from $1.39 billion between August 2014 to August 2015.”

A cheap milk boycott began after processors downgraded the price paid to farmers for dairy products, prompted by sales of private-branded $1 per litre milk by supermarket giants Coles and Woolworths.

However, Choice is calling for milk processors to confirm they will pass on an additional profits from branded milk sales to farmers.

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