Austalia-Dairy crisis.

AUSTRALIA-DAIRY CRISIS.In Australia, the gap between export-exposed southern farmgate milk prices, and those paid in domestic market-focussed northern regions, will expand significantly over the remainder of the 2008-09 season, Dairy Australia says.

In fresh milk regions, contracted prices for 2008-09 are up 10pc as processors seek to shore up regional supplies. Domestic market exposure and current contract obligations would imply that these prices will hold for the current season, according to Dairy Australia’s latest Situation and Outlook report released this week. These domestic milk contract prices, however, could come under pressure when these contracts are renewed. In contrast, the report confirms the extent to which the 60pc of Australian dairy farmers relying on export dairy product prices, have been shaken by the global financial downturn - mostly southern dairy farmers, especially those in Victoria. The rapid downturn in exports to the international dairy market has been in line with falls in many other export commodities, as the global economy slides rapidly into recession, the report says. The outlook over the next 12 months will continue to remain uncertain. It says conflicting signals are still coming in from overseas markets.