Australia-Dairy farming.

AUSTRALIA-DAIRY FARMING.

Dairy farmers are re-examining their herd size and supplementary feeding rates, as well as restructuring debt, as short-term solutions to the recent drop in milk prices.

But most farmers are still confident in their long-term future, according to new Dairy Australia research.

The latest National Dairy Farmers Survey found two-thirds of the 1000 dairy farmers surveyed nationally said they felt "fairly to very positive" about the future of the industry.

Carried out annually, Dairy Australia Managing Director Mike Ginnivan said this year’s survey demonstrated the resilience of Australian dairy producers.

"It is a very tough time for many of our dairy farmers," Dr Ginnivan said.

"They have been doing all they can to adapt their businesses in response to the current economic and climate conditions they face."

The proportion of farmers feeling positive has fallen by 12pc over the past 12 months, reflecting that most farmers have felt the immediate impacts of the global economic crisis through a drop in milk price.

Dr Ginnivan said despite the challenging times, there was an improved outlook for the dairy industry in the medium to long term.

"In recent weeks we have seen commodity prices stabilise and we are seeing early indications of demand recovery, particularly for milk powders," he said.

"It is expected that as developing markets begin to recover next year and beyond, and dairy becomes more incorporated into developing countries diets, consumption should rise.

"Production is forecast to gradually decline in developed countries.

"For example, growth in US dairy production is constrained by high feed costs which will affect production and profitability and prolonged drought is affecting production growth in South America."

Dr Ginnivan said the introduction of the European Union (EU) export subsidy scheme has had a dampening affect, despite the subsidy level still being historically low and with little growth in EU production expected.

Jo Bills, Dairy Australia manager for strategy and knowledge, said lower milk prices was the biggest concern for farmers.

"Naturally it is the single biggest current challenge for farmers, and it is impacting on producer plans," Ms Bills said.

"Herd size, supplementary feeding rates and restructuring debt are all being considered as short term responses.

"One in three producers cite milk price as their biggest future concern, outweighing factors like climate, feed and other input costs which have dominated in recent years.

"Climate change and effects of drought or flood are seen by one producer in five as a major future challenge.

"The level of confidence in the survey indicates that most dairy producers see this as a short-term issue associated with the current dire economic situation.

"We know that economic recovery will lead to increased consumption, thereby increasing prices and global demand for dairy products.

"In the mean time though, our farmers are adapting their plans as best they can."