Australia-Dairy farming doing it tough.

AUSTRALIA-DAIRY FARMERS STILL DOING IT TOUGH.

Australian dairyfarmers have experienced a significant drop in income and faced many challenges in the past year.

Despite this however, the industry remains mostly confident about its long-term prospects, according to the latest Dairy Australia National Dairy Farmers Survey.

Two thirds of the 1000 dairyfarmers 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 the survey demonstrated the resilience of Australian dairy producers.

"It is a very tough time for many of our dairyfarmers," he 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 12 per cent 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 is 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 export subsidy scheme has had a dampening affect, despite the subsidy level still being historically low and with little growth in EU production expected.

Dairy Australia Strategy and Knowledge manager Jo Bills said lower milk prices are the biggest concern for farmers.

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