What causes increases to Australian milk prices?
Many factors influence Australian milk prices - including market forces both here in Australia and globally. Suppressed retail prices and a shrinking Australian milk supply have also influenced the increase we've seen of late. Dairy Australia's Situation and Outlook quarterly reports are a great source of up-to-date information regarding the Australian dairy market.
Last updated 31/01/2025
The price of milk in Australia is influenced by various factors, both within our own market and globally. Recently, the costs of producing, transporting, processing, and packaging a wide range of products have increased sharply due to impacts associated with the COVID-19 pandemic and the Russian invasion of Ukraine. Dairy is no exception. Rising dairy prices are a reflection of higher costs across the supply chain.
In Australia, the recent price increase can also be attributed to a long period of low prices, like the $1 per litre private label milk. These prices have only recently started going up, so the starting point was quite low compared to global standards. On top of that, the amount of milk being produced in Australia has been decreasing. This has created a lot of competition among milk processors to get enough milk from farmers, resulting in high farmgate prices. This, along with general inflation, has driven up prices further.
If retail prices stayed low, more milk would be sent to places where it's more profitable, like food service or export markets.
In summary, the price of milk is affected by many factors, and lately, it has gone up due to increased costs and a limited supply of milk.
Dairy Australia regularly produces market commentary as part of its Situation and Outlook reports, released quarterly.
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