Australia Remains a Global Leader in Low-Cost Dairy Production

Australia has maintained its status as one of the world’s most cost-effective dairy producers, standing out in an era where global milk production costs have significantly increased over the last five years. A recent report by Rabobank highlights that despite these rising costs, Australia's dairy industry remains competitive internationally.

While the average total cost for milk production has increased across major dairy-exporting regions such as Argentina, China, and the United States, Australia has managed to keep its expenses relatively low. This feat is remarkable given that labour costs have risen significantly in Australia over the same period.

Globally, feed and fertiliser cost spikes at the farm gate have led to increased production costs. Challenges such as unfavourable weather, the Ukraine conflict, rising energy prices, and supply chain disruptions have contributed to this trend. However, lower costs of production in regions like Australia have been supported by their reliance on pasture-grazing and locally-produced feeds.

Oceania, consisting of Australia and New Zealand, continues to be a global leader in dairy production, competing closely with each region for the lowest production costs. New Zealand slightly edged out Australia in 2024, benefiting from lower feed costs, although Australia remains a strong competitor despite its rising labour expenses.

The global dairy industry is facing persistent challenges in terms of price volatility, geopolitical instability, and the need for continuous cost management to ensure resilience. As the sector navigates through these challenges, maintaining strong milk margins will be vital for ongoing productivity improvements.

While regions like China are working towards becoming more cost-competitive, Australia remains a benchmark for low-cost, efficient dairy production globally.