Dairy Crisis Down Under: Farmers Warn of Soaring Milk and Butter Prices

Industry leaders warn that prices for dairy products are poised to climb significantly in both the short and long term, with some areas already facing shortages. Joe Bradley, president of EastAUSMilk, minced no words: “There’s no ifs or buts about it—it’s a disaster. Prices have to rise.”

More than 80% of the country’s milk producers are reportedly grappling with the fallout from extreme weather events. Devastating floods in New South Wales have compounded years of environmental strain—severe droughts, record-low rainfall, and persistent feed shortages have left many farmers barely afloat.

The Bureau of Meteorology has recorded a “severe deficiency” in rainfall, marking the driest 14-month period on record in several regions. In Victoria and Tasmania, some farmers are spending unprecedented sums on hay and feed, struggling to maintain even baseline production levels. The Victorian Farmers Federation is calling for emergency funding to bolster both immediate recovery and long-term resilience.

Australia’s milk output, already in steady decline for decades, is set to shrink even further. “You’ve had entire farms and herds wiped out,” Bradley added. “Some producers have told me they’re walking away from the industry altogether.”

Yet while the damage is plain, bureaucracy threatens to stall relief. The NSW government has so far resisted declaring a “Category D” natural disaster—an official classification that would unlock crucial federal assistance. Bradley criticized the delay as needless red tape: “We’re not just talking about farming—we’re talking about milk on your shelves. Essential services.”

Michael Hampson, CEO of Norco, the nation’s oldest farmer-owned cooperative, echoed the urgency. “Without immediate support, we are looking at millions in losses per farm. The emotional and mental toll is just as severe.”

Norco estimates that individual farmers could lose more than a million dollars in income over the next 12 months, in addition to direct losses of infrastructure, feed, and pasture. Hampson, too, is calling for Category D classification, warning that continued delays will exacerbate both economic and psychological harm.

Meanwhile, consumers can expect to feel the pain at the checkout. Dairy Australia’s Eliza Redfern cautions that the entire supply chain—from farmers to processors to retailers—is under immense pressure. Farmgate milk prices are set to rise from July 1, but supermarket giants like Coles and Woolworths are expected to resist passing on the increases, further squeezing margins for producers.

Globally, the situation isn’t helping. Butter prices are reaching record highs on international commodity markets, according to Rabobank’s senior dairy analyst Michael Harvey. “We’re in a perfect storm of tight supply and stubborn demand,” he said.

In the coming months, Australians may find themselves paying significantly more for dairy—or finding it missing altogether from shelves. For farmers already on the brink, the question is no longer whether the crisis will deepen, but how many will survive it.