Crying Over Spilled Milk: Australia’s Diminishing Dairy Production

by Phoebe Shum

Due to climate variability, Australian dairy production may face challenges in the coming years. Authors Kevin Hanslow, Don Gunasekera, Brendan Cullen and David Newth (2012) outline the economic effects of climate change on pasture-based dairy production in Australia. Climate change undoubtedly affects agriculture in general, but pasture-based dairy production, which is heavily reliant on climate, experiences difficulty in efficiently converting pasture to milk when the temperature is not right. The drastic climatic changes will force farmers to alter their grazing systems. Hanslow et al. focus on the south-eastern regions of Australia, i.e. Victoria, Tasmania and South Australia, which produce 80% of Australia’s milk. Since climate change will reduce the supply and reliability of water supplies, dairy herds that rely on rain-fed pasture will not be able to survive as easily. Their results prove that the regions with drastic changes in climate will experience the greatest loss of dairy output. Additionally, shifts in temperature can also cause stress-related illnesses such as heat stress in cattle, resulting in reduced cattle productivity. Stress-related pests such as cattle ticks can also occur. Surprisingly, Tasmanian dairy production experienced a relatively low amount of decline in dairy productivity when compared to other states for reasons unstated.

There is a relatively inelastic demand for dairy and high substitutability between dairy from different states. Warmer temperatures will mean that there will be an increase in water requirements for dairy production. But this demand will coincide with the decreasing water availability. The warm and dry climate of south-eastern Australia will be most affected by the temperature shifts. To sustain the production quantity, solutions such as increasing the amount of food (grain, dietary oils) for cattle or changing the grass to deep-rooted and heat-tolerant grasses may help to alleviate production difficulties.

The article also covers effects on international dairy production. The similarly pasture-based dairy industry in New Zealand will experience a 2.8 to 4.3% decrease in production due to climate change. Reduced rainfall in Central Europe will cause their dairy systems to suffer. The United States will experience higher temperatures in the coming years, causing a significant negative impact on dairy production. By 2050, the analysis indicates that dairy production will have dramatically decreased.

Hanslow, K., Gunasekera D., Cullen B., Newth D., 2012. Economic impacts of climate change on the Australian dairy sector. Australian Journal of Agricultural and Resource Economics, 58, pp. 60–77.

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