Dairy Australia’s latest Situation and Outlook report for October says the ongoing drought and very dry conditions across many production areas, combined with soaring grain and fodder costs, will have a big impact on production this season.
A drop in cow numbers is also a factor and Dairy Australia now predicts production across the country this season will be between 8.6 and 8.8 billion litres.
In Tasmania, rising input costs and a dry spring are the main causes of concern.
The report says grain prices in Tasmania have risen by 52 per cent while fodder costs have increased by 21 per cent.
However, this increase is still significantly lower than in regions such as the Murray Valley, which have seen grain prices increase by more than 300 per cent.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said at this stage the increase in grain prices and lack of spring rain were probably the most worrying issues for many producers.
“The grain prices are the biggest factor for many people at the moment,” he said.
“Grain is probably the biggest costs for a lot of producers, but other input costs like fertiliser and power are also going up as well.”
Mr Lester said it would be vital for farmers to do careful budgets this season.
“A lot of people have limited the amount of grain they are using, but it’s very difficult to cut it out altogether because it’s often used to give cows supplements in their rations as well,” he said.
“Costs are certainly going to be high and if we don’t get some more rain it could end up being quite a tough season for a lot of people.”
Mr Lester said a lack of pasture growth would impact on silage and hay cuts later in the season.
“It’s not look too fantastic at the moment,” he said.
“Some areas I’ve seen are good, but there are others like down through the Northern Midlands there’s not much growth there at all.”
The Bureau of Meteorology’s outlook for November to January predicts the dry weather will continue though much of eastern Australia.
In Tasmania the forecast maps shows most western and central regions have a 25 per cent to 35 per cent chance of exceeding average rainfall, while in the East the likelihood is slightly higher at 40 per cent.