Producers in many regions have been forced to start irrigating amid growing concerns about how much pasture will be available for fodder production.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said the season was shaping up to be tight.
“A month ago it was looking really good and we were almost wanting a break from the rain,” Mr Lester said.
“Now it’s turned dry and unless we get rain soon it’s going to be a tight season, that’s for sure.”
While most water storages in the dairying regions are full after good winter rains, Mr Lester said starting irrigation this early could put pressure on water supplies at the end of the season.
“The concern is if there will be enough surplus pasture growth to get good hay and silage cuts,” he said.
“Most people would have enough grass now, but it’s later on where we could run into trouble.”
Mr Lester said a slowdown in pasture growth could also cause a slight dip in the state’s peak production over spring if the dry conditions continue.
This week Fonterra suppliers were given a boost after the processor announced a farmgate price increase of 13 cents per kilogram of milk solids.
The hike brings Fonterra’s price to $5.98/kgMS and follows Saputo’s rise of 20c/kgMS for its suppliers last month to a farmgate price of $5.95kg/MS.
Fonterra has revised the top end of its season-closing forecast from $6.20kg/MS down to $6.10kg/MS.
Fonterra Australia managing director René Dedoncker said the step-up would help support farmers who are facing challenging conditions.
“Rising costs for feed and water due to the drought means that cashflow is even more critical for our farmers.”
He said receiving the increase in milk payments now, rather than later in the season, would help farmers plan for the remainder of the year.
Mr Dedoncker said the price rise resulted from consistent performance by the Australian business, along with tightening domestic milk supplies and a weakening Australian dollar.
However, he noted market conditions were putting pressure on the upper end of the forecast range with production increasing in some other dairy-producing countries.
Mr Lester said it was important farmers knew where prices were likely to go, especially in a season like this.