Page 22 - Food&Drink Business magazine October 2022

decades. However, buyer caution is still required. The forecast growth rate exhibits weather risk, is against a weak comparable, and is likely to be below the long-term average through 2023.
Meanwhile, everywhere you look, consumers are paying more for dairy and this is driving some changes in purchasing behaviours. Inflation is a global challenge, with some economies facing multi-decade high inflationary pressures.
FOR SPOT OCEANIA PRICES HAS OCCURRED SINCE THE
Q2 FY22 PEAK.
INFLATIONARY CHALLENGES
There is a range of supply and demand drivers behind the rampant inflation.
In Australia, headline inflation was 6.1 per cent in the June quarter. Food inflation was also elevated and was broad-based across most food categories.
Dairy consumer prices are rising (in some cases significantly) across many categories and regions and the peak in the cycle has not yet passed. Dairy demand settings are complex and uncertain, but have a softer tone, which is leading to some volume impact in the dairy aisles.
Cost headwinds prevail across the entire Australian dairy supply chain. On farm, high costs of feed, fuel and fertiliser have squeezed farmgate margins. While benchmark prices for most of these key inputs have fallen from Q2 2022 highs, they remain well above long-term averages with upside risk lingering through the next 12 months.
GLOBAL DISRUPTIONS
Zooming out, global feed benchmark prices have also fallen through Q3 2022, largely as a result of a Ukraine grain corridor opening and Russian exports lifting. Nonetheless,
A DROP OF
A volatile time
The Australian dairy industry continues to navigate a complex and uncertain period. RaboResearch senior analyst – Dairy and Consumer Foods, Michael Harvey, provides an overview of the global dairy landscape.
A potential collision is approaching in global dairy markets.
AGAINST the backdrop of geopolitical conflict, a slowing global economy and rampant inflation (including food and energy prices), dairy industry players are operating in a volatile environment with everyone keeping a close eye on what happens to the underlying market and industry fundamentals from here.
GROWTH WITH CAUTION
Globally, Rabobank expects the combined Big-7 milk pool – from major producers New Zealand, Australia, the EU, the US, Brazil, Argentina, Uruguay – to return to growth in Q4 2022, ending five consecutive year-on-year quarterly declines.
This is an unprecedented accomplishment in the past two
22 | Food&Drink business | October 2022 | www.foodanddrinkbusiness.com.au
20%