The Australian dairy sector, which relies heavily on exports for its viability, is likely to face stiff market competition from a resurgent US dairy industry.
According to an analysis in the April issue of Australian Farm Journal, US dairy farmers are changing their approach to business structure and productivity.
Rabobank's senior dairy analyst, Tim Hunt, said US dairy farms were becoming larger and more professional businesses, similar to what was happening in Australia and in New Zealand.
"At the farm gate there has been a substantial recent shift to fewer, larger and more productive dairy farms,” he said.
"The past five years have seen a 19pc increase in the number of farms with more than 500 head, and a doubling of the number of farms with more than 2000 cows."
This was a significant change in approach for the US dairy sector, which had traditionally been characterised by high production costs, protection from external competition and an internal market focus, with forays onto export markets limited to the subsidised disposal of product accumulated through price support schemes.
"In 2005, US farmers achieved the strongest growth in national milk production in a decade - with output up 3.5pc for the year,” Mr Hunt said.
"The increase was driven by a combination of increased herd numbers and improved yields.
"While much of the increase in exports was destined for the Mexican market, there has also been a substantial increase in US sales to ASEAN nations such as Indonesia, Thailand, Malaysia and Singapore - key markets for the Australian industry."
