Extreme Weather Threatens Dairy Prices and Industry Sustainability

The Australian dairy industry is facing unprecedented challenges as extreme weather events wreak havoc on farms, leading to anticipated shortages of milk, butter, and cheese. According to Milena Bojovic, Lecturer in Sustainability and Environment at the University of Technology Sydney, the industry is experiencing a crisis fueled by climate change, financial strain, and shifting consumer preferences toward dairy alternatives (Bojovic, 2025).

As one of the country’s most significant agricultural sectors, the dairy industry produces over AUD 6 billion in milk annually and employs more than 30,000 individuals (Australian Bureau of Agricultural and Resource Economics and Sciences, 2023). However, ongoing weather disruptions, including devastating floods in New South Wales and prolonged droughts in Victoria and Tasmania, have severely impacted farm productivity and animal health (Bojovic, 2025). In May 2025, record-breaking rainfall in several regions prompted many farmers to reduce their cattle numbers to conserve resources, thus exacerbating the situation (Bureau of Meteorology, 2025).

The financial landscape for dairy farmers is equally troubling. High operating costs associated with specialized milking equipment and infrastructure have left many producers struggling to maintain profitability. Recent announcements of modest increases in farmgate milk prices have disappointed farmers, who argue that these increases fail to cover rising operational expenses (Dairy Australia, 2025). Moreover, the number of dairy farms in Australia has declined significantly, from over 6,000 in 2015 to just 4,163 by 2023, raising concerns about the future of family-owned farms (Dairy Australia, 2023).

In light of these challenges, Australian Dairy Farmers, the national policy and advocacy group for the industry, has called for a AUD 399 million government investment aimed at enhancing farm productivity through technological advancements, improved water security, and succession planning initiatives (Australian Dairy Farmers, 2025). This appeal highlights a critical need for coordinated support efforts to assist dairy farmers in adapting to changing market conditions and climate variability.

Compounding the crisis, consumer preferences are increasingly shifting toward non-dairy alternatives, with the non-dairy milk market in Australia now valued at over AUD 600 million annually (Market Research Future, 2025). Innovations in cellular agriculture and precision fermentation are emerging as potential solutions for sustainable dairy production without the environmental impact of traditional farming methods. Companies like Eden Brew and All G are pioneering developments in this area, offering dairy proteins produced through fermentation processes (Eden Brew, 2025).

Despite the promise of alternative dairy sources, industry experts caution that challenges related to cost and scalability remain significant hurdles to overcome (Bojovic, 2025). As climate change continues to disrupt traditional farming practices, the concept of “protein pluralism” is gaining traction. This approach advocates for a market where both traditional dairy and alternative proteins can coexist (Bojovic, 2025).

Looking ahead, experts assert that immediate action is required to address the pressing issues facing the dairy sector. According to a recent study, Australian dairy farmers are eager for access to financial and technical advice to help navigate the uncertainties of their industry (University of Technology Sydney, 2025). A coordinated approach involving government support and industry expertise is essential to assist affected farmers in transitioning to more sustainable practices and ensuring the long-term viability of the dairy industry in Australia.

In conclusion, the Australian dairy industry finds itself at a critical juncture, facing severe challenges from climate change, economic pressures, and evolving consumer preferences. The need for strategic investment and innovative solutions has never been more urgent, as stakeholders work to secure the future of this vital sector.