Rise and fall of the dairy industry in New South Wales : a supply-demand relationship analysis

Dairy has been a major food commodity in Australia since 1788 and a core export commodity since the 1930s, with rapid growth in the 1980s and a rapid decline in 2000 with the introduction of the dairy deregulation policy. The high rate of decline of dairy farms within Australia, particularly in New South Wales (NSW) and Queensland, has left the industry and market unprepared for future development. One reason for this decline would be the domestic supply and demand mismatch. Therefore, this study examines the relationship between supply (i.e., whole milk production), market demand (domestic and international markets) and policy variables. This study collected supply and demand-related data between 1980 and 2021 and then used a multiple regression model to depict the relationship between supply and demand variables. The study found that while there is a significant relationship between total whole milk production and domestic demand, there is relationship between supply, deregulation, and export market has not been identified. Therefore, the Australian dairy industry should look at how do they increase their volume in the export market without reducing the supply to the domestic market.