Australians are being warned that the price of milk and other dairy products are set to soar ahead of Christmas due to reduced supply and increased demand.
Coles, Woolworths and Aldi have all lifted milk prices by 10cents a litre, and the shortage could impact cheese, cream and yogurt products in the coming months.
The shortage in dairy products comes amid Australia’s limited supply of urea – a vital ingredient in Australia’s diesel fuel supply which allows trucks to deliver everyday goods.
It was earlier revealed SRH Milk Haulage, which transports milk from farms to factories in NSW, had run out of the diesel exhaust fluid AdBlue, apart from what was left at service stations.
Dairy Australia senior industry analyst Sofia Omstedt said the demand for milk was growing around the world but the production wasn’t.
‘We’re seeing this fairly tight supply and strong demand putting upward pressure on prices, and at the same time, we’ve also seen cost pressures growing for producers of dairy and farmers,’ she told news.com.au.
She said that it was likely prices would continue to move around early next year, but it wouldn’t drastically affect shoppers.
‘A lot of farmers last year had one of the most profitable years – dairy farmers in Australia have quite high milk prices at the moment from a historical point of view, and it means farmers are helping absorb some of the price increases,’ she said.
Dairy products are also becoming more expensive to make with farmers having to fork out higher prices for things like grain and fertiliser, Ms Omstedt added.
She described the issue as a ‘perfect storm’, with cow populations in Australia having decreased from the drought as well as recent bad weather ruining yields.
With soaring beef prices, many farmers have chosen to sell their livestock rather than use them to make dairy products.
AdBlue, which is made from the fertiliser urea, is in short supply globally after China this year banned exports in a bid to contain food inflation.
Without this diesel exhaust fluid, designed to reduce nitric oxide pollution, half the trucks on Australian roads won’t start.
This crisis would threaten the supermarket and corner store supplies of Dairy Farmers milk, Parmalat dairy products like Oak flavoured milk, Saputo cheeses including Cheer, and milk from Norco, A2 and Richmond Dairies.
‘We’ve got nothing in our depots in New South Wales – we’re sending trucks effectively to service stations to get it,’ Ben Nix, the chief financial officer of SRH Milk Haulage earlier told Daily Mail Australia.
‘If the service stations start running low, which I’m going to guess they will in the not-too-distant future depending on who they get their supply from, that just creates uncertainty in the market.
‘Hence, everyone’s increasing their prices. You just don’t know what’s going on.
‘Effectively, it’s just every man and their dog.’
As a result, there’s been a global scramble for alternative supplies of the diesel exhaust fluid from other urea-producing nations like Indonesia, Saudi Arabia and Qatar.
Trade Minister Dan Tehan on Monday called on transport companies to avoid hoarding AdBlue but he insisted there was no crisis because Australia could import alternative supplies.
He hinted Australia would buy AdBlue supplies from Indonesia, almost a week after South Korea signed a deal with Indonesia to buy 120,000 tonnes a year for three years.
Trade Minister Dan Tehan on Monday called on transport companies to avoid hoarding AdBlue but he insisted there was no crisis because Australia could import alternative supplies
Australia is also approaching Saudi Arabia, the United Arab Emirates, Qatar and Japan for urea supplies.
Incitec Pivot, Australia’s only manufacturer of AdBlue, supplies 10 per cent of the domestic market.
But in November, it announced that from December 2022, it would cease making the product at its Gibson Island plant in Brisbane, with chief executive Jeanne Johns blaming a failure to secure a gas supply deal.
The company, listed on the Australian Securities Exchange, released a statement on Friday promising to boost production next year before the plant closed.
Source: Daily Mail