Dairy production in Australia will hit a twenty-year low next season, as falling milk prices encourage farmers to reduce their herds, US officials said.

The US Department of Agriculture’s Canberra bureau saw Australian production under pressure from the combined effect of prolonged dry conditions, as well as low prices.

Production in 2017 was forecast at 9.3m tonnes, thanks to the “smaller dairy herd and exits from the industry”.

“Average dairy farms incomes fell significantly over 2016 due to lower farm gate milk prices and lower milk production per farm,” the bureau said.”

The bureau saw milk production in 2016 at 9.5m tonnes, below the official forecast of 9.7m tonnes.

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