The milk, the whole milk and nothing but the milk: the story behind our dairy woes

Pressure has been mounting on the industry for the past decade. Existing milk alternatives are growing their market share, helped by a rise in veganism and public concern around animal welfare. The agriculture sector is under pressure to reduce its contribution to climate change, and technology advances mean milk may one day be produced without cows at all.

All this has been compounded by devastating and prolonged drought. So here's the full story of the hurdles farmers face, now and in the future, to get milk into your fridge.

The rate at which processors pay farmers for milk is known as the farm gate price. The prices are not regulated and are set by market forces.

In 2016 the milk price crashed when Australia's two largest dairy processors, Murray Goulburn and Fonterra, lowered the price they would pay from about 48 cents a litre to as low as 40 cents.

This dramatically cut the incomes of milk suppliers. The number of dairy farmers in Australia fell by 600, or 9% over four years. This exit has been exacerbated by drought.

Since then, the farm gate milk price has increased and in 2019-20 is expected to be 51 cents per litre, due to a weaker Australian dollar and demand from export markets. But forecast global prices for butter, cheese and whole milk powder this financial year remain below that of previous years.

Methane and other livestock emissions comprise about 10% of Australia's greenhouse gas emissions.

As the Intergovernmental Panel on Climate Change made clear in its land use report in August, changes must be made across the food production chain if the world is to keep global warming below the critical 1.5 threshold. For beef and dairy livestock, this means changes such as land and manure management, higher-quality feed and genetic improvements. Meeting this challenge cost-effectively, while improving productivity, is no small task.

Technology may help in curbing greenhouse gas emissions from cows, but it also threatens to replace the dairy industry altogether. Advances in biotech may enable liquid analogous to milk to be produced through bioculture systems, without a cow in sight.

Elsewhere, the rise of plant-based alternatives derived from soybeans, almonds, oats and other sources threatens traditional milk products. This can partly be attributed to increasing numbers of people adopting a vegan diet.

Challenges to the dairy industry will take time and effort to address. Some, such as drought, are out of farmers' control. Dry conditions and high cost of water, fodder and electricity have forced farmers to cull less productive dairy cows, leading to a decline in production.

The pressures, and associated debt, create intense stress for farmers, increase family tensions, and have negative flow-on effects throughout rural communities.

Putting aside the political push for a regulated milk price, the key message for dairy consumers is clear. If we want our milk produced in a certain way, we must pay a fair market-based price to cover the costs to farmers of fulfilling our wants.

Andrew Fisher, Professor of Cattle & Sheep Production Medicine, University of Melbourne