Australia’s dairy sector is under pressure, with milk production declining in May. Adverse weather conditions, including drought in the south and floods in New South Wales, have upset regional production and contributed to lower farmer confidence. Although prices are rising due to strong export demand and tighter supply, higher input costs and lower volumes are likely to offset any short-term gains in profitability. More recently, the merger between Lactalis and Fonterra was approved, raising concerns about market concentration.