Milk production across Victoria and nationally continued to decline last month.
Dairy Australia figures show a further drop of 5.3 per cent nationally, when compared with February 2022.
Nationally year-to-date production was down 6.5pc.
Victoria saw a decrease of 6.9pc on last February's figures, with a decline of 7.2pc, year-to-date.
Northern Victoria saw the biggest decrease on February last year, down by nearly 10pc, or 10,387 million litres.
The year-to-date figure was down 7.6pc
In western Victoria, production was down 2,566 m/l, or 2.3pc on the previous February and 5.8pc for the year-to-date.
Gippsland saw production fall by 11, 169 m/l, or 8.4pc when compared with February 2022 and an 8.2pc year-to-date drop.
Dairy Australia industry insights and analysis manager John Droppert said the continuing decline was based on a continuation of factors that had defined the current season.
"High input prices caused early setbacks," Mr Droppert said.
"Lower fertiliser use last season - and wet conditions in spring - resulted in poor quality conserved feed and pasture damage.
"There will be ongoing impacts from the floods, although the direct impacts are likely very localised.
"We have continued to see retirements and dairy operations winding down."
Mr Droppert said the coming season would continue to follow the trend lower.
"Next season, I think, will potentially see a further decrease, especially if farmgate prices fall to converge with international indicators," he said.
"On the other hand, if the domestic premium is able to be sustained and processor competition keeps prices high, we may see more of a consolidation - especially if beef continues to fall and so does nitrogen/grain."
He said milk processors were likely to have a very intense few months, working budgets on buoyant domestic values and sagging international prices.
Processors would be balancing their overall market exposure against competition for a tighter milk pool and the threat of imports eroding domestic premiums.
"I think they have their work cut out for them as things stand," he said.
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Meanwhile, Burra Foods, Korumburra, chief executive Stewart Carson said the company had a stand at Farm World, Lardner Park, Warragul, in late March and prices were an important topic of discussion.
"Taking a rational view from a market perspective, the current Victorian milk price is now well above import price parity from New Zealand," Mr Carson said.
"This has enabled strong growth in NZ dairy product offerings at a very competitive price in local supermarkets.
"It also makes it more challenging to compete in export markets, particularly when the world's largest dairy importer - China - is flush with milk and has significantly less demand for imports."
Mr Carson said this was an unsustainable model for the stability of Australian dairy so it was therefore rational to expect farmgate milk prices to reduce.
"However, farmgate milk supply continues to decline which increases the competition for milk and invariably drives milk price up," he said.
It was too early to commit to an opening farmgate milk price, at this stage.
At Bulla, Colac, Dairy Procurement general manager Rohan Davies said the team had begun planning for the upcoming season.
"The declining milk pool is a clear consideration for the industry and, the needs of our valued farmer's businesses are at the forefront of our planning," Mr Davies said.
"As a 112-year-old family-owned dairy processor, we understand the importance of a sustainable dairy industry.
"Timing for our opening price announcement has not been finalised yet, however, our priority, as always, will be to assess and put forward price bands that are competitive in this market and that will equally fuel our growth trajectory as a business."
Bulla has more than 200 farmers, across Victoria, supplying its Colac factory.