United Dairyfarrmers of Victoria president Adam Jenkins said dairy producers would be looking to rein in costs wherever possible, including grain purchases.

He said while there was demand to feed the nation’s dairy cow herd, lower milk prices meant the incentive was not there to spend big on feed.

“The milk price situation is not that attractive, so at present it is a bare bones sort of situation, people going hand to mouth to an extent, not using more than they have to until there is a clearer picture on the season,” he said.

“However, people will still buy grain, they might be able to cut back, but they will make purchases.”

Rupanyup farmer and Grain Producers Australia chairman Andrew Weidemann sells grain and fodder to the dairy industry.

He said availability of both hay and grain stocks were tightening as mixed farmers held onto their reserves.

“Farmers are making sure they have feed for their own livestock so that means there is not much on the market,” he said.

“There’s also been solid demand from all the livestock industries, you can see that with all the grain bags in paddocks through grain producing areas that have been emptied over the past couple of months.”

Mr Weidemann said the burgeoning lamb and cattle market was providing some relief from the downturn in dairy.

In terms of grain availability, Mr Jenkins said he believed there was still grain available for purchase, but said dairy producers had to hunt around more to find it.

It was a similar story in the hay market.

“Stocks of hay and straw are starting to get a little tight,” Mr Jenkins said.

AgScientia analyst Lloyd George said dairy’s reduced demand would be felt by grain producers.

“There are other domestic users there, but certainly in south-east Australia, Victoria’s dairy herd of a million or so cows dwarfs the other industries,” he said.

He said there wouldn’t be a wholesale exit from grain purchases, but financial strain might have dairy farmers looking at all alternatives.