The survey found that many Australian dairy farmers are currently operating at or below break-even levels with 95% having their farmgate price significantly reduced in 2009.

Analysis undertaken by Dairy Australia as part of the 2009 Situation and Outlook Update released last week shows that although farmers were doing it very tough in September, there are signs of market recovery with input costs easing and some good mid-spring rainfall assisting farm margins in many regions.

The Hastings Co-operative Ltd's chief executive officer, Phillip Bryant, echoed the results of the survey.

"While Hastings Co-op has made good progress in what is still a difficult marketplace for dairy products, we feel it is still too early to tell for sure if there has been any significant turnaround globally or domestically," he said.

"We know our farmer suppliers are still doing it tough.

"Our approach is simply to keep working hard to expand our markets for our premium products, so that we can pay our farmers a fair price while remaining financially sound."

Dairy Australia's Manager Strategy and Knowledge Jo Bills said 340 farmers who participated in the March National Dairy Farmer Survey were re-contacted in September to update any changes and outlook an input in to the Situation and Outlook update.

September was a particularly low point for dairy farmers. Many told us they were facing immediate challenges managing their cash flow and dealing with highly variable spring weather conditions.

However since September we have seen a round of step ups in milk prices by major manufacturing companies as well as an increase in rain and better water allocations and weakening feed prices, so things are looking slightly better in some regions.

As well as good spring rains in some parts, international dairy commodity prices have increased.

Dairy Australia Managing Director Mike Ginnivan said DA market surveys have shown increases for several months now.

We are seeing increased demand in key Australian dairy markets such as the Middle East and South East Asia, so there are good signs of ongoing recovery for dairy prices. This has been supported by the globalDairyTrade results for whole milk powder (WMP) which indicate sustained demand from buyers into next year at higher prices.