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The Australian dairy industry is feeling the effect of Russian trade sanctions following a sharp drop in world prices for milk powder.

The Australian government is working to ensure farmers hit by lost exports to Russia gain access to alternative markets, says Agriculture Minister Barnaby Joyce.

The recent supermarket price war on milk has forced Australian dairy suppliers to look elsewhere for new markets and revenue sources.

The first supplies of Australian fresh milk have started flowing to China following a new trade deal.

World dairy prices and Australian farmgate milk prices are expected to remain favourable over the outlook period.

Despite the high Australian dollar, exports have picked up in Tasmania thanks to continued demand from China and an improved US economy.

Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig, has announced that the agricultural industry would benefit from increased governmental support including assistance in cutting red tape for agricultural exports.