Delve deeper into dairy

Not enough large-scale investments in the dairy industry are being made

ALTHOUGH the timing might be right for the Australian dairy sector to finally expand, there's still a gap between willing investors and actual investments.

This week the issue was thrust into the spotlight via the inaugural Dairy Farm Investment Forum in Melbourne, Victoria, organised by Dairy Australia (DA), which attracted about 300 people - including farmers, processors, industry leaders and investors.

About 50 foreign delegates attended (mainly from China) and organisers were hoping the event would stimulate activity.

The discussion stressed it was an ideal time to grow the industry - thanks to increasing demand, Australia's location and climatic conditions - but the reality is that not enough large-scale investments in the dairy industry are being made.

David Williams, from the investment firm Kidder Williams, urged the industry to stop focusing so heavily on China.

Mr Williams told the crowd to broaden its view and said many Chinese investors were "tyre-kickers", with many potential buyers coming to Australia without adequate advice.

But he said investment activity was increasing, with some investors looking to buy bigger farms, while others were considering smaller, more efficient farms.

Jeremy Bayard, who heads up the corporate dairy operation ACE Farming, said there was a handful of corporate dairy operations up and running but the landscape was barren.

If a few more came on board, the money would start to flow, he said.

Despite the recent volatility of the milk price, many industry leaders said farmers needed to focus less on price and more on margins.

High-performing producers were making money in those tough years by doing exactly that, they said.

For any investor to give up their hard-earned capital, this is the sort of information they need.

Speakers said the industry should focus on getting the message out that well-managed farms were profitable but also stress that like any investment it was a long-term asset.

The feeling was that DA had done a great job of putting the issue of investment in the spotlight - and if anything the forum highlighted the real desire for more information so investors would be able to make the right decision.

The discussion has started about what the industry needs to do to attract capital, but the conversation now needs to delve deeper into how to convince investors that dairy is all it's cracked up to be.

StockLand
Louise Preece

Louise Preece

is a journalist for Stock & Land
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

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