Tough year for WA dairy industry

30 Dec, 2013 01:00 AM
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The new year saw farmer confusion over supply contracts with major processors

IT was another challenging year for the WA dairy industry.

An increase in farm-gate price was dampened by the rising cost of production.

And erratic weather wreaked havoc in the South West, frustrating producers.

Dairy Australia reports indicated a two per cent fall in WA milk production to the end of September.

And disappointing spring milk flow saw speculation about the potential for a shortage in milk supply through the summer months.

The new year saw farmer confusion over supply contracts with major processors.

Harvey Fresh and Brownes offered extended supply contracts to producers in an effort to secure their long term milk supply, but met resistance from producers, who cited concerns that such deals would limit their options.

February also saw supermarket giant Coles release an inflammatory YouTube video which told the company's story behind the Coles brand milk pricing.

The attempt to curtail rising frustration among dairy farmers and bad PR, the release of the video backfired on the retail giant when it received a barrage of negative responses from dairy farmers and consumers.

The Ravenhill Dairy remained WA-owned after a deal was struck between the Ravenhill family and Brownes in March, which saw the major processor take on the brand, assets and milk supply.

The future of WA's fresh milk supply was put into question following claims from industry that without an increase in farm-gate price the availability of fresh milk in WA supermarkets could become a thing of the past.

It was said that supplies were dropping at such a rapid rate that WA consumers could have to get used to UHT milk.

The decline in fresh milk production was attributed to high grain prices, poor seasonal conditions, irrigation restrictions and rising electricity costs.

In April, dairy farmers celebrated after Brownes Dairy announced an increase in farm-gate prices.

Suppliers received an extra four cents a litre in September and October, an extra 2c/L in November and an extra 3c/L in December.

It was a turbulent year in Scott River with WA's largest single producer, Lactanz Dairy, removed from the market.

Lactanz Dairy was put up for sale late last year but lack of interest saw the price slashed by 10 per cent in early April.

It was revealed that unless a Memorandum of Understanding was put in place by the end of May, the property would be removed from the market until 2017.

Contracts between the conglomerate and Brownes meant the processor had control over the milk supply for the next five years which complicated the sale.

Ferrier Hodgson were appointed receivers of the corporate dairy as of June 5.

The results of a National Dairy Farmer Survey commissioned by Dairy Australia were met with wariness after the results determined WA dairy farmers were most likely to plan for re-investment.

The survey found 37pc of WA dairy farmers intended to invest in on-farm capital, the highest of all milk-producing regions.

The survey also revealed that 42pc of farmers throughout Australia were positive about the future of the industry, down from 66pc in a 2012 survey, which was the lowest since 2004.

This year also saw Dairy Australia establish a new strategy to endorse to Australian dairy industry, with the introduction of the "Legendairy" campaign.

The culmination of a year of industry-wide consultation, the campaign was launched across various media platforms in order to tell a consistent story to key stakeholders, including consumers, farming communities and government.

The release of a controversial pre-feasibility study by DAFWA, was an ongoing source of contention in the industry in 2013.

The study provided a blueprint for the potential expansion of WA's dairy industry and laid out costings and business plans for potential investors.

China was highlighted as the main investment avenue with many of the costings based on supply to Shanghai.

The study outlined two potential investment prospects, the first involved the production and export of 30,000t of whole milk powder, and the second included the production of 100 million litres of bulk fresh milk.

Some left-field ideas presented within the study included the establishment of feedlot dairies in the Great Southern.

Farmers and industry representatives questioned the findings and figures presented in the report, and were sceptical as to whether any of the ideas presented would come to fruition.

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READER COMMENTS

Pete
1/01/2014 4:35:44 PM, on Farm Weekly

Why are we talking about overseas investment? Pay our peasant farmers more and they will invest sell our milk powder to the Chinese not sell our land and infrastructure to them. Wake up you clown politicians.

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