What the dairy processors think

28 Dec, 2013 01:00 AM
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I think it is fair to say that we are incredibly concerned about the state of the industry

Brownes Dairy managing director Ben Purcell

What is your take on the current position of the WA dairy industry, is it sustainable?

We've worked incredibly hard to get more money back to the farmer, all that seems to be doing is covering escalated costs and I don't think we are in a position where people are investing and where we haven't got efficient young farmers coming through the system.

I think it is fair to say that we are incredibly concerned about the state of the industry, but we are pretty focused as a business as to what we need to do to keep it sustainable.

What are the greatest challenges facing the WA dairy industry?

In WA I think rising costs on-farm are particularly challenging and the incredibly competitive retail landscape also creates challenges.

I think the industry is sub-scale, therefore none of us are at a sufficient scale to properly recover our overheads in the way that we would ordinarily want to as manufacturers.

I think the apparent increase in imported dairy products into the State is a huge challenge, I don't believe consumers are made aware of what is being brought into WA and what isn't.

I think people automatically think a fresh product they bought was produced in WA, but there is no requirement to label proper origin.

So I think labelling requirements in Australia are unhelpful to sustain a small regional industry like the WA industry.

What needs to change to ensure stable production into the future?

For the last 12 months I have been very vocal about imported dairy coming into the State, I'm incredibly disappointed at Oak and Icebreak, they are two flavoured milks that originate from I don't even know where, but I know it's not WA and not using WA milk.

I think the disappointing thing is the short-term thinking that goes on to support cheap offerings from the Eastern States.

Everyone within the State, whether it's consumers or retailers, needs to think a bit more than just the short-term and look to the medium-term.

And select products that are going to benefit the state and not support products that come from outside the state.

What are your hopes for the future of the industry?

I'd like to get to a place where there is continued reinvestment in the industry.

Where the price for farmers and the price for processors is at a level where farmers can continue to invest in new technology and efficiency on-farm, so that we can invest in new products and efficiency in our own business, and that both of us get an adequate return on our investment in capital.

I'd also like to see a situation where you are getting people taking up dairy farming with confidence, particularly young people, not just rolling the dice or not just because they have inherited the family farm or because they are stuck in the industry.

It needs to be with confidence and that they know they are making a good investment decision and life decision.

I'd like people in WA to realise we actually have the best dairy in the country in terms of quality, the quality of our dairy is better than any other state in Australia. Our grade one standard is a higher standard than any other state in Australia.

Harvey Fresh director Kevin Siorgiovanni

What is your take on the current position of the WA dairy industry, is it sustainable?

The interest in milk products both domestically and internationally has never been greater in my 25 years in the dairy industry. That provides opportunity for volume growth for farmers to generate higher revenues to offset their fixed cost investments.

For the industry to be sustainable we need to balance domestic and export pricing. Domestic consumption remains strong with five per cent to 6pc population growth. Export demand is at an all-time high, however it is competitive. Our biggest competitor is not New Zealand. Today we are witnessing UHT produced in Germany sold at some 30pc below the Australian export price into Asia. It is more important that we continue to remain niche and I believe that opportunities will continue driven mainly by our short distance to South East Asia.

What are the greatest challenges facing the WA dairy industry?

For both farmers and dairy processors, the greatest challenge is from overseas and Eastern States producers and dairies competing in Asia, driving down prices and replacing WA volume.

What needs to change to ensure stable production into the future?

I would like to see longer term supply contracts, to provide price and volume security for the farmer and the processor. The longer term contracts would include a base price and a mechanism that provides the farmer with the opportunity to grow additional volume and be paid accordingly for his/her efforts. If a farmer then chooses to further invest in dairying, buying more land, growing more milk, that additional value should be rewarded. For this to occur there needs to be a clear understanding that each dairy farmer requires a certain level of return for his/her individual investment and risk.

What are your hopes for the future of the industry?

There is an enormous amount of investment made in WA both on farm and in processing. My hopes are that the entire milk industry from dairy farmers to service providers to transporters to dairy processing and to retailers all receive a fair and sustainable return to sustain the longevity of the dairy industry, as opposed to short term individual gains that will have irreparable effects for the supply of fresh milk in the years to come.

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READER COMMENTS

Pete
28/12/2013 1:31:29 PM, on Farm Weekly

Let's shut the gate after the horse has bolted maybe regulation wasn't a bad thing. We now have an industry with not many producers and the ones that are left are very big and they are supposed to be more efficient and have economies of scale but they don't and are going broke.

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