Dairy processors say Australian Dairy Plan will underpin turnaround

Australian dairy processors are counting on the Australian Dairy Plan to turnaround the sector after a difficult few years.

Australian Dairy Products Federation president Grant Crothers was one of the architects of the plan.

He said the plan outlined how to rectify falling profitability through the supply chain.

“It’s been a hard slog for processors in recent years,” he said.

“Increasing input costs combined with stagnant retail prices and increased import competition have left dairy manufacturing margins wafer-thin, which has eroded profitability and confidence.

“This has led to a downturn in capital investment and investment in innovation at a time when we should be taking advantage of free trade agreements, growing international demand and responding to fundamental shifts in consumer attitudes to food.”

Mr Crothers said processors were also contending with a reduced supply of raw milk.

“Manufacturing plants around the country have been forced to spread overheads across lower volumes putting further pressure on margins and curtailing the ability to reinvest in the industry,” he said.

The plan would also help to ensure Australia maintained its position as a reliable dairy exporter.

Mr Crothers said processors would help deliver on the plan’s commitment to restore trust between farmers and processors.

A Milk Value Portal, to be released by ADPF before the end of this year, would help demystify farmgate milk pricing.

“The Milk Value Portal will explain how raw milk is valued and the factors affecting the prices offered to dairy farmers across Australia,” he said.

“The Milk Value Portal will be the central source of information on the farmgate milk price using primary data from processors clearly showing the value of milk in each region by farm size and time of year, also taking into account milk composition.”

Mr Crothers said it would also contain information on the key influences of farmgate milk price, global indices and benchmarks and provide market insights.

The portal would be available free online and would provide the most current price information for dairy farmers, investors and analysts.

The Australian Dairy Plan is the first time the entire supply chain had come together to set a clear vision, purpose and course of action for the industry.

It was developed in collaboration between Australian Dairy Farmers, ADPF, Dairy Australia and Gardiner Dairy Foundation, with John Brumby serving as independent chair.

More than 1500 farmers, processors, service providers, retailers, investors and other stakeholders participated in nationwide consultation in 2019.

Originally appeared on Farm Online