Reducing the barriers to profitable raw milk production growth – including labour, costs such as energy, and irrigation water – is vital to sustainable and profitable industry growth.
Dairy processors need confidence in the sector to encourage ongoing investment, product optimisation and guaranteed employment.
We are working to ensure the principles and policy settings are right to reverse the decline in raw milk production and secure a sustainable and profitable dairy processing industry – one that can compete ably in global markets – into the future.
Twenty years ago, the Australian dairy industry produced 11 billion litres of raw milk. Ten years ago, this was about 9.3 billion litres annually. In 2022/23 we produced 8.1 billion litres. The current season is expected to finish at 8.3 billion litres.
There are many reasons why, from labour to input costs. But a key consideration to factor into the future of secure milk supply and food security more broadly, is competing land use. Non-food industries such as timber are acquiring an abundance of active-producing dairy farms, and this will only increase.
We are currently seeing an increase in raw milk production volumes, however dairy processors need to be confident the profitable, secure supply of raw milk will continue, so they can stem the flow of rationalisation and consider growth plans.
Commitment from government to work with industry on developing a workplan with tangible initiatives towards securing a profitable and viable dairy industry, that attracts people and investment. This includes:
In FY2022 labour costs increased by about 10 per cent, transport costs were up 10 per cent and gas and electricity prices surged by about 300 and 100 per cent respectively.
In FY2023 we saw further rises in labour costs of about five per cent, transport by another 19 per cent and gas and electricity costs up by another 82 and 25 per cent. This was in addition to packaging, insurance, and raw ingredients costs.
This trend continues in FY2024.
Our dairy processors are under pressure to remain viable, maintain jobs for workers and keep the doors open. In the past 24 months 13 dairy processing businesses have publicly announced a closure.
This is in addition to several other dairy processing factories suspending operations, closing production lines, rationalising operations and others announcing significant impairments on their dairy asset value, writing down hundreds of millions of dollars over the last two years.
There is no doubt the current operating environment is damaging dairy processing businesses and is unsustainable.
Identify opportunities to support dairy processors to move to renewable energies to:
The technology employed to produce Australian dairy products is ‘world best’.
As a perishable product milk needs to be collected and processed within 24 to 48 hours of milking, which means most dairy processing factories operate seven days a week.
The consistency of dairy production means dairy processing employment requirement is more stable and has a lower seasonality factor than many other agricultural industries.
The high output, high-level sophistication of dairy manufacturing and processing facilities, also means the industry requires a more skilled labour force than most food processing systems.
While the Australian dairy processing industry provides significant opportunity for skilled and secure employment, processors are experiencing significant challenges in sourcing labour and meeting the specialty training and development needs of the dairy processing workforce.
This is further exacerbated with more than 50 per cent of the workforce expected to be retiring from the industry in the next five to 10 years.
ADPF and Australian dairy processors need to attract more skilled people to the industry.
This will be through upskilling existing employees, reskilling existing employees and attracting new entrants – both from our domestic and international workforce.
We need access to specialty dairy processing skills, and we need to address the shortfall in domestic training and development services.
Government to work with Australian dairy processors on access to a skilled workforce, to remain competitive in local and world markets. This includes:
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