Dairy Industry in Australia: Growth Potential, Trade Opportunities, and Regional Impact

The dairy industry in Australia is a major contributor to the economy, with 6,128 farmers producing 9.5 billion liters of milk. Approximately 35% of the production is exported, generating nearly $3 billion in income. The industry employs over 39,000 people and plays a significant role in regional areas. It relies on transparent trade systems and regulatory environments for future growth. The industry supports the Regional Comprehensive Economic Partnership (RCEP) agreement, aiming to enhance trade opportunities and establish regional value chains. The industry emphasizes the need for transparency, a plurilateral approach, and an MFN clause to maintain market access.

The dairy industry in Australia is one of the major rural industries of the country. On the basis of
the farm gate value of production, industry has been ranked at third place falling behind beef and
wheat industries. The 6,128 dairy farmers of Australia produce nearly 9.5 billion litres of milk.
Out of this production, approximately 35% of it is exported. In this way commit includes a wide
range of value added and innovative dairy products. Same time the industry generates and export
income of nearly 3 billion dollars.
The dairy industry of Australia can be described as the largest value added Food Industry. It
contributes 13 billion dollars at wholesale to the economy. Similarly the industry employees
directly nearly 39000 people on farms and those involved in the processing of milk.
The dairy processing and service industry is generally based in regional areas. Due to this reason
the industry produces significant employment and economic activity in the regional areas of
Australia.1 It is also worth mentioning that more than 100,000 people in Australia rely on coming
for their livelihoods. These include veterinarians commerce scientists animal nutritionist
transport industry feed suppliers financial Advisors. Nearly 97% of dairy farms in Australia
owned by family businesses. The quality and safety processes adopted by the dairy industry in
Australia are among the best in the world. They have a global reputation of being innovative and
reliable supplier. Dairy is very nutritious food and it has diverse and growing range of ingredient
applications. With a farm gate value of 4.7 billion, dairy has become a major contributor in the
economic and social fabric of the regional communities in Australia, particularly in south east
1 Basu Das, Sanchita (2013). “Challenges in Negotiating the Regional Comprehensive Economic Partnership
Agreement”. ISEAS Perspective No. 47-2013. Singapore: Institute of Southeast Asian Studies

and also in national economy keeping in view the trim linkage to the retail and food service
industry also in case of export.2
The dairy industry has the potential of achieving substantial growth in the next decade for
fulfilling the rising domestic and international demand. However, achieving this growth potential
and expanding the economic social and environment benefit by the industry relies on the
presence of transparent and open trading system and also on the regulatory environment. Under
the circumstances The industry welcomes a chance to present the submission on RECP.
It can be expected that the RECP is going to continue with the increased trade liberalization
taken place during the last few years. The dairy industry Australia also appreciates d
commitment on part of the Federal Government of Australia for creating an agreement for the
21st Century by removing tariff as well as non tariff impediments letter present for the trade in
goods. Rapid increase can be seen in case of the import of dairy products during the last several
years. When implemented, the RECP is going to create export opportunities for the dairy
industry in Australia. Particularly, the industry has the potential of growing experts to a large
number of countries.3
The Regional Comprehensive Economic Partnership (RCEP) negotiations included the ASEAN
member states and also the tax free trade agreement (FTA) partners of ASEAN. These included
2 Chandra, Alexander C (2008). Indonesia and ASEAN Free Trade Agreement: Nationalist and Regional Integration
Strategy. Lanham: Lexington Books
3 Corbett, Jenny (2008). “Services Trade Liberalisation in the ASEAN Economic Community and Beyond”. In
Deepening Economic Integration- The ASEAN Economic Community and Beyond. ERIA Research Project Report
2007-1-2, edited by Hadi Soesastro. Chiba: IDE-JETRO

Australia, India, China, Korea and New Zealand. It needs to be noted that these nations are
significant economic partners as well as the neighbors of Australia.4 It is also worth mentioning
that the RCEP nations include nine of the top 12 trading partners of Australia. Similarly, it
covers 60% of two-way trade of Australia in goods and services that has been valued at $392.4
billion. Australia has diverse and broad range of interests related with trade and investment in
RCEP countries ranging across almost all sectors of the economy. These include agriculture,
services, resources and manufacturing. During the last decade, there has been a significant rise in
the trade of Australia with RCEP countries. As a result, the annual growth of 10.6% has been
recording as against the overall annual growth of Australia of 7.8% in two-way trade.
The present assignment and evaluation has been made if RCEP has the potential of delivering
significant opportunities for international business. The evaluation has been made from the
viewpoint of Australian Dairy Industry Council Inc. and Dairy Australia as a stakeholder.
According to the government of Australia, RCEP has been claimed as a major foundation stone
of the future prosperity of the country. However it is believed that the RCEP great deal will have
a significant impact on agriculture in Australia. However, there several experts who believe that
the trade deal is going to damage food sovereignty that was the result of earlier trade agreements
including the trade agreements of the WTO.5 Therefore, these experts apprehend that RCEP is
going to threaten the livelihood particularly in sectors like agriculture, dairy, meat and other
agricultural products as it will allow duty-free import of subsidized products from other
countries.
4 Fukunaga, Y. and I. Isono (2013). “Taking ASEAN+1 FTAs towards the RCEP: A Mapping Study”. ERIA
Discussion Paper Series 2013-02. Jakarta: Economic Research Institute for ASEAN and East Asia
5 Hew, Denis (2007). “Conclusion: Towards an ASEAN Economic Community by 2015”. In Brick by Brick: The
Building of an ASEAN Economic Community, edited by Denis Hew. Singapore: Institute of Southeast Asian
Studies.

In the present submission, the objectives of economic integration strengthening economic
cooperation between the participating nations and achieving equitable economic development
have been supported. In its submission, the industry draws on the Guiding Principles in which it
has been mentioned it to include provisions for the purpose of facilitating trade and investment
and also to enhance and transparency in trade and investment relations that have arisen between
the participating nations and also to facilitate participating nations.6 It is believed that
commercially meaningful liberalization of dairy trade from EIF will be beneficial for the
consumers.
Policy Position of Dairy Industry: it is believed by the industry that genuinely liberalizing RCEP
agreement involves agricultural and particularly dairy and a heart with zero carve-outs in case of
the sensitive products. In this regard it is essential to have a plurilateral approach. Therefore, the
industry supports the adoption of this approach regarding the goods negotiations which include
holding consultations with the stakeholders and creating a single tariff schedule that results in a
call coherent, unified structure for dairy trade in the RCEP region.7
Need for transparency: transparency also has basic significance during the negotiations,
including the consultations that take place with different stakeholders. The industry has noted the
substantial commitment of resources as well as the complexity involved in negotiating an
6 Itakura, Ken. “Impact of Liberalization and Improved Connectivity and Facilitation in ASEAN for the ASEAN
Economic Community”. ERIA Discussion Paper Series 2013-01
7 Kawai, Masahiro and Ganeshan Wignaraja (eds.) Asia’s Free Trade Agreements: How Is Business Responding?
Cheltenham: Asian Development Bank and Asian Development Bank Institute, 2011.

agreement between 16 nations who are trying to conclude the negotiations involving ambitious
goods and services outcome rapidly.
Regional value chains: the participation by small and medium-sized dairy enterprises in trade
opportunities that are result of RCEP is a significant goal for the industry. There is also a need
for establishing mechanisms in RCEP that are capable of enhancing the expansion and
functioning of regional value chains, including liberal ROOs and regulatory cooperation.
MFN clause: In view of the rapid expansion being witnessed by bilateral and regional trade
agreements and aspirations of major economic power for establishing preferential access rights,
an MFN clause which covers all dairy products and food ingredients is considered as an integral
part of the agreement. This would maintain a level playing field for the market access to the
dairy products originating in Australia.8
The dairy industry in Australia is one of the major rural industries of the country. On the basis of
the farm gate value of production, industry has been ranked at third place falling behind beef and
wheat industries. The 6,128 dairy farmers of Australia produce nearly 9.5 billion litres of milk.
Out of this production, approximately 35% of it is exported. In this way commit includes a wide
range of value added and innovative dairy products. Same time the industry generates and export
income of nearly 3 billion dollars.9
The industry of Australia can be described as the largest value added Food Industry. It
8 Kawai, Masahiro and Ganeshan Wignaraja (2013). “Patterns of Free Trade Areas in Asia”. East West Policy
Studies No. 65
9 Medalla, E.M (2011). “Taking Stock of the ROOs in the ASEAN+1 FTAs: Toward Deepening East Asian
Integration”. Discussion Paper Series No. 2011-36. Manila: Philippine Institute for Development Studies.

contributes 13 billion dollars at wholesale to the economy. Similarly the industry employees
directly nearly 39000 people on farms and those involved in the processing of milk.
The dairy processing and service industry is generally based in regional areas. Due to this reason
the industry produces significant employment and economic activity in the regional areas of
Australia. It is also worth mentioning that more than 100,000 people in Australia rely on coming
for their livelihoods. These include veterinarians commerce scientists animal nutritionist
transport industry feed suppliers financial Advisors. Nearly 97% of farms in Australia are owned
by family businesses. The quality and safety processes adopted by the dairy industry in Australia
are among the best in the world. They have a global reputation of being innovative and reliable
supplier. Dairy is very nutritious food which is diverse and growing range of ingredient
applications. With a farm gate value of 4.7 billion, dairy has become a major contributor in the
economic and social fabric of the regional communities in Australia, particularly in south east
and also in national economy keeping in view the trim linkage to the retail and food service
industry also in case of export.
The dairy industry has the potential of achieving substantial growth in the next decade for
fulfilling the rising domestic and international demand. However, achieving this growth potential
and expanding the economic social and environment benefit by the industry relies on the
presence of transparent and open trading system and also on the regulatory environment. Under
the circumstances The industry welcomes a chance to present the submission on RECP.
It can be expected that the RECP is going to continue with the increased trade liberalization
taken place during the last few years. The dairy industry in Australia also appreciates d
commitment on part of the Federal Government of Australia for creating an agreement for the

21st Century by removing tariff as well as non tariff impediments letter present for the trade in
goods. Rapid increase can be seen in case of the import of dairy products during the last several
years. When implemented, the RECP is going to create export opportunities for the dairy
industry in Australia. Particularly, the industry has the potential of growing experts to a large
number of countries.10
RCEP provides chance to the Australia to grow diary services and also to use the expertise of the
industry in research and development for assisting in the development of productivity and
profitability of dairy and food supply in Australia. Some of the significant Australia has
considerable expertise include farm management, cattle breeding, dairy processing, cold supply
chain, animal welfare, city and environment, innovative Dairy ingredient applications, energy
and water conservation, and skill development for this is an retail sectors and also in dairy
marketing. This type of knowledge is particularly useful for improving productivity and also in
organizing marketing of milk in RCEP Nations where it will particularly create conditions it will
be helpful in increasing the price used by the farmers for their milk.
The dairy industry in Australia has prospered result of its overseas investment more than 100
years. As a result of foreign direct investment, the competitiveness of supply chain increased by
delivering sophisticated equipment, better technical skills that result in improving the innovation
and quality of the product and also with the help of the adoption of progressive management
practices. The industry feels trade and investment go hand in hand use of creating a double game.
As a result, investment clauses are sought in RECP for the purpose of encouraging a mutually
10 Scollay, Robert (2012). “APEC’s Regional Economic Integration Agenda and the Evolution of Economic
Integration in the Asia-Pacific Region”. KIEP APEC Study Series 12-02. Seoul: Korea Institute for International
Economic Policy

beneficial two way flow as it has been noted that the general exemptions provided by GATT
article XX are required to apply. These include the prevention or the enforcement of the
measures contracting party that are considered to the respective government for the purpose of
protecting public morals, protecting human law plant life or for health all related with the
conservation of resources. It has been seen that the increasing movement of people is also related
with trade and investment is it delivers technical skills relationships and business acumen. Under
the circumstances the dairy industry in Australia supports and agreement that allows the
movement of natural persons within the country for the purpose of supplying a defined service.
Significance of improved market access: As a result of the fact that the trading environment is
becoming more competitive due to number of access arrangements and also on account of the
increased focus of the US and EU.
On the other hand, in 2016, RCEP nations accounted for 42.5% after Global Dairy trade. The
same figures in 2008 were around 31.8%. This growth reveals the pivotal and expanding role
played by industry of the region.

Bibliography
Basu Das, Sanchita (2013). “Challenges in Negotiating the Regional Comprehensive Economic
Partnership Agreement”. ISEAS Perspective No. 47-2013. Singapore: Institute of Southeast
Asian Studies
Chandra, Alexander C (2008). Indonesia and ASEAN Free Trade Agreement: Nationalist and
Regional Integration Strategy. Lanham: Lexington Books
Corbett, Jenny (2008). “Services Trade Liberalisation in the ASEAN Economic Community and
Beyond”. In Deepening Economic Integration- The ASEAN Economic Community and Beyond.
ERIA Research Project Report 2007-1-2, edited by Hadi Soesastro. Chiba: IDE-JETRO
Fukunaga, Y. and I. Isono (2013). “Taking ASEAN+1 FTAs towards the RCEP: A Mapping
Study”. ERIA Discussion Paper Series 2013-02. Jakarta: Economic Research Institute for
ASEAN and East Asia
Hew, Denis (2007). “Conclusion: Towards an ASEAN Economic Community by 2015”. In
Brick by Brick: The Building of an ASEAN Economic Community, edited by Denis Hew.
Singapore: Institute of Southeast Asian Studies.
Itakura, Ken. “Impact of Liberalization and Improved Connectivity and Facilitation in ASEAN
for the ASEAN Economic Community”. ERIA Discussion Paper Series 2013-01
Kawai, Masahiro and Ganeshan Wignaraja (2013). “Patterns of Free Trade Areas in Asia”. East
West Policy Studies No. 65

Kawai, Masahiro and Ganeshan Wignaraja (eds.) Asia’s Free Trade Agreements: How Is
Business Responding? Cheltenham: Asian Development Bank and Asian Development Bank
Institute, 2011.
Medalla, E.M (2011). “Taking Stock of the ROOs in the ASEAN+1 FTAs: Toward Deepening
East Asian Integration”. Discussion Paper Series No. 2011-36. Manila: Philippine Institute for
Development Studies.
Scollay, Robert (2012). “APEC’s Regional Economic Integration Agenda and the Evolution of
Economic Integration in the Asia-Pacific Region”. KIEP APEC Study Series 12-02. Seoul:
Korea Institute for International Economic Policy