Australian Dairy Industry Report

The report analyzes the Australian dairy industry, highlighting its position as a major exporter, the challenges it faces, and the opportunities for growth. It discusses historical developments, current market dynamics, and the impact of government regulations on production and pricing. The report also includes a SWOT analysis, examining strengths, weaknesses, opportunities, and threats within the industry, and concludes with insights on the future of dairy farming in Australia.

Running head: AUSTRALIAN DAIRY INDUSTRY
Australian dairy industry
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1AUSTRALIAN DAIRY INDUSTRY
Table of Contents
Introduction......................................................................................................................................3
About the industry...........................................................................................................................3
Challenges and opportunities...........................................................................................................4
Analysis and interpretation..............................................................................................................6
Overview..........................................................................................................................................8
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

2AUSTRALIAN DAIRY INDUSTRY
Introduction
Australia is not a big producer of milk but it is the 3rd largest dairy exporter in the world
and they export 50% of their production. After wheat and beef, it is their 3rd largest rural industry
with a gross value of $4 billion. Among the dairy products they produce milk, yoghurt, milk
powder, cheese and butter. The sector is mainly spread in south- eastern parts of Australia with
Victoria being the largest producer. Production in Victoria is mainly seasonal and their entry in
the export market makes them susceptible to unpredictable global prices. Other areas which
produce dairy products provide the domestic market for an all year production (Barkema et al.,
2015).
About the industry
In 1788, the first dairy cows had arrived in Australia. They had faced problems with poor
grazing condition and fodder. Lack of refrigeration referred to the prior serving of the domestic
market by the Australian industry. Most of the production areas were situated close to the
consumers so that they could be easily accessible. With the advancement of refrigeration, there
was commercialization in the industry. It became possible for the farmers to increase their
profitability and efficiency. For ease of transporting, processing and marketing of the milk
produced by the farmers, cooperatives were established. But with the corporatization of those
cooperatives it became a challenge for the dairy farmers again to gain profit or increase their
productivity and efficiency (Beggs et al., 2015). Few important facts are given in the following
table.

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Fig- Dairy facts in Australia
Source- Buys et al.,2014
Challenges and opportunities
The modification in the Australian dairy industry has put it in a favorable condition as
compared to other sectors of the food industry. It has helped in increasing the technical
efficiency and strong herd genetics. The following figure will help in portraying the SWOT
analysis of the industry.
Strengths- increased efficiency in production;
in a stable position for export market; strong
hold in the export business
Opportunities- risk in the management of
production; rise in demand from the Asian
countries; achieving greater efficiency in the
market
Weakness- unpredictable climatic condition;
purchasing and selling of retail and wholesale
products; uncertain policy and rules
Threats- change in the climate; protectionism
in the competitive market; input prices

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Recently there are various challenges faced by the Australian dairy industry along its supply
chain. The different stages in the supply chain include input, production, processing, exporting,
manufacturing and retailing of milk and milk products. There is volatility in the price along with
a decrease in price at the input level. Uncertainty and unavailability of water due to scarcity of
rain and increase in urbanization is a threat to the dairy industry. The investment and adaptation
in the production stage and restructuring might be a challenge for the dairy industry (Byrne et al.,
2016).
Production factors and international demand are the major criteria which tend to be an
opportunity for the dairy industry of Australia. It is important for the production system to adapt
to the uncertainty in climatic condition and increase in volatility of market. The deregulation in
the dairy industry with a clear focus on has been favorable to meet with the increased global
demand. This demand in the developing markets has not decreased with the increase in prices.
Demand markets are also important for the benefit of Australia’s industry. It has led to an
increase of 33% in the consumption of dairy products. Increase in the price of oil is directly
proportional to income and demand. Domestic production rate will be limited which signifies
that the growth in demand will be met by the import business. There is a strong relationship
between the Australian dairy industry and developing markets (Moate et al., 2014).
Analysis and interpretation
Future of the dairy industry among farmers as measured by NDFS has decreased from
67% in 2016 to 53% in 2017. A study has also showed that the profitability for three years is so
low that 45% of farmers when surveyed anticipated a profit in 2016- 17. Improved margins have

5AUSTRALIAN DAIRY INDUSTRY
controlled the decrease in milk production and there has been an increase of 3.8% in the overall
demand for export.
Fig- Export share and region- wise analysis
Source- Nettle, Brightling & Hope, 2013
Fig- Australian milk production (billion litres)

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Source- Byrne et al., 2016
ADF or Australian Dairy Farmers Ltd is a non- profitable organization which takes care of the
interests of the dairy farmers. They get the partial funding of 30% from voluntary fees, members
of the organization and some income from the fund.
Fig- Statistics of Australian dairy industry (2009- 10)
Source- Regulations, 2013
The supplementary food or grain is becoming common as the Australian dairy industry is based
on pasture. The industry gets an added value through processing and manufacture of milk and
milk products.

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Overview
The dairy industry of Australia is well stocked with government interventions. This
results in the use of inefficient resource and increase in the price of milk and milk products. This
intervention causes a virtual distinction between the two types of milk used for consumption and
manufacturing of dairy products. Price of market milk is higher than manufacturing milk even
though there is no difference. The kinds of intervention are- regulated price of milk in all the
states, definite quota for market milk, regulation in the processing and distribution of milk,
regulation in the retail prices of market milk in almost all the states, limitation in some states for
trading of market milk, tariff quota for restriction on the import of cheese and control on the
export business by the statutory bodies.
Conclusion
The strong relationship between of the Australian dairy industry and the developing
market has lead to increased growth and export. The demand of the market has also increased the
awareness about the nutritional value of milk. Although the dairy industry has faced remarkable
challenges like financial crisis, drought and deregulation but their ability to face such difficult
situations with collective actions has proven has helped in attaining success. The major element
of success for the dairy industry is the policy environment which helps it to adapt and develop.
Competition in the processing and functioning of dairy industry ensures options for the
stakeholders while selling and purchasing the dairy products.

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Reference
Barkema, H. W., Von Keyserlingk, M. A. G., Kastelic, J. P., Lam, T. J. G. M., Luby, C., Roy, J.
P., ... & Kelton, D. F. (2015). Invited review: Changes in the dairy industry affecting
dairy cattle health and welfare. Journal of dairy science, 98(11), 7426-7445.
Beggs, D. S., Fisher, A. D., Jongman, E. C., & Hemsworth, P. H. (2015). A survey of Australian
dairy farmers to investigate animal welfare risks associated with increasing scale of
production. Journal of dairy science, 98(8), 5330-5338.
Buys, L., Mengersen, K., Johnson, S., van Buuren, N., & Chauvin, A. (2014). Creating a
Sustainability Scorecard as a predictive tool for measuring the complex social, economic
and environmental impacts of industries, a case study: Assessing the viability and
sustainability of the dairy industry. Journal of environmental management, 133, 184-192.
Byrne, T. J., Santos, B. F. S., Amer, P. R., Martin-Collado, D., Pryce, J. E., & Axford, M.
(2016). New breeding objectives and selection indices for the Australian dairy
industry. Journal of dairy science, 99(10), 8146-8167.
Moate, P. J., Williams, S. R. O., Deighton, M. H., Pryce, J. E., Hayes, B. J., Jacobs, J. L., ... &
Wales, W. J. (2014, November). Mitigation of enteric methane emissions from the
Australian dairy industry. In Proceedings of the 6th Australasian dairy science
symposium (pp. 19-21).
Nettle, R., Brightling, P., & Hope, A. (2013). How programme teams progress agricultural
innovation in the Australian dairy industry. The Journal of Agricultural Education and
Extension, 19(3), 271-290.

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Rad, S. J., & Lewis, M. J. (2014). Water utilisation, energy utilisation and waste water
management in the dairy industry: a review. International Journal of Dairy
Technology, 67(1), 1-20.
Regulations, P. (2013). Australian Dairy Industry.