Markets are evolving
- Dairy is having to adapt to changing consumer preferences and competition from milk alternatives.
- Public expectations are changing and consumers are increasingly questioning food and the way it is produced.
- While the removal of quotas and export subsidies overseas has generated additional value in global markets it has also brought on more market volatility.
- Dairy imports have secured a greater presence in the Australian market on the back of a variable domestic supply pool.
Supply chain adjustments
- Processors have invested heavily on the back of clear opportunities for the Australian dairy industry – however they require more milk throughput to improve their efficiencies.
- Processor ownership structures have evolved from the farmer-owned cooperatives to private companies which has influenced their decision making.
- Australia is a major global dairy exporter however our relevance on global markets is being questioned on the back of reduced milk volumes.
On farm complexity
- The way we farm is becoming more complex in response to market, pricing and climate variability.
- A broader range of skills and knowledge are now critically important as farms expand, employ significant labour and need to manage the business in a more volatile operating environment.
- Farmer confidence has been challenged by drought and industry events.
Risk and volatility
- Australia has a more variable climate than our major global competitors.
- Risk management has become critical to manage the increased volatility in both input costs and milk prices.
- Input costs (water, feed, labour and energy) have become more variable on the back of volatile seasonal and market conditions.
- The drivers of farm profitability vary significantly by region and require different solutions to ensuring success.
- Farm consolidation is shifting our relationship with regional service providers and communities.
- Environmental pressures in some regions require farmers to adapt quickly, including diversifying and intensifying their enterprises.
Attracting and developing people
- There is a shortage of skilled labour at all levels in the dairy industry.
- Keeping skills and knowledge in the industry and encouraging farm succession is an increasing and critical challenge.
The prospects for the industry are bright but the pathway toward a better future will require concerted and sustained collective industry action. Dairy Australia is ideally positioned to play a key role in lifting profitability for farmers, rebuilding confidence in the future and facilitating industry stakeholders pulling together as a united force to address key challenges.