Not All Bad News

Nov 11, 2016

The American people have spoken and made their choice. It is amazing how things can change overnight. President Elect Trump’s victory in the United States presidential election has created a little bit of a stir in Australia and around the world.

Australia has an open economy and we are heavily reliant on exports. We depend on international stability and open borders to drive our economic growth. If Mr Trump’s views, which were expressed during the election campaign are realised, then the world trade environment is in for a very bumpy ride.

The Turnbull government promised that the ratification of the Trans Pacific Partnership (TPP) would deliver valuable new markets for Australian dairy. It was an ambitious pact that would have covered nearly 40 per cent of the global economy and solidified US leadership in the Asia-Pacific.

While Mr Trump’s election win has made the ratification of the TPP less likely, it is not all bad news for Australian dairy.

In fact, this election could open Australia to new opportunities and strengthen economic ties with countries in ways we never thought possible.

The China-Australia Free Trade Agreement (ChAFTA), ratified almost a year ago is a partnership that has the potential of becoming even stronger.

Australian Dairy Farmers (ADF) lobbied hard and strong for this once-in-a-lifetime deal and was closely involved in the negotiations.

Our dairy exports to Greater China have increased 46 per cent over five years, making it our largest dairy market export by volume and value. Import values have increased by almost 65 per cent year-on-year from approximately $456 million in 2014/15 to over $750 million in 2015/16.

The first half of 2016 saw the value of Australian dairy exports double. China’s market for Australian consumer goods has become much more sophisticated, with strong sales growth from supermarket chains and convenience stores. A growing middle class of roughly 300 million people want what Australia offers. Our industry’s ability to benefit China with safe, healthy, reliable sources of quality dairy products is essential for us in the long term.

China remains the largest importer of dairy products and it is still growing. About 16 million babies are born each year in China, and with the relaxation of the one child policy, that number is projected to beyond 20 million annually in coming years.

Over the long term, ChAFTA means more jobs across the Australian dairy industry both on farm and in processing plants. It will provide our industry with the confidence it needs to invest for a strong future.

Whatever transpires from the policy direction of a new US President and administration, the Australian dairy industry and Australian Government will do everything possible to ensure any changes in direction on US trade policy does not adversely impact the gains we have won for our dairy products access to markets.

The dairy industry’s long term growth will come from our ability to bounce back and make the most of the all the opportunities that are presented.

David Basham

Acting ADF President


 

 

Argibusiness Outlook 2016 to focus on global demand for Aussie produce

Apr 11, 2016

The Agribusiness Outlook Australia event will explore the strategies for primary producers to access and leverage the global demand for Australian produce. With sessions exploring how to access overseas markets, how to establish a reputable brand, and how to strategically position your organisation for success, this event will provide a platform to share best practice examples, innovative approaches and other strategic ways to secure a profitable and productive future.

In particular, the event will explore the tools to make Australia the next global supplier, due to the considerable economic expectation pinned on the growing appetite for Australian produce.
 
High international demand is great news for the security of Australian agribusiness. For example, when Coles dropped Bega Cheese in February for its private label cheese manufacturing and packaging this could have been detrimental for Bega if it had no further opportunities to access even greater revenue.
 
The dairy producer responded to the change in supply arrangements with Coles by redirecting their supply to other markets, like China, and rapidly growing their infant formula and nutritional platforms to attract much greater margins. Bega’s Chief Executive, Aidan Coleman, has noted that the strong global demand for infant formula will offset the loss of the Cole’s contract, estimated to be around $130 million.
 
Prior to the terminated contract, Bega’s share price had surged more than 42 per cent after announcing a joint venture with Blackmores to develop branded infant formula and sell into China. The positive results attained from the early stages of the Bega/Blackmore partnership indicate a prosperous future for the two companies, and endless possibilities for Australian agribusiness.
 
However, not all producers could bounce back from such an unexpected loss. Transitioning to high-margin products and bigger markets requires significant resources and investment. But this does not limit access to overseas markets to only those who hold noteworthy resources.
 
Bulla Dairy Foods are a great example of how even small business can access markets and opportunities overseas. Although it will still be a few years before Bulla can focus more of their business with China, they are currently preparing by innovating and building a competitive export portfolio to unlock and maximise the benefits available.
 
The Agribusiness Outlook Australia is a not-to-be-missed forum that will examine, amongst other topics, how to leverage global demand through a diverse collection of case-studies including from Bega Cheese, Graincorp, Coles and Bulla Dairy Foods, with the overall intention to secure a productive, profitable and successful future for all Australian agribusiness.
 
For more details about the conference please download the brochure here.
 

Progress and challenges revealed by dairy’s 2015 Sustainability Report

Mar 11, 2016

There is a rising demand worldwide for companies and industries to meet the needs of people today without compromising the ability of future generations to meet their needs.

Australia’s dairy farmers and manufacturers are proud to be part of a global movement which aspires to meet this demand, whatever understanding people have of sustainability.

One of the ways we demonstrate our whole-of-industry commitment to increasing prosperity for industry and communities, our care for people and animals, and minimising our environmental footprint is through the Australian Dairy Industry Sustainability Framework.

Established in 2012 to help guide Australian improvement against 11 targets and 41 performance measures the Framework is lead by the Australian Dairy Industry Council, managed by an industry Steering Committee, and supported by Dairy Australia.

Our 2015 Progress Report shows our improvement, but also our challenges. During 2015 there were several areas of improvement including:

  • The industry’s efforts in helping the Government to secure Free Trade Agreements with China, Japan and Korea, will help increase our competitiveness and profitability;
  • The intensity of waste sent to landfill by manufacturers, which has dropped 46% since 2011, exceeding the target for 2020 several years ahead of schedule;
  • The proportion of farmers with nutrient management plans, which at 58% is on-track to achieve the 2020 target of 80%, having almost doubled since 2013; and
  • The reduction in the use of routine calving induction - 88% of farmers do not use it compared to 80% in 2014.

Although we made good progress against some targets, there are others where more progress is needed, such as increasing the proportion of dairy farmers who are aware of, and implement, the recently agreed (January 2016) standards and guidelines for animal welfare. Currently, awareness stands at 56% and our target for 2020 is 100%.

There are other areas where the industry’s performance has declined, such as the proportion of people who recognise dairy as a quality product, which slipped to 69% from a baseline of 72% (the 2020 target is 80%).

To ensure our industry remains current, relevant and accountable in the context of changing global and domestic conditions and expectations, a review of all the targets, indicators and performance measures in the Framework will be undertaken during 2016.

The review will take into consideration a broad range of emerging issues, stakeholder views, industry priorities, political agendas and global trends.

The ADIC is excited to share our progress thus far – it demonstrates just how powerful dairy can be when the whole supply chain works together toward its common goals.

We encourage you to take the time to have a look at the key areas that interest you in the online report and look forward to hearing your thoughts.

A snapshot of the Australia dairy industry and our sustainability progress...

Trade reforms a positive kick start for 2016

Jan 23, 2016

Over the course of 2015, Australian Dairy Farmers (ADF), together with state members and industry partners has worked collaboratively with government to broker new trade deals which increase access to key Asian markets hungry for safe, clean and sustainable Australian dairy produce.

ADF welcomed the China-Australia Free Trade Agreement (FTA) which entered into force on 20 December 2015, followed quickly by a second round of tariff reductions on 1 January 2016.

Also on New Year’s Day, the Korea-Australia FTA progressed to its third year of benefits for dairy exporters, meaning further tariff reductions and increased quotas for a range of Australian dairy exports.

Similarly, the Malaysia-Australia FTA moved into its fourth year of implementation, translating to further increased liquid milk tariff rate quotas. The Thai-Australia and US-Australia FTA’s also celebrated a milestone in passing the 10 year point, and provided improved duty free quotas for Australian dairy.

Further to this, the finalisation of the Trans-Pacific Partnership negotiations in late 2015, plus the late December announcement of an agreement to abolish government subsidies on agricultural exports through the World Trade Organisation.

The Australian dairy industry still faces challenges in its export focused markets, especially with regard to technical barriers to trade which translate to higher production costs, reduced product returns and restricted export demands all combine to lower milk returns for farmers.

With these challenges in mind, ADF is celebrating the progress made in trade reform to the long-term benefit of our industry. This progress boosts the industry’s competitive position in the global market and contributes to building confidence to invest in a strong future for Australian dairy.

For more information on ADF’s Markets Trade and Value Chain priorities, click here.

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