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Australia 10.10.2024

Our Main Goal is to Create a Profitable and Sustainable Dairy Industry in Australia - Janine Waller

Source: DairyNews.today
From December 2 to 4, 2024, Australia will host the annual independent event bringing together key players in the dairy market - the Dairy Rally. Participants in the dairy road rally will embark on a journey from Melbourne to Sydney to visit leading farms, cheese factories, and dairy plants. In anticipation of the event, the editorial team at The DairyNews.today spoke with Janine Waller, the CEO of the Australian Dairy Products Federation (ADPF). Janine discussed the current state of Australia's dairy industry, the main challenges faced by local producers, and the opportunities that are emerging for the milk processing sector in the country.
Our Main Goal is to Create a Profitable and Sustainable Dairy Industry in Australia - Janine Waller
Janine, could you tell us about the Australian Dairy Products Federation (ADPF)? What are its key tasks and objectives?
The Australian Dairy Products Federation (ADPF) serves as the national peak policy and advocacy body representing the interests of Australian dairy processors, traders, and marketers of dairy products. Approximately 90% of the raw milk produced across the country is processed by our members, which include small, medium, and large enterprises that produce dairy products for both domestic and export markets. Our primary role is to lobby on behalf of Australian dairy processors in the political arena, for the greater benefit of the Australian dairy industry.

We work to protect and promote dairy for the future success of dairy processors, and foster the continued growth of an internationally competitive, innovative, and sustainable dairy processing sector.

It is crucial for the government to understand the role of the Australian dairy processing sector and recognize our significant contribution to the national economy, whether through job creation or investments in local communities, as well as the social and health benefits of Australian branded and locally produced dairy products.
ADPFs goal is to work with the government and other key stakeholders to ensure they are aware of what we do, as well as the issues and opportunities we encounter, and how we can best work together to secure a profitable and viable Australian dairy industry, that’s keeps manufacturing local and attracts people and investment.

 What challenges is the Australian dairy industry currently facing?
The situation for dairy processors in Australia remains quite challenging, and this has been the case for some time. A range of factors contributes to this issue. We are experiencing significant pressure on retail prices, surging overhead and input costs, competition fr om imported products, regulatory constraints, and foremost managing the ongoing challenges related to low growth in raw milk production volumes. While these challenges may not be unique to Australia, they certainly complicate trade under the current conditions, both locally and in international markets.

As mentioned, this stagnation in raw milk production is one of our primary concerns. In the early 2000s, raw milk production reached 11 billion liters. Currently, we are maintaining a level of around 8 billion. The government is working with us on how to halt this decline and create value, ideally increasing raw milk production volumes to ensure profitable growth.

Another challenge is cost inflation, which affects consumer purchasing power. As a result, we are witnessing a shift towards what we refer to as home brand or private label dairy products, as well as an increase in the volumes of cheaper imported dairy products, such as cheese and butter, that are replacing Australian brands on our supermarket shelves and in cafes. To illustrate the current situation, over the past two years, 13 dairy businesses have announced the closure of their plants. The latest closures occurred only recently with King Island Dairy in Tasmania, a 120-year old dairy processing facility and then Beston Global Foods who went into voluntary administration. Unfortunately, these realities compel dairy processors to continue to adjust their operations and find ways to optimise production efficiencies and rationalise operations to sustain the Australian dairy processing industry in the long term.

What are the main factors that have led to consequences such as increased imports and the closure of local dairy plants?
Paying our dairy farmers a fair price for their raw milk remains critical.

However, one of the factors that caused the influx of imported products was that we were paying a high price for raw milk versus our global competitors – there was a thirty percent difference in the price we paid for raw milk in Australia. It was cheaper to import dairy products into Australia such as cheese and butter, than to produce them locally because the price of raw milk was high in comparison. This is why we saw products coming in from New Zealand and the United States, wh ere production costs were lower. However, we are beginning to see a slowdown in this trend, which is a positive sign. Nevertheless, when you enter a supermarket or café, you still see imported dairy products instead of locally produced and Australian branded dairy products, which creates serious competition – and this will take years to unwind.

How does your federation work on addressing these issues?
We are optimistic as an industry. We have a government that places great importance on food security and the development of advanced production methods. This is very important to us. We are asking our government how to support local production and attract people and investment to remain competitive. We are pleased that our government is working with us in this direction and we hope to continue these partnerships.

We also enjoy a high level of consumer trust in our products, which is very important. For us, a priority is ensuring consumers understand the nutrition and health benefits of dairy foods and the importance of supporting locally made and Australian branded dairy products.

I hope this gives you some insight into the challenges and opportunities we face as an industry. Our main goal is to create a profitable and viable dairy industry in Australia that continues to produce locally, attracting people and investments.

At this time, we are conducting a significant amount of research to understand why we are experiencing a stagnation in raw milk production. We are trying to delve deeper into these reasons by partnering with the government to identify the specific challenges we face and what we can do to overcome them.

How exactly does your collaboration with the government work? What support measures does it provide to your organization and the dairy industry as a whole?
As an example, the government has provided us with funding and the opportunity to work together to explore the issue of our low volume growth, to jointly determine what specifically we need moving forward.

The government organized what was called a Dairy Symposium earlier this year, which invited dairy farmers, processors, and other key stakeholders to understand the reasons for the decline in raw milk production and the barriers contributing to it.

Prior to this, we, as representatives of the dairy industry, had already invested in research to better understand those barriers, as well as potential solutions, which was presented at the Symposium.

One of the outcomes of the Symposium was the government announcing funding to deepen this research and strengthen our competitive position. This will allow us to study various agricultural regions and determine why we are experiencing a stagnation in raw milk production volumes, what barriers exist, and what opportunities there are. The barriers may be related, for example, to competition for land use. Dairy farming often competes with beef production or other agricultural sectors, as well as with forest plantations. Additionally, there are issues with labor shortages, the age of farmers, succession planning, and high production costs. So, there are many reasons underlying this decline.

The government aims to ensure the preservation of local dairy production so that we have a reliable food supply, as well as being able to compete internationally. If we recall the effects of the COVID pandemic or natural disasters, such as floods, wildfires, or droughts, the key question is whether we have a safe and sustainable food supply. Our government is focused on preserving local production and advanced manufacturing, which pertains to all agricultural sectors, with the dairy industry a key area. The government pays significant attention to how to maintain local production and how to ensure that our industries are ready for export. Thus, they consider opportunities both locally and internationally. They are also analyzing what technologies are needed to support this process and what workforce resources are necessary. In other words, they are trying to understand the challenges we face at the local level, how to address them, and how to optimize processes to maintain local production to guarantee a certain level of self-sufficiency.

How important are environmental aspects for the dairy industry in Australia, and what steps are being taken to enhance production sustainability?
Sustainability and environmental performance is an extremely important aspect to ADPF and our dairy processing members and, to some extent, a right to conduct business. Retailers, as well as banks and investors, the government, and increasing international trading markets, have their own sustainability goals and ambitions.
For us as an industry, it is important to be at the forefront. We have had a framework supporting the sustainable development of dairy products and the dairy industry in place for over 12 years, which creates the conditions for our success. We continue to ensure the relevance of our frameworks program, its goals, commitments and targets. Our role is to support our members by providing them with the necessary skills, resources and guidance to achieve governments, the industry and companies own sustainability requirements and ambitions. If investment fr om the government is required, we assist in lobbying for this.

We strive to maintain leadership in sustainability, which includes packaging, waste management, animal welfare, and raw milk production. A key point in recent years has been the importance of collaboration. Joint efforts with other processors, farmers, and government agencies will allow us to achieve much more than working alone.
In responding to your particular question regarding raw milk production, I mentioned at the start and above, we have faced challenges with low volume growth in Australia, and our current task is not only to halt this process but also to stabilize it and, ideally, increase it. At the same time, it is essential to ensure profitable growth and the creation of added value to remain competitive in both local and international markets.

How do you manage to build cooperation with various stakeholders in the industry?
We champion the interests of dairy processing brands across Australia, from Fonterra Australia, to Lactalis Australia, Bega, Saputo Dairy Australia, as well as Brownes Dairy, Bulla, Burra Foods, Noumi, Ky Valley and ACM, to name a few.

As an industry association, we strive to represent the collective interests and needs of all members and steer the industry toward a profitable, sustainable future. We can certainly support individual company issues, as they arise. But generally, we focus on matters that impact the majority of our dairy processing members. We operate in a pre-competitive space, while competition is the responsibility of individual companies. For example, Lactalis Australia may have its own specific problem, Bega may have another, and Fonterra may have yet another. We can support them, but the majority of our work is aimed at the common good of our members, considering how we can enhance their interests and benefits on a larger scale.

Beyond our members, ADPF works closely with government, and other industry association be them within dairy or other agricultural sectors – and this includes farmers and processors working together on common issues for the collective good of the industry.

Success lies in the fact that the dairy industry can work together as part of a unified program.

For example, when it comes to animal welfare, farmers and processors collaborate. Similarly, when we protect and promote dairy products and highlight their nutritional importance or the role of ‘brand Australia’, it is also a joint effort between farmers and processors. We also engage with other industry participants, such as partners in the food industry or supermarkets.

We also have a wide range of other stakeholders we collaborate with, including academics and research organizations to underpin our work with a strong evidence-base.

Therefore, it is important to understand that we work with many different organizations to jointly achieve our common goals and address shared challenges and opportunities, and set the dairy industry up for success, today and in the future.

Could you share your latest results of successful collaboration?
Back in 2020, the ADPF – with the support of our members – launched a tool called the "Milk Value Portal"; This is a public website wh ere users can learn how the pricing system for raw milk works in Australia. It is useful for farmers, government representatives, the media and investors, as well as processors themselves, who can obtain information about the factors influencing the value of raw milk across Australia, at different times of the year. It was developed by ADPF and our processors, with the support of Freshagenda consultancy, and houses data directly fr om the processors themselves.

In terms of sustainability, as touched on earlier, we have the Australian Dairy Sustainability Framework that has been in place for over 12 years. This program encompasses the entire industry, dairy farmers and processors. When I talk about sustainability, I mean animal welfare, emission reductions, health and nutrition, as well as business viability. This is a very broad spectrum through which we define sustainability. This framework sets our commitments and goals regarding sustainability, complemented by the work of individual dairy businesses. It serves as a guide for how as an industry we work and strive for best practices.

Recently, ADPF on behalf of our members, published a report that proudly demonstrates dairy processors sustainability commitments and achievements. It outlines the measures they are taking to reduce emissions, how they are managing waste and packaging, and how they minimize excessive water usage. This sustainability publication has just been released, and I would be happy to share it with you. LINK

Janine, could you tell us what key trends and changes you have observed in the Australian market recently?
For me, the key trends are sustainability or circular economies, which has undoubtedly become an important aspect and is now at the forefront of many businesses, especially for dairy processing. Our role as an industry association is to build awareness of, and prepare our members for current and future reporting requirements and challenges by helping to provide the necessary tools, resources and guidance . This enables them to succeed, and for us in turn as an industry to succeed.
Another significant trend is the growing interest in protein for good health. This has always been an important aspect for the dairy industry, and we see its development and expansion in areas such as sports and immune health, ageing, and cognitive development, which opens up new opportunities.

Additionally, I see that value creation is a key factor. In the context of rising prices and food inflation, consumers are looking to get the most value for their money. It is important to understand how to provide the best price-to-quality ratio for our products, whilst supporting local manufacturing.

These trends really influence what we need to think about in terms of both local and export markets.

What do you see as the future of the dairy industry in Australia over the next 5-10 years?
Similar to the previous question, the future of the dairy industry largely depends on raw milk production levels, and our ability to be competitive. It is crucial whether we can stabilize production or if it will continue to decline or, conversely, grow. Climate conditions will play a significant role in this. I see that creating added value will be key for our industry. Sustainability and circularity will also be of great importance, and we need to continue emphasizing the merits of dairy and its unique benefits to the consumer and our commitment to sustainable production. Sometimes we lose sight of the importance of this discussion. The sector will continue to need to consider product mix and market mix: what the portfolio will consist of and wh ere we will sell our products— in local or international markets. It is also essential to have a skilled workforce. Overall, we remain optimistic as an industry, and no doubt we will face new challenges over the next 5-10 years, but the focus will always be on continuing to produce safe, high quality, nutritious dairy products that consumers love. We need to think about how we can make the most efficient use of the dairy products we produce.

Your organization has become a partner of the upcoming Dairy Rally in Australia. Can you tell us what interesting and valuable experiences participants can expect fr om the rally?
We are looking forward to the Dairy Rally, which will take place in Australia in December. This is a great opportunity to share information about our industry with representatives from other countries, to explain who we are and what we are focused on.

For me, an important aspect is the exchange of ideas and collaboration. This is a chance to learn about the challenges and opportunities faced by other countries and to share our own issues and solutions.

For me, success will be defined by this exchange.

The program includes visits to dairy farms and processing facilities, including a visit to the Fonterra plant, wh ere participants can learn about cheese production and their focus on sustainability. This is an excellent opportunity to gain insight into the business, the people, and the innovations being implemented in the industry.
Thus, the event will be an attractive opportunity for participation, learning, exchanging ideas, and exploring avenues for further partnerships.

Janine, thank you for the interview! See you at the Dairy Rally!

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