dairy industry strategy

8/8/2019 Dairy Industry Strategy

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S o u t h A u s t r a l i a n D a i r y I n d u s t r y S T R A T E G I C

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1T H E S O U T H A U S T R A L I A N D A I R Y I N D U S T R Y 1

"Growing to1

.5 billion litres annually achieving thehighest added value per litre of milk in the Australasianregion and earning $ 1 billion."

Dairy in 2 0 1 0Dairy in 2 0 1 0

Milk production from 700 million to1.5 billion litres

State herd from 105,000 to 200,000 cows

Processing capacity from 480 million to1.6 billion litres

Wholesale value of industry from$318 million to $1 billion

Employment from 3,000 to 6,500 people

Exports from $47 million to $570 million

Key Strategi es

1 Ensure a sustainable resource base Water Power People

2 Consolidate a viable production sector

Farm consolidation Farm expansion and new farms3 Att ract dairy investment

Commodity manufacturing Specialised further processing Large scale dairy farming

4 Ensure a diverse product market mix


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I ndustry and Government need to work together conti nued

Invest in an effective dairy development functionto co-ordinate and streamline interaction betweenindustry and Government, and to foster farminvestment through demonstration

Promote the opportunities for farm investmentsto potential investors in overseas and interstate

regions Clarify and promote practices for the

management of animal di sease (parti cularlyBovine Johnes Disease)

The areas of strategy that deal with individual dairycompany strategies are not the domain of this plan.

The cost of delayUncertainty is the greatest barrier to the further development and expansion of the production and processing sectors of the South Australian dairy industry.

This strategic plan estimates that a lack ofproactivity will cost the States dairy industry

$420 million per annum the difference in the value of t he industry between a " strong growth" scenario and a " slow growth" outcome.

E x e c u t i v e s u m m a r yC O N T I N U E D


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T h e o b j e c t i v e sT h e o b j e c t i v e s

There are a number of objectives that underpin the

deli very of t he vision for t he future:

Foster the ongoing development of a sustainableresource base that provides confidence andcertaint y for milk producti on

Create and maintain an environment fora sustainable, viable and expanding milkproduction sector

Enhance the positive relationship betweenthe South Australian Dairy Industry andthe community regarding the use of naturalresources and environmental management

Provide the environment to maintaininternationally competitive processing andmanufacturing facil it ies

Foster the uptake of innovation in the farm andprocessing sectors

Ensure South Australia is an attractiveinvestment dest inat ion for farmers, processorsand manufacturers of dairy products andingredients

Foster the ongoing development of an appropriateand secure mix of markets and specialised anddiff erenti ated products t hat opt imise the valueextracted from the States milk production

Measuring progress against outcomes

The most effective way for the industry to measure its

future progress against this plan is to rely on a set ofquantif iable output s:

Production Growth Volume of total milk production

(target: 1.5 billion litres by 2010) Number of dairy cows in milking

(t arget: 200,000)

Value The wholesale value of dairy produce to the

St ate (target: $1 billion) The per-litre value of dairy product processed

from South Australian milk (target: 67 cpl) The proportion of production which is

processed in the State (t arget : 110% - forexample, South Australia is a net importer

of milk)

Efficiency Per-farm (per-cow productivity

target: 7,500 litres per annum)

Appropriate measures of water use efficiency Forage production and utilisation efficiencies

Employment Measured against targets for the total number

of people directly and indirectly employed indairy farming and processing enterprises, andin supporting industries and capacities

Investment attraction The number of new enterprises at farm level The investments in existing farm and

processing enterprises The investments in new farm and processing

enterprises The investment in industry capacity building

(in water/ power and transport i nfrast ructure)


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T h e e n a b l e r s t o u n d e r p i n t h ep r e f e r r e d s c e n a r i oT h e e n a b l e r s t o u n d e r p i n t h ep r e f e r r e d s c e n a r i o

Drivers

A committed set of stakeholders

focused on outcomes that are basedon achievement of the vision

An attractive investment destination

Certainty and clarity of the investmentdecision parameters that affect productionand processing sectors

A resource and infrastructure policy andincentive environment that is attractiveto investors

A sustainable resource baseunderpinning certainty in theproduction sector

Access to sufficientand competitively pricedwater, land and stockfeed and fodder

Access to reliable andcompetitive sourcesof energy

High mobility of capital

Competitive processing capacity

Significant and expandableprocessing capacit y l ocated

in or adjacent to key SouthAustralian production regions

A critical mass ofmanufacturing providingattraction to furtherspecialised food processors

A viable & sustainable production sector

Enterprises of varying size and typeprovide long-term wealth creation for

their owners High-level business skills used in

managing and operating farm enterprises High standards of water-use efficiency,

food safety, environmental responsibilityand animal welfare

Dairy providing attractive careeremployment opportunities for young

people and skilled farm labour

A diverse and secure market-product mix

Access to the ongoing growth in thevolume and value of the world marketfor dairy commodities, ingredients andvalue-added dairy foods

Access to the national domestic marketfor dairy products

Exploitation of premium branded foods

and specialist food ingredients andapplications in local and int ernationaldairy markets

Resourceinputs

Milkproduction

Processingcapacity

Marketsfor dairy

products

Leadership and responsibili ty

Share and articulate the vision and its elements

Promote the vision based on the gains and benefits

Monitor progress against strategies (manage andco-ordinate plan implementation)

Measurement of outcomes against plan

Foster a positive industry image


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MarketAccess

Processing

MilkProduction

Strengths/ Opportunit ie s

Strong long-term demand from world market for dairy productsand ingredients

Expanding markets for high value nutritional ingredients

Existi ng premium food/ wine marketing

Strong interest in t he establishment of commodit y/ ingredientmanufacture in 2-5 years

Versatility of milk production profile suits the diversity ofdomest ic/ export markets

Opportunities for specialised ingredient facilities off a base ofcommodity manufacturing in western Victoria and south eastof South Australia

Opportunit y for rati onali sation of processing facil it ies

Existing biotechnology capacity in South Australian food industry

Low-cost milk production in line with world-class efficiencies

Demonstrated milk production growth in recent years

Mobile investment capital from overseas and interstate seeking newfarm investments

Relatively flat production profile provides attraction to manufacturersalongside existing high seasonality of the south west Victorian region

No viable alternative enterprises or activities have been identifiedon the lower Murray River flats

Barrie rs / Threats

Access to the high end nutritional markets given the focus on thisactivity by the global conglomerates

Limited export infrastructure for container-based freight

Limited access to growth, or capture of market share in domesticmarkets due to location

Competition from production areas that can offer greater productionsecurit y (western Vict oria/ Riverina)

Lack of critical mass in cheese manufacturing facilities, and anabsence of milk powder production

Short -t erm uncertaint y over corporate/ brand ownership scenarios

Poor quality road infrastructure limits milk transport access

Competition for milk amongst dairy companies may restrictdevelopment of single site facility

Lack of water resource security undermines investment confidence

Competition from western Victoria in attracting new farm investors

Limited technical consulting expertise due to small scale areasof farming

Limited understanding of the economies of farm conversion

Lack of 3-phase power in all areas of potential expansion

Competition for land and resource use from other high-valueindustries and rural-urban encroachment

Lack of clarity for the management of animal disease (such asBovine Johnes Disease)

P o s i t i o n a s s e s s m e n t t h e S A d a i r y i n d u s t r y t o d a yP o s i t i o n a s s e s s m e n t t h e S A d a i r y i n d u s t r y t o d a y



ResourceBase

Strengths/ Opportunit ie s

Abundant water resources in the south east region which areunder-utilised by other grazing industries

Suitable land for significant farm conversions in South Australiassouth east

Relatively low land prices in most dairy regions in South Australia

Dairy can demonstrate a more effective and value-adding use of watercompared to other activit ies

Accessible supplementary feed

South Australia is a better place to employ labour as it has a loweron-cost structure

Barrie rs / Threats

Strong support from other State Governments for its industrydevelopment

Poor knowledge of the ground water resource in the southern regionof South Australia

Poor image of the lifestyle and career opportunities in the industry

Poor understanding of issues associated wi th wat er poli cyaffecti ng dairying

Threats to water quality in the Meningie lakes district

Lack of well-developed culture for the attraction and developmentof skilled labour and staff

Lack of suitable training resources focused on the needs of dairyfarm and processing enterprises

P o s i t i o n a s s e s s m e n t t h e S A d a i r y i n d u s t r y t o d a y

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Responsibilities

Government / Collecti ve industry i niti ative

Collecti ve industry init iati ve




Government



1 Sustainable resource base

Challenges

The critical resources for the ongoing development of the dairy industry are land, water, feed, qualityli vestock, skil led farm management and labour. The priori ty is to overcome signi fi cant uncert aint y as tothe long-term arrangements for access to water in key production regions of the State that have thecapacity to underpin future growth.

Strategies

Water

1.1 Improve the knowledge of water usage, environmental impact and land capacity in South Australianregions, including through supporting research into:

The usage of the water resources by dairy and other industries The effects of usage on the sustainability of the key water resources Enhancing and capitalising on knowledge with respect to pasture development and

water use efficiency

1.2 Promoting dairys "high-value add" use of water compared with other uses

1.3 Support the adoption of water-use metering by all irrigators

1.4 Support and facilitate the adoption of full-cost water charges

1.5 Facilitate an active, transparent market for water rights in all regions

Power

1.6 Improve access to, and reliability of three-phase power infrastructure in key growth areas

People

1.7 Develop and promote models for ownership/ income part icipat ion opti ons to enhance t angible career pathoptions for young entrants to the industry

1.8 Enhance access to extension skil ls and farm management t ools/ aids



Responsibilities


Collective industry i niti ative


Government

Collective industry i nit iati ve

Collective industry init iati ve/ I ndustry parti cipant



Collective industry init iati ve/ I ndustry participant

Collective industry i nit iati ve

Sustainable resource base / Strategies / People continued

1.9 Enhance farm management skills to focus on: Managing a business in a volatile environment Farm expansion/ development opti ons Labour management

1.10 Develop and/ or support a leadership and ent erprise development program for young dairy business people

1.11 Develop a uniform professional approach to the attraction of farm labour supply to dairying regions,including roles, career paths and on-farm training

2 A viable production sector

Challenges

Provide an environment for sustained industry expansion, from existing and new farm investments closely aligned to those aimed at securing a sustainable resource base.

Strategies

Farm consolidation

2.1 Facilitate certainty of the cost sharing arrangements for rehabilitation works on the lower Murray River flats

2.2 Facilitate greater understanding of the opportunities for consolidation of farming operations

Farm expansion and new farms

2.3 Develop and promote the "business case" for new farm conversions and expansions (based onregional conditions)

2.4 Develop and promote "model" dairy farming enterprises relevant to growth regions of the State

2.5 Use available farm management and decision tools as basis for Research, Development and Extension toassist existing, and emerging farmers with the evaluation of expansion

2.6 Enhance the understanding of the gains through the use of supplementary feed

2.7 Improve the understanding of the finance sector as to the farm economies in the regions of the State

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Responsibilities


Collecti ve industry init iati ve/ I ndustry participant



Government / Collecti ve industry ini ti ative /I ndustry parti cipant






A viable product sector / Strategies / Farm expansion and new farms continued

2.8 Foster the adoption of water-use efficiency practices in the State

2.9 Undertake an audit of road infrastructure needs that would support dairy production expansion

2.10 Enhance the access to risk management options applicable to feed grains to provide producers withcost certaint y

2.11 Evaluate the opportunities to further develop markets for dairy veal

2.12 Improve the working relationships between the milk production sector and managers of environmentalpolicy in the State

2.13 Clarify and promote proactive practices for the management of animal disease (such as Bovine JohnesDisease) in the context of the national industry

3 Promote South Australia as an attractive dairy investment destination

Challenges

Strategies to ensure greater resource security and a greater crit ical mass of milk production in the southernregions of South Australia will underpin the attraction of the State as an investment destination.

South Australia competes for future investment funds with major dairying regions in Victoria to secure: Commodit y manufacturi ng Specialised further processing of dairy food applications Large scale dairy farming.

Strategies

3.1 Develop a promotional package that identifies the advantages of dairy farming in South Australia,including natural features, labour cost structures, etc

3.2 Improve the relationships between local and State government and industry relevant to approvalprocesses associated with the establishment of dairy farm infrastructure and transport access

3.3 Develop a one-stop-shop service function that streamlines the approval processes by government and

local government for new farm investments and conversions



Responsibilities




Government







Promote South Australia as an attractive dairy investment destination / Strategies continued

3.4 Evaluate a dairy farm development function to assist with the targeting and development of farmexpansion cases

3.5 Promote the opportunities for farm conversions in South Australian regions to specific potentialinvestor markets in New Zealand, the US, South Africa, Zimbabwe and selected regions of Europe

3.6 Facil it ate t he adoption of full input and production traceabilit y t hrough t he supply chain

3.7 Enhance the presentati on of advantages available to f ood manufacturers

4 Ensuring South Australia has a diverse product-market mix

Challenges

The development of an appropriately differentiated mix of dairy product markets to enhance the valueof the contribution of the industry to the State and reduce market risk.

Strategies4.1 Assist in the facilitation of a merger, integration and expansion of existing cheese processing facilities

in collaboration with owners and Government agencies

4.2 Establish and maintain close relationships with major manufacturers to assist in their evaluation ofmajor manufacturing investments in South Australias regions, including:

Clarifying and monitoring investment criteria Enhancing access to supporting infrastructure arrangements

4.3 Identify and develop relationships with potential investors in functional food and other applications ofspecialised dairy ingredients with a view to securing investment in facilities in the State

4.4 Create and build on linkages between the dairy industry and existing biotechnology and research anddevelopment capability

4.5 Align with food export initiatives to access export market opportunities across food groups



Responsibilities

Government

Government / Collective industry initi ative /I ndustry participant


Ensuring South Australia has a diverse product-market mix / Strategies continued

4.6 Enhance infrastructure (transport) access arrangements for products from the regions

4.7 Foster the development of regional marketing networks of niche cheese and other dairy productsmanufacturers. These will include partnerships wit h other regional food and wine "brands" , for t hemutual benefit of all:

Developing a cheese and fresh dairy aspect of Food Barossa Developing effective cheese marketing in McLaren Vale, Coonawarra and Clare regions


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F r o m t h e c h a i r m a nF r o m t h e c h a i r m a n

The Dairy I ndustry Development Board has worked

wit h i ndustry t o develop thi s challenging plan andvision for South Australias dairy industry.

The South Australian dairy industry has potential tocontribute significantly more to the State food industryas it is recognised as being highly efficient andcompetit ive in both nat ional and int ernational t erms.The cost to the State for not realising this potentialwould be $420 million per annum by 2010.

The plan is based on a positive period of incrementaland sustainable growth and establishes clear directionand st rategies for it s implementat ion. It incorporatescurrent knowledge, recognised potential and credibleassumptions provided to the Board by major industrysectors including manufacturers with a stake in thefuture of this States industry.

The Board has used this process to set realisticproduction and manufacturing targets and to identifystrategies that stakeholders and Government needto work on collaboratively to achieve the predictedoutcomes.

Achievement of our vision for South Australias dairyindustry will result in a S1 billion regional based

industry, employing over 6000 people, with a strongfocus on export and value adding. I t wi ll requirestrong leadership from industry and Government as

well as relevant policies and strategies which instil

confidence and provide a positive investmentenvironment for production and manufacturing sectors.

We look forward to your participation.

Perry GunnerCHAI RMAN

L to R standing:Grahame Tonkin Managing Director, Tarac Australia Pty Ltd; Calvin BoyleChief Operat ions Offi cer, Dairy Farmers Pty Ltd ; Brenton HigginsManaging Director, Golden North; Frank Beauchamp Past General President, SA Dairyfarmers Association Inc; Brian Bartsch Manager Industry Development, Livestock Industries PIRSA; John Busse Food Indu stry Consultant , TAFE Lecturer; James Mann Chief Executive Officer, Donovans Dairying Pty Ltd, Mt Gambier; Neil M cNishInvestment Director, Department of Industry and Trade.L to R sitt ing:Fiona Keen Senior Brand Manager, Orlando Wyndham; Perry Gunner (Chair)Chairman, Coorong Dairies P/L;

Carol SchofieldDairy farmer and Proprietor Galloway Yabbies; Tony MorbeyDairy Industry Development Board, Executive Officer.


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If you wish to obtain further information, or

provide your comments and views on this document,please contact Tony Morbey , Executive Officerof the Board on 08 8207 7956 or by email onmorbey.tony@ saugov.sa.gov.au


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dairy industry strategy

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