GROWING production, in the face of world-wide milk oversupply, is one of the keys to the longevity of the industry.
Ian Halliday
Dairy Australia managing director Ian Halliday told an agribusiness lunch at Farm World last week that to grow new markets in Asia, Australia needed to increase production.
He said domestically milk consumption was growing at 1.5 per cent per annum and with production growing at only 2 per cent “it doesn’t leave a lot left over for exporters”.
“Importers ask us ‘can we rely on you to provide the product?’ If not, they will go to the US or other exporters,” Mr Halliday said.
He said across all of South East Asia, the growth potential was enormous.
“We focus on China a lot, but the biggest market for many years has been Japan,” he said. “India has no desire to reduce tariffs, but the growth potential there is also enormous and gives me optimism.”
Mr Halliday said demand in India was expected to grow rapidly. “We need to look beyond just today and ask how can we help farmers improve profitability.”
Mr Halliday estimated there had been $2-3 billion of investment in dairy in the past three or four years and much of it was in post-farmgate processing.
However, there are some key factors that are putting downward pressure on the world market, including a large inventory of product in China, large amounts of milk being produced in the EU and the US and a ban by Russia on importing dairy products.
Mr Halliday said China bought a lot of dairy products in 2013, but demand dropped last year as China worked its way through the inventory.
He said the Russian ban was in place until August but there were no signs of President Vladimir Putin lifting it.
“Even if the ban was lifted a lot of the local consumers would not be able to afford imported dairy products.”
Mr Halliday said the industry needed to look long term to grow production and new markets.
He said figures from February showed production was down 2.7 per cent in Gippsland on the previous year, while nationally it had dropped 4.9 per cent.
In Victoria, production in February was down 1.8 per cent on the previous year.
Source: Weekly Times Now
