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Dairy market conditions 'tough', but bright future ahead

23 April, 2014

Domestic market conditions for Australia's dairy sector are tough for the moment, but the future outlook is optimistic and there's plenty of room for innovation, according to an agribusiness expert.

Michael Harvey, Rabobank Senior Analyst with the bank's Food & Agribusiness Research and Advisory division, spoke with farmers and other agriculturalists at a meet in Ripples on the Creek, Gradys Creek, NSW earlier in the month (April 2014) on the topic, 'Australian dairy: in search of sustainable growth'.

He said robust growth prospects lie ahead in the retail market over the medium-term.

"New South Wales fresh milk consumption is expected to grow at about 1.5 per cent per year to 2021 based on population growth and some growth in per capita milk consumption," he said.

Harvey said Australia's share of the global milk trade had declined in recent years, although forecast growth in Asia over the next decade, particularly in China and Southeast Asia, provide enormous upside potential for Australian producers to grow trade to the region.

"Worthwhile discussions are currently taking place in NSW about the potential to tap more into the global market," Harvey said.

"Accessing global markets would give NSW producers alternatives than just servicing the domestic market, which can be challenging. But this would take significant amounts of investment right across the value chain."

Harvey said margin pressures, particularly around labour and energy costs, were ongoing concerns for local processors that could be offset by a focus on innovation and higher value products for consumers.

"We're seeing huge investments, both locally and with our international competitors, in optimising returns in the marketplace through a focus on growth markets, leveraging the asset base, improving capabilities and increasing capacity," he said.

Trusting in new technology

As part of the events organised for the day, the Wilson family – local Kyogle-based (northern NSW) dairy farmers – opened their Applegrove farm to the group for a tour of their new robotic dairy system. The automated system can milk approximately 210 cows on a year-round calving system.

Tony Wilson, a fifth generation dairy farmer and Norco director, discussed the highs and lows of the system and the human change needed to trust technology.

"The first 10 months on this new system has been a big change for us as we have learned to trust robots to understand the cows like we do," he said.

"The start-up period was very smooth as we introduced the sorting gates gradually. We're yet to maximise the robot efficiency, but feel we're definitely heading in the right direction."

Wilson and his wife Jillian said a major reason they made the investment was not only to make life a bit easier for themselves, but also for their boys and the future of the farm.

"The cows took to it in the first few days, while the boys took a few weeks and the rest of us have taken a bit longer," Mrs Wilson said.

"Running a dairy farm takes an enormous amount of human capital. We knew the labour efficiency gains would be huge, but we also wanted the dairy to continue into the future with technology that was progressive."

The pair said while the productivity gains were already clear – a couple of litres per cow per day and improved herd management – they would continue to focus on using the system to maximise its potential.

Wilson said he hoped that by investing in the technology his sons would continue to be interested and wouldn't be 'slaves to the farm'.

"Two of our boys are dairy farming and we hope some of our grandchildren will be the seventh generation of farmers in our family," he said.

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Megan Corey | Thursday, May 22, 2014, 1:57 PM
Might I ask the Wilson family if they have plans to automate the disposal of the hundreds of new born calves, a by product of the industry they have chosen to profit from for at least six generations. Are they intending to automate the ripping of the newborn calves from their Mothers side -it must be terribly emotional for them to see them cry and scream as they are taken away either to be 'disposed of' or confined to a veal crate for their very short sad little lives. Mr Wilson, I am sorry that your sons may become 'slaves to the farm' when I put it to you, the real slaves are those that provide you with your source of income. Farmers really are a breed unto themselves aren't they.