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27-10-2015, 10:38 PM
ANZ: Dairy farmers should expand and meet Asian milk demand
Sue Neales
[Image: sue_neales.png]
Reporter - Rural/Regional Affairs
[Image: 637983-a6a87f80-7c89-11e5-9d9b-7b73a423a28f.jpg]
Source: TheAustralian
[b]Australia’s 6000 dairy farmers must be encouraged by a combination of carrot and stick approaches to dramatically fast-track increased milk production, or risk losing the Asian dairy food boom opportunity to European rivals.[/b]
A new paper from ANZ, “Looking for a sign: unlocking Australia’s dairy potential”, claims a lack of confidence, capital and scale among dairy farmers is holding back herd expansion and milk production.
But the ANZ report, to be released today, also claims Australia’s $4.7 billion dairy industry could see annual milk production rocket 15 per cent a year to 15 billion litres by 2018 if aggressive growth incentives and investment structures are put in place.
To achieve such rapid production growth, ANZ head of agribusiness Mark Bennett is adamant more funding, more cows, more dairy farmland, bigger herds and fewer farmers are required.
The report finds a big injection of $8.6bn of capital from super funds, foreign investors and banks is needed to reach the 15 billion litres of milk a year production target.
Intensive milking herds housed permanently in barns are also likely to proliferate at the bigger end of the industry, as are foreign joint venture opportunities.
Another key change must be to stop selling 80,000 young dairy heifers to China each year, which ANZ’s report found to be suppressing total milk production by 1 per cent a year.
Annual milk production in Australia has plummeted from 11 billion litres a year to 9.2 billion litres in the past decade, and is growing at a slow 2.5 per cent a year, despite recent strong demand in Asia for “clean, green and safe” Australian dairy foods.
Mr Bennett said the global financial crisis, the long millennium drought, water shortages and years of poor farmgate returns had provided little incentive for Australian dairy farmers to expand, especially in key irrigation-reliant areas such as northern Victoria.
“So we asked what will be the catalyst for producing more milk, and what are the answers for how to get to the 15 billion litres of annual milk production, because the China food boom has gone from sleeping giant to reality, yet it still isn’t happening,” Mr Bennett said.
“We are not about forcing farmers to do things; what we have tried to do in this report is look at how we could get to producing 15 billion litres of milk by 2025, or even quicker, and what is needed to achieve that.”
Mr Bennett believes it is vital Australia consider how it is going to grasp the potential opportunities offered by Asia’s growth and affluence, especially with the benefits of the new China-Australia Free Trade Agreement starting to flow over the next nine years. In ANZ’s most aggressive and bullish scenario, by 2018 Australia’s dairy industry would be a different place.
Heifer exports to China, which grew by 33 per cent in 2014 and are valued at $170 million, would have halted.
Despite the cash benefits to farmers, the damage they are doing to the growth and genetic gain of Australia’s dairy herd are too great, the ANZ report says.
Australia’s herd of 1.6 million milking dairy cows would have expanded by a million, requiring a $2 billion additional investment.
Farmers aged over 55 would be encouraged to leave the industry though government incentives.
This would leave fewer younger, keener and better-educated farmers, with different attitudes to risk, debt, taking on equity partners or forming local co-operatives with other farmers. Each farmer — and there might be only 1500 or 2000 left, compared to the current 6200 — would be running a bigger farm.
The average herd size would have grown from just 270 cows per farm to 730-825. More workers would be needed per farm, despite the introduction of automated and robotic dairies.
Through a focus on better pasture production, genetic improvement and management techniques — as achieved today by the nation’s top 25 per cent of dairy farmers — the number of cows supported by each hectare of farmland would have increased from 1.4 to 2.2.
Annual milk production per cow would have grown from 5611 litres a year to close to 10,000 litres.
In addition, government and private sector investment in land conversions and irrigation projects — as well as improved dairy profits through corporate focus on high value exports — would have enabled the total area of farmland suitable for profitable dairy farming to expand from 2.3 million hectares to 3.3 million, especially in higher rainfall areas, such as Tasmania.
The capital cost requirement of such dryland conversion, intensification and irrigation expansion is estimated at about $5.5 billion.
- THE AUSTRALIAN
- OCTOBER 28, 2015 12:00AM
Sue Neales
[Image: sue_neales.png]
Reporter - Rural/Regional Affairs
[Image: 637983-a6a87f80-7c89-11e5-9d9b-7b73a423a28f.jpg]
Source: TheAustralian
[b]Australia’s 6000 dairy farmers must be encouraged by a combination of carrot and stick approaches to dramatically fast-track increased milk production, or risk losing the Asian dairy food boom opportunity to European rivals.[/b]
A new paper from ANZ, “Looking for a sign: unlocking Australia’s dairy potential”, claims a lack of confidence, capital and scale among dairy farmers is holding back herd expansion and milk production.
But the ANZ report, to be released today, also claims Australia’s $4.7 billion dairy industry could see annual milk production rocket 15 per cent a year to 15 billion litres by 2018 if aggressive growth incentives and investment structures are put in place.
To achieve such rapid production growth, ANZ head of agribusiness Mark Bennett is adamant more funding, more cows, more dairy farmland, bigger herds and fewer farmers are required.
The report finds a big injection of $8.6bn of capital from super funds, foreign investors and banks is needed to reach the 15 billion litres of milk a year production target.
Intensive milking herds housed permanently in barns are also likely to proliferate at the bigger end of the industry, as are foreign joint venture opportunities.
Another key change must be to stop selling 80,000 young dairy heifers to China each year, which ANZ’s report found to be suppressing total milk production by 1 per cent a year.
Annual milk production in Australia has plummeted from 11 billion litres a year to 9.2 billion litres in the past decade, and is growing at a slow 2.5 per cent a year, despite recent strong demand in Asia for “clean, green and safe” Australian dairy foods.
Mr Bennett said the global financial crisis, the long millennium drought, water shortages and years of poor farmgate returns had provided little incentive for Australian dairy farmers to expand, especially in key irrigation-reliant areas such as northern Victoria.
“So we asked what will be the catalyst for producing more milk, and what are the answers for how to get to the 15 billion litres of annual milk production, because the China food boom has gone from sleeping giant to reality, yet it still isn’t happening,” Mr Bennett said.
“We are not about forcing farmers to do things; what we have tried to do in this report is look at how we could get to producing 15 billion litres of milk by 2025, or even quicker, and what is needed to achieve that.”
Mr Bennett believes it is vital Australia consider how it is going to grasp the potential opportunities offered by Asia’s growth and affluence, especially with the benefits of the new China-Australia Free Trade Agreement starting to flow over the next nine years. In ANZ’s most aggressive and bullish scenario, by 2018 Australia’s dairy industry would be a different place.
Heifer exports to China, which grew by 33 per cent in 2014 and are valued at $170 million, would have halted.
Despite the cash benefits to farmers, the damage they are doing to the growth and genetic gain of Australia’s dairy herd are too great, the ANZ report says.
Australia’s herd of 1.6 million milking dairy cows would have expanded by a million, requiring a $2 billion additional investment.
Farmers aged over 55 would be encouraged to leave the industry though government incentives.
This would leave fewer younger, keener and better-educated farmers, with different attitudes to risk, debt, taking on equity partners or forming local co-operatives with other farmers. Each farmer — and there might be only 1500 or 2000 left, compared to the current 6200 — would be running a bigger farm.
The average herd size would have grown from just 270 cows per farm to 730-825. More workers would be needed per farm, despite the introduction of automated and robotic dairies.
Through a focus on better pasture production, genetic improvement and management techniques — as achieved today by the nation’s top 25 per cent of dairy farmers — the number of cows supported by each hectare of farmland would have increased from 1.4 to 2.2.
Annual milk production per cow would have grown from 5611 litres a year to close to 10,000 litres.
In addition, government and private sector investment in land conversions and irrigation projects — as well as improved dairy profits through corporate focus on high value exports — would have enabled the total area of farmland suitable for profitable dairy farming to expand from 2.3 million hectares to 3.3 million, especially in higher rainfall areas, such as Tasmania.
The capital cost requirement of such dryland conversion, intensification and irrigation expansion is estimated at about $5.5 billion.