Managing director for yogurt company Chobani Australia, Peter Meek said he worries that Australia’s milk supply is not increasing.
“Making sure we have a strong and vibrant dairy industry is really important for us as a processor. I think we produce wonderful milk and we need to produce more of it,” he said.
“Easily the biggest issue is that we’ve been in long term decline for milk creation and that needs to turn around. Farming needs to be seen as a core industry for Australia. I’m not sure it is yet. There’s certainly a lot of talk about dairy and particularly dairy being the next big growth opportunity for the country.
“Nothing would please me more to see significant growth in terms of dairy production. Anything that supports driving more milk being available is something we’d always look to support.”
According to a report released by Dairy Australia, Australia’s milk production has continued to shrink over the first six months of the 2013/14 season.
Dairy Australia has attributed the decline to adverse weather – particularly in northern regions – along with physical factors such as in-calf rates and pasture damage.
The report states that “some regions remain constrained by poor cash flow, low confidence, increasing debt servicing requirements and attractive prices for heifer exports.”
Confidence could rise amongst Queensland milk farmers, who may receive a pay rise and more security as Woolworths extends its contract with Parmalat to supply Woolworths’ Select house brand with Queensland milk.
According to ABC Rural, Woolworths is now offering more than 200 Queensland dairy farmers a five-cent-per-litre pay rise and ten-year contracts.
But Parmalat general manager Vincent Houlihan said traditionally the supermarket contracts have only been offered for one to two years. "That's not long enough to give you confidence to invest in productivity, innovation or improvements in quality, whereas a ten year deal gives you that absolute confidence that if you invest, you will see a return," Houlihan said.
The announcement follows Woolworths dumping dairy company Lion for Fonterra in Victoria, and Brownes in Western Australia. The loss is expected to deeply hurt Lion, with the Victorian and Western Australian contracts having a combined worth of $300 million.