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Australian dairy industry overview

Presentation by David Basham, dairy farmer to CIPLE Congreso, September 2011

4%

6%

5%

12%

8%

65%

Seasonality of milk production in Australia

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Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Million litres

2001/02 2010/11

Dairy farms and number of cows

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No. Farms

Cows milked Farms

No. Cows milked [000s]

Milk production and yield per cow

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12,000M. litres

Milk Production Yield per cow

Litres per cow

A major exporter

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2,000

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12,000Share ExportedM. litres

Domestic market

Export markets

Farm gate prices are driven by export returns

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How is raw milk handled?

Supply arrangements: share of production in 2010

Risk management issues• Deregulated market leaves farmers open to market volatility

• Milk income• Inputs

• Risk management skills increasingly important to farm profitability and viability of dairy industry in medium term plus

• Risk management focus is not just on farm gate milk price. Also on• Margins • Resilience of farm systems• Management skills and developing capability to deal with more

complex business environment

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Share of consumer dollar: fresh milk sales in Australia

Participation by the state: laws and regulatory framework

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Milk producers: how are they organised?

Industry representation and service

Future trends to 2016: production and marketing of milk globally: developed country perspective

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• Economic growth driven by developing nations• Sustainability of supply: can dairy proteins meet future demand? • Health and wellness: is dairy an integral part of a balanced diet?• Competition from plant proteins

Future trends to 2016: production and marketing of milk in Australia

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12%

8%

14%15%

15%

11%9% 8%

6%

10%8%

15%15%

15%13%

8%

9%

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8%

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18%

0-5 6-13 14-19 20-29 30-39 40-49 50-59 60-69 70+Age (years)

Share of population vs. share of dairy volume consumed in 24 hours

% share of dairy vol

% share of population

• Dairy’s importance for rural development and fabric is understood and acted upon by policy makers• Encouraging the habit of lifelong and consistent consumption• Milk is nutrient rich, that is healthy and tasty•Dairy is versatile; can be consumed as a snack or at meals

Future trends to 2016: major challenges from a dairy farmer perspective in Australia are:

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• Risk management• Innovation along supply chain driving productivity• Sustainability of dairying• Dairy is “essential” for the diet• Dairy farmer leadership• Farm inputs; quality of, availability and cost

Future trends to 2016: Australian dairy industry involvement in the international market

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Growth of Australian dairy industry tied to taking advantage of export opportunities

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Muchas gracias

Questions and answers