'Australian dairy producers fail to understand overseas markets'

Speaking at an industry summit in Victoria, Helou told the nation’s dairy companies that they are still employing outdated thinking from a generation age at the same time as operating in an industry driven by overseas markets.

The time that processors realised the days when they could focus principally on the domestic market were over, said Helou, the head of a dairy co-operative that processes one-third of Australia’s milk supply.

Clinging to the past​

“We are now driven by Asia, the Middle East and North Africa. That is a mind set that has to change​,” he said.

World demand for dairy products is set to grow at 6% each year, fuelled by the growing middle class in Asia, but supply would increase by no more than 2% annually, he added.

“The growth numbers are scary. The dilemma that farmers face and the food industry faces is how is it that we have struggling farmers​?”

Helou said Australian farmers in general were good operators and low-cost producers, but their lack of focus on international opportunities has served to reduce their returns.

Asked why Australian milk production was declining in the face of increasing demand, Helou said the answer clearly was the farm gate price paid to farmers for milk. “Horrendous​” seasonal conditions, the high Australian dollar and low commodity prices had all contributed to the low farm gate price, but those factors were “coming to an end​”, he said.

Indeed, the industry expects higher prices based on strong demand and lack of supply.

Call for expertise​

Also speaking at the summit, Indonesia’s vice-consul in Australia for economic affairs was likewise critical of Australia’s approach to food supply in emerging markets.

Maradona A Runtukahu explained how an anticipated five-fold increase in Indonesia’s middle-class over the next 50 years would open up more markets, not only for Australian food but also its expertise.

But he added that Australia’s trade with Indonesia was “underdone​” at present, and the country needed to better understand Asian preferences.

Runtukahu said the opportunities in Asia went beyond the exports of products, with Indonesia lacking technical knowledge, which he hoped Australia could soon help to supply.