Australian Dairy Industry Response - Agricultural Competitiveness Issues Paper, April 2014

Australian Dairy Industry
Represented by
Australian Dairy Industry Council Inc. and
Dairy Australia
Response to
The Agricultural Competitiveness Issues

Paper
April 2014
About the Australian Dairy Industry Council

The Australian Dairy Industry Council (ADIC) is the dairy industry's peak policy body. It co-ordinates
industry's policy and represents all sectors of the industry on national and international issues through
its two constituent bodies, Australian Dairy Farmers Ltd (ADF) and the Australian Dairy Products
Federation (ADPF). The ADIC aims to foster, promote and protect the interests of the Australian
dairy industry by driving a whole of industry approach to dairy policy and the development of the dairy
industry.
About Dairy Australia
Dairy Australia is the national services body for dairy farmers and the industry. Its role is to help
farmers adapt to a changing operating environment, and achieve a profitable, sustainable dairy
industry. As the industrys research and development corporation (RDC), it is the investment arm of
the industry, investing in projects that cant be done efficiently by individual farmers or companies.
Contacts
ADIC: Natalie Collard Chief Executive Officer, Australian Dairy Farmers
03 8621 4200 I ncollard@australiandairyfarmers.com.au
Level 2, 22 William Street, Melbourne, Victoria 3000
DA:
Charles McElhone Group Manager Trade & Industry Strategy
03 9694 3763 I CMcElhone@dairyaustralia.com.au
Level 5 IBM Centre 60 City Road, Southbank Victoria 3006
Contents
Key points................................................................................................................................................ 5
The Importance of the Australian Dairy Industry to the Australian Economy ......................................... 7
The Australian Dairy Industry Sustainability Framework ................................................................. 8
Industry volatility is hurting confidence ............................................................................................ 9
Response to questions in the white paper ............................................................................................ 10
1.
Ensuring food security in Australia and globally ............................................................ 10

Milk production growth ................................................................................................................... 10
Food security - biosecurity ............................................................................................................. 10
Information needs of dairy farmers ................................................................................................ 11
Export of dairy research, information, technology and marketing ................................................. 12
2.
Farmer decisions for improving farm gate returns ......................................................... 12

Adaptation Improved drought preparedness .............................................................................. 12
Attracting new dairy farmers .......................................................................................................... 13
3.
Enhancing access to finance ............................................................................................. 14

Investment and the Australian dairy industry ................................................................................. 14
Australian dairy farm business ownership structures .................................................................... 15
What is needed to drive investment into the Australian dairy industry? ........................................ 15
4.
Increasing the competitiveness of the agricultural sector and its value chains .......... 16
Whole supply chain approach ........................................................................................................ 16
Competition in the dairy manufacturing sector .............................................................................. 16
Mandatory Code of Conduct .......................................................................................................... 17
Gene technology ............................................................................................................................ 17
5.
Enhancing agricultures contribution to regional communities .................................... 18

Dairys contribution to the regions ................................................................................................. 18
Attracting the next generation of farmers....................................................................................... 19
Industry and Government actions .................................................................................................. 19
Cows Create Careers - farm module ............................................................................................. 19
Dairy labour agreement ................................................................................................................. 20
Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper
6.
Improving the competitiveness of inputs to the supply chain ....................................... 21

Research and development ........................................................................................................... 21
The value of research and development to the Australian dairy industry...................................... 22
Extension resources are under pressure ....................................................................................... 22
Cross-sectoral approaches ............................................................................................................ 23
Cooperative Research Centres ..................................................................................................... 23
Collaboration .................................................................................................................................. 23
Food processing innovation ........................................................................................................... 23
Dairy workforce development and competitiveness ...................................................................... 24
Survey of dairy labour needs ......................................................................................................... 24
Freight infrastructure ...................................................................................................................... 25
Energy ............................................................................................................................................ 25
Unconventional gas mining ............................................................................................................ 26
Water.............................................................................................................................................. 27
7.
Reducing ineffective regulations ...................................................................................... 28

Private sector standards, self, and co-regulation .......................................................................... 28
AgVet chemical regulation ............................................................................................................. 28
Front of pack labelling .................................................................................................................... 29
8.
Enhancing agricultural exports ......................................................................................... 29

Trade agreements.......................................................................................................................... 30
Agricultural counsellors .................................................................................................................. 31
International trade support structures ............................................................................................ 31
Consistency of approach ............................................................................................................... 32
Promoting the Australian food safety system ................................................................................ 32
Attachment 1: Australian Dairy Industry Council Policy Priorities Summary ........................................ 34

Attachment 2: Australian Dairy Industry Submission to the National Food Plan Green Paper 2012 ... 36
Key points
Australian dairy is a $13 billion farm, manufacturing and export industry, with an extremely positive
future. Dairys value to the Australian economy, jobs on farms, in manufacturing and service sectors,
the towns and communities it supports, as well as the ongoing health and wellbeing of Australian
families, are a compelling basis for Government attention and support.
Australias 6,400 dairy farmers produce around 9.2 billion litres of milk a year, with potential to grow
substantially over the next decade to meet growing international demand, particularly in South East
Asia, China and the Middle East. The industry directly employs 43,000 Australians on farms and in
dairy processing, while more than 100,000 are employed in dairy service sectors.
This submission outlines the Australian dairy industrys position on the issues identified in the
Agricultural Competitiveness Issues Paper. It highlights how dairy farmers and the broader dairy
industry are constantly investing, adapting and innovating for a profitable, sustainable and productive
future. It also highlights that Australian Government actions will be pivotal in securing not only the
dairy industrys future, but Australias hard-earned reputation for as supplier of quality, safe dairy
products.
Australian dairy believes the Government needs to focus on the following four priority areas in the
short to medium term, if the dairy industry is to fulfil its potential.
Trade
Improved market access is crucial, with established trading partners, including China; and new and
emerging markets in South East Asia and the Middle East. This means not just removing restrictive
tariffs and quotas, but also focusing on the growing problem of technical market access barriers.
To capitalise on the clear trade opportunity for Australian dairy, the following actions are required:
Government to work with the dairy industry to conclude Free Trade Agreements, in particular the
China FTA, that provide genuine liberalisation of market access for all Australian dairy products
and that reduce Australian dairys competitive disadvantage with its major global competitors.
Government must increase resources for the Department of Agricultures Agricultural Counsellor
postings to help remove barriers to trade (including non-tariff barriers) in key international markets
such as Vietnam, the Philippines and Saudi Arabia.
Research, Development & Extension (RD&E)
Farm profitability and productivity continue to be constrained by high input prices, water reform,
energy costs, labour shortages, low retail milk prices, rising community expectations on environmental
and other farm management practices, and increasing pressure on the domestic value chain.
Efficient and effective extension is more important than ever if dairy farmers are to adapt to these
challenges, improve their profits, and gain the confidence to invest in growing their business. Effective
extension is a function of Government, industry and service providers collaborating to make the best
possible use of the available funding and resources.
To meet this need, the following actions are required:
Government and industry to develop a new joint approach to extension that grasps the emerging
opportunities to drive structural change, delivery change and to transform the way that the dairy
industry engages with dairy farmers.
Government to invest in extension programs through Research and Development Corporations
(RDCs), to deliver extension services according to who is best placed to achieve outcomes on a
case by case basis. This includes more funding for agricultural education and training, and the
increased use of industry and vocational education and training sector resources to build
capability in the private sector. Opportunities to grow capability through professional development
and accreditation of advisers must be further explored and better resourced.
Overseas labour access

Dairys future depends on attracting, training and retaining the next generation of farmers, food
scientists, processing workers, and industry service providers. The dairy industry has been actively
developing and implementing strategies to attract, retain and develop a skilled workforce, but in the
short term, immigrant labour will help fill dairys acute skills shortage.
To meet this need, the following actions are required:
Government must work with industry to streamline and fast-track the application and approvals
process for 457 visas for skilled dairy workers.
Support for the dairy industrys application for a Labour Agreement to improve access to skilled
overseas workers.
Extend the duration of 417 and 462 visas from six to 12 months.
Government to include dairy on the list of eligible industries for the Seasonal Worker Scheme and
on Schedule 1 of the Skilled Occupation List, and revise Australian and New Zealand Standard
Classification of Occupations (ANZSCO) skills descriptions for dairy farm managers and workers
to align with the Pastoral Award and relevant courses under the Australian Qualifications
Framework.
On-farm capital investment
It is well recognised that capital investment in the dairy sector can increase efficiency and productive
capacity. Such investment contributes to incomes, infrastructure and employment, often in regional
areas. It can also help Australia gain access to new export markets.
At the same time, many Australian dairy farmers have been struggling under the burden of increased
debt levels and now find themselves unable to effectively capitalise on improved market conditions.
Investment on-farm is desperately needed and Australian dairy farmers are being increasingly
exposed to alternative models of attracting capital into their businesses without merely increasing
bank debt.
The Australian Government should support this investment agenda through the following actions:
Be proactive and positive in driving the investment discussion and looking for ways to drive capital
through a broad range of models, derived from both on and off-shore sources.
Provide regulatory certainty in order to underpin confidence for investment in dairy farm assets.
A full list of ADIC policy priorities is attached at attachment one (page 34).
The Importance of the Australian Dairy Industry to the

Australian Economy
The Australian Dairy Industry Council (ADIC) and Dairy Australia (DA) contends that our industry is an
industry with an extremely positive future and one that is worth investing in.
The ADIC is the dairy industrys peak policy body. It co-ordinates industry policy and represents all
sectors of the industry on national and international issues. The ADIC represents farmers (through
Australian Dairy Farmers), dairy product manufacturers and milk processors (thorough Australian
Dairy Products Federation) and has the task of bringing these bodies together to form a united view
on issues affecting the dairy industry.
DA is the industry-owned national service organisation. It is fully accountable to its members - those
levy payers who elect to become members - and the peak industry bodies. Dairy Australia invests the
Dairy Service Levy, matching government funds and other money in activities across the dairy supply
chainfrom paddock to plateto get the best outcomes for farmers, the dairy industry and the
broader community.
Australias 6,400 dairy farmers produce around 9.2 billion litres of milk a year, with potential to grow
substantially over the next decade to meet growing international demand, particularly in South East
Asia, China and the Middle East. Realising this growth potential and expanding the industrys
economic, social and environment benefits depends on a positive national and international operating
environment.
The Australian dairy industrys people and world leading practices create jobs for generations and
careers for life making the dairy industry one of the most important rural industries in Australia,
directly employing 43,000 people.
As opposed to many agricultural industries, the Australian dairy industry has a strong and vibrant
manufacturing sector, particularly in regional communities, that value adds raw milk into a wide range
of healthy and nutritious dairy products for consumption both within Australia as well as to over 100
export destinations across the globe.
Dairy ranks fourth in agricultural exportsvalued at $2.76 billionwith a 5% increase in export
volumes last year alone. Value-added processing activities delivered an agricultural industry with a
wholesale value of dairy products in excess of $13 billion a year.
Australian dairy farmers operate in a deregulated and open market and have done so for over a
decade. At an average of just over US$40 per 100kg of milk solids last year, Australian dairy farmers
generally received a price comparable to many of the major producing countries. The fact that around
half of Australias milk production has been exported over the last decade reflects this high level of
competitiveness.
While many farmers recognise the opportunities offered in growing international dairy markets, shortterm variations in returns and profitability have strained finances and are challenging confidence,
underlining the two-speed dairy industry development in recent times. Fluctuations in international
prices and other variables such as the price of feed are key factors that influence farm viability.
As in the farm sector, the milk processing sector is undergoing continuing rationalisation. This has
resulted in improved factory capacity, as larger operations have improved their efficiency and
economies of scale. While contributing a relatively small share of total global milk production (<2%),
the Australian dairy industry comprises a more significant 7 % of global dairy trade and is the fourth
largest global trader of dairy products.
The sustainability criteria of the Australian dairy industry are well established and places the industry
in good stead for the foreseeable future. In late 2012, the Australian dairy industry launched a
Sustainability Framework with the vision to enhance livelihoods, improve wellbeing and reduce our
environmental impact so that the Australian dairy industry is recognised worldwide as a responsible,
responsive and prosperous producer of healthy food. In 2013, we set targets and measures against
our objectives for a sustainable industry. For example, it is a target to Increase the future
competitiveness and profitability of the Australian dairy industry and a number of measures have
been set around this.
The Australian Dairy Industry Sustainability Framework
The Australian dairy industry has developed a whole-of-industry Sustainability Framework which aims
to:
Enhance livelihoods across the industry
Improve community and animal wellbeing
Reduce our environmental impact
The Sustainability Framework leads the industry's push to be more sustainable and will help drive
practice change where necessary for farmers and processors. It is a framework for keeping the
Australia dairy industry in business for the long term.
The Framework was developed in consultation with industry representatives and other stakeholders
including customers, retailers, government, regulators, NRM groups and leading interest groups.
In 2012, the Australian dairy industry, under the leadership of the Australian Dairy Industry Council
(ADIC) and supported by Dairy Australia, has endorsed the Framework, targets and performance
measures, while recognising that there is still further work to be done in some areas.
Over the past 12 months we have reviewed all current activity benchmarked against the Framework,
and identified where performance improvement is still needed. We have committed to achieving key
targets, and we're working to establish performance measures underpinned by baseline data.
We've brought this work together in the Australian Dairy Industry Sustainability Framework Progress
Report 2013. The Progress Report demonstrates our commitment to the Framework, our principles of
transparency and accountability, and outlines where we are and where we need to continue to do
more.
Implementation of the framework will continue in 2014.
Dairy farmers and processors have a strong track record, working to be economically viable while
improving the health of the environment, workforce and the broader community. They understand the
core role that industry prosperity plays in sustainability.
Requirements to meet environmental and social responsibility do not translate into direct dollar
returns. Most businesses wanting to demonstrate their credentials place the burden to do this on their
suppliers and it ripples along the chain.
Some brief facts about the contribution made by the Australian dairy industry:
1. The Australian dairy industry is a $13 billion farm, manufacturing and export industry.
2. The Australian dairy industry directly employs 43,000 Australians on farms and in factories, while
more than 100,000 Australians are indirectly employed in related service industries.
3. With a farmgate value alone of $4 billion, the Australian dairy industry enriches regional Australian
communities, where 1 in 8 Australians live.
4. Dairy products are one of the largest container exporters through the Port of Melbourne.
5. Australia is the fourth largest dairy exporter in the world, accounting for 7% of global trade.
6. Major export markets include Japan, China, Singapore, Indonesia, Malaysia and the Middle East.
7. Australia would save $2 billion a year in healthcare costs if every Australian consumed the
minimum recommended daily dairy intake.
8. Dairy farmers are environmental caretakers. The industry has a strong record of continuous
improvement in water and energy efficiency, and protecting soils and biodiversity.
9. The Australian dairy industry is

well positioned to capitalise on
growing global dairy demand,
particularly from the emerging
markets within Asia and the
Middle East (as highlighted in the
chart).
Industry volatility is hurting confidence

Increasing levels of market and margin volatility of the industry (see Chart below) in the last five to six
years has served to undermine confidence in the outlook for many farmers who are seeking reliable
returns on which to build a longer term future. In turn, Australias competitive position on the global
market has suffered and we have been unable to effectively capitalise on the growing demand in the
region over the past decade. Australian dairy farmers operate in a deregulated and open market and
have done so for over a decade with the only government involvement being administration of food
standards and safety assurance systems. Consequently, international markets and prices are the
major factors determining the price received by farmers for their milk.
At an average of just over US$40 per
100kg of milk solids in 2012, Australian
dairy farmers generally received a price
comparable to many of the major
producing countries (see Figure 2).
While farmers experienced approximately
a 10% drop in farmgate pricing in
2012/13, the projections for 2013/14
suggest a closing price of $6.80-$7.00,
which may be tempered later in the year
due to export competitive pressures.
Australias competitive position has
Annual change in dairy performance, Australia (1991 = 100)2
changed over recent years. Farm cost
structures have increased in response to the need to adapt to drier conditions, with rain fed pastures
contributing a lower proportion of the total feed available. Despite the increased rainfall in the last
couple of seasons, farm cost structures have not returned to those of a decade ago. At the processor
level, lack of volume growth and the resulting lack of scale efficiencies has resulted in a lack of
infrastructure expenditure leading to little or no productivity gains. Consequently, Australias share of
international trade has trended down as local milk production has contracted over the past decade.
Reversing this trend is now a major focus of the dairy industrys strategy as highlighted at the recent
Australian Dairy Farmers Summit.
Government has a role to play in a competitive dairy industry through measures such as negotiating
commercially meaningful Free Trade Agreements, facilitating research and development and
minimising the regulatory burden on industry.
10
Response to questions in the white paper

1. Ensuring food security in Australia and globally
What opportunities exist to expand agricultural production in Australia and how can we take
advantage of them?
How can farm businesses, food manufacturers and the retail sector be more responsive to domestic
and global food demand and better integrate into domestic and global supply chains?
Do farmers have access to timely, relevant and accurate information to fully inform production
decisions to meet domestic and global food demands?
What opportunities exist for exporting Australian agricultural technology, marketing skills and
expertise to improve global food security outcomes?
Milk production growth
Strong growth characterised the dairy industry through the 1990s, but that growth has stalled in the
last decade. In the meantime, our major export competitor New Zealand, has expanded significantly.
The dairy industry has made strong

productivity gains in the last two or three
decades but further improved gains on
individual farms will rely on new
technologies or techniques developed
through R&D. As with New Zealand
conversion farms may be an option.
25000
20000
15000
ML
The industry has experienced a slow

recovery from drought with rains returning
in recent years replenishing storages and
restoring irrigation levels. Milk production
growth in 2011/12 of 4% was the
strongest in a decade, but 2012/13 will
see approximately a 2% reduction due to
dry conditions in SE Australia.
10000
NZ
AUS
5000
0
The outlook for 2013/14 is for relatively

stable production, based on surveyed
herd growth intentions, cow condition and assuming normal seasonal conditions offset limited fodder
reserves. Southern exporting regions should lead growth given positive global prices. Production in
domestic supply regions is likely to be flat in response to market signals, such as $1 per litre milk, and
uncertainty around supply contracts.
Based on production intentions for three-year growth recorded in the 2013 National Dairy Farmer
Survey and assuming reasonable seasonal conditions and prices, milk production could range
between 9.8 and 10.2 billion litres by 2015/16. Further afield, ultimately profitability will be the key
driver of growth for the Australian dairy industry.
Food security - biosecurity
The dairy industry believes that future food supply is tied to the ongoing viability of food industries.
Food businesses along the supply chain must be both profitable and sustainable in the long term to
ensure Australians continue to have access to a nutritious, secure food supply.
Dairys strong exposure to the international market supports its competitiveness and sustainability,
which are essential for maintaining domestic and global food security. The Australian dairy industry is
highly flexible, adaptable and industrious which can create more value and investment opportunities
for our customers. Our proximity to key Asian markets, our variety of processing companies, factory
11
sizes, and our broad product range is an advantage compared to some key competitors who are more
focussed on large commodity business.
The Australian dairy industry is still a relatively low cost producer of dairy, however, it is the diversity
of companies who are involved in producing and exporting dairy products that is a key differentiator.
World scale companies such as Murray Goulburn and Fonterra Australia export a vast array of
products and specifications themselves. In addition the mid-size and smaller companies have the
flexibility to adapt products specifications, logistics and support that add to this diversity. Increasingly
this capability is extending to the development of branded retail and foodservice products.
There is an opportunity for the Australian dairy industry to leverage the diversity, flexibility and
proximity to our key markets through the story it tells about Australian dairy.
The Australian dairy industry enjoys the favourable animal and plant health status and production
environment in Australia which contributes to the profitable production and leads to benefits in trade
and market access for dairy products and more broadly to the Australian economy.
Australias biosecurity system recognises and provides protection from biosecurity threats to industry,
the Australian economy, the environment and to human health. The dairy industry supports
governments high level reform themes that underpin the approach. That is that our system is:
Implementing a risk-based approach to biosecurity management;

Managing biosecurity risk across the continuum offshore, at the border and onshore;
Strengthening partnerships with stakeholders;
Being intelligence-led and evidence-based;
Supported by modern legislation, technology, funding and business systems.
The dairy industry recognises the value of the national government providing leadership in the control
and management of serious threats and the need to ensure cooperation between jurisdictions for the
most efficient and effective outcomes. Industry wants national consistency and certainty and does not
want duplication. As a major exporting nation of agricultural produce it is important that Australias
import risk management is cognisant of expectations for export market access.
Information needs of dairy farmers
Among the challenges for the dairy industry is the need to ensure industry decision making and
policies are developed in an informed manner with the most accurate available information. The goal
of dairy activities in this area is ultimately aimed towards enhancing industry decision making abilities
by providing the right information, at the right time, for a more profitable Australian dairy industry.
A variety of data is used extensively in analysis of specific issues of importance facing industry
stakeholders in the dairy industry at national, state and regional levels, including:
data to be used by industry in its regular research planning and performance reporting
requirements;
data to enable accurate monitoring of trends in the productivity and profitability of dairy farms,
including the provision of results for selected regions; and
data to enable the development of information and analysis that supports improved business
planning and decision making and improved policy development.
In relation to on-farm business decision making, the dairy industry is working to develop a
performance benchmarking tool called DairyBase. The objective of DairyBase is to provide dairy
farmers, service providers and industry with access to a national database of accurate physical and
financial information for more effective farm comparisons and industry analysis that can be used to:
Enable dairy farmers to compare their business - both against others and against themselves
over time.
Contrast business performance of dairy farmers in different regions and districts within
regions, as well as differing farm systems and farm sizes.
Assist with the standardisation of key performance indicators so that terminology is clearly
understood by a majority of dairy farmers and rural professionals.
12
Measure business performance of dairy farmers and the industry, and monitor this over time
or during periods affected by adverse operational conditions.
Provide industry organisations (Dairy Australia, ADIC, ADF, ADPF and State farmer
organisations) with data to enhance presentations and submissions to government agencies.
Provide government agencies (e.g. DEPI and University groups) with greater opportunity to
enhance training in economic based systems research.
Provide government researchers and policy makers with access to data for use in determining
research priorities and in policy formation.
In addition, there is a comprehensive suite of additional information and tools made available to dairy
farmers via DA and other sources that inform on-farm decision making. These include tools to inform
heifer rearing and feed conversion efficiency through to market information.
Export of dairy research, information, technology and marketing
The Australian dairy industry collaborates effectively internationally on pre-farm gate research and
development for the benefits of the Australian industry and its global collaborative partners.
Specifically, Dairy Australia has Collaborative Agreements in place with DairyNZ (New Zealand),
Teagasc and Animal Health Ireland (Ireland) and DairyCO (United Kingdom). These partnership
agreements facilitate the effective exchange of technology, capability and skills for dairy research and
development, ensuring that Australian research levy funds are leveraged to their full potential. The
current rural Research and Development Corporation (RDC) model provides an effective platform for
this level of international collaboration and exchange.
Collaboration is also taking place on an international level relating to dairy marketing activities. Our
marketing and promotional activities are shared widely across international dairy networks where
global issues and ideas are explored. The Global Dairy Platform and International Dairy Federation
both have annual marketing forums in which Australia takes an active role. Universal issues such as
sustainability and health and nutrition are tackled both from a research, practice and promotional
aspects.
These efforts have evolved in the Australian market through the recently developed Legendairy
promotional platform. This campaign recognises that the Australian dairy industry has a magnificent
story to tell which will restore confidence and relevance in the minds of many. The challenge for the
Australian dairy industry is to rally and enable our strongest voices, whether they are farmers,
consumers or the influential shapers of our society to tell this story.
Legendairy is designed to inspire confidence in dairy people, build trust with consumers and win
respect from those who influence the industrys operating environment. The Legendairy platform has
been developed to traverse multiple audiences both domestically and internationally. It is built on a
solid messaging framework underpinning a sustainable industry Improving Wellbeing, Enhancing
Livelihoods and Reducing Impact.
2. Farmer decisions for improving farm gate returns

What are the drivers and constraints to farmers adopting alternative business structures, innovations
or practices that will assist them in improving farm-gate returns?
What tools, skills and advice do farmers need to effectively adapt and respond to the risks they face?
What alternative actions or measures by governments, farmers or others would result in improved
financial performance at the farm gate?
What approaches could be used to encourage improved drought preparedness?
During drought, what measures are most effective in supporting long term resilience?
How can new farmers be attracted to agriculture and how can they succeed?
Adaptation Improved drought preparedness
Drought has a direct impact on farm gate returns and competitiveness. The long drought prior to
2008 resulted in a significant reduction in Australia's milk production and we are still recovering
13
production to the pre-drought levels. The impact of the drought is still fresh in the minds of many of
our international customers.
ADIC supports a focus on drought preparedness as the primary means of supporting farmers to
minimise the impact of drought on returns. The dairy industry has prepared information and provided
extension to support farmer decisions in areas such as water management and feed management.
Farmers need to be able to make rational decisions based on sound advice. This can be difficult in
the midst of a drought. As well as providing information and extension, supporting farmers to access
professional advisers, such as financial or business advice (focused on decision-making for drought),
will assist farmers to be well placed to remain viable for future droughts.
There are policy opportunities to support farmers in drought preparedness. We understand that the
Intergovernmental Agreement (IGA) on National Drought Program Reform still has status but its
implementation from 1 July 2014 is unclear as the implementation plans due in December 2013 do
not appear to be available. The responsibility for oversight of the IGA is currently unclear with the
removal of SCOPI. The IGA provides a useful base for a drought preparedness program. Further
consideration is required as the implementation plans are developed to ensure that the program
covers all opportunities. For example, we consider that there is considerable opportunity for
improvements in tax, depreciation, and deductions for water or food storage infrastructure, but it is not
clear that this would be within the scope of the IGA. In addition, there is scope for improvements to
the framework for Farm Management Deposits.
While drought preparedness should always be the primary part of a drought program, in-event
support will also need to be provided as part of a comprehensive program. The drought support
package announced in February 2014 demonstrates an important commitment to drought relief. The
successful roll out of the package will now be the test. There can be pitfalls in financial support
packages and getting these to the right farmers.
Communication and working directly with farmers in need is the only way to really assist with farmer
decisions. Farmers in need will not always come forward and ask for help, especially in group
situations or public centres. Key principles should be applied to in-event support including simple
quick application processes, assistance with application processes, clear criteria and guidelines
around eligibility, consistency across states, and a focus on supporting those farm businesses most
affected by drought (i.e. not rejecting affected farmers because of other external factors beyond the
control of the farm business).
Previous natural disaster response programs provide useful learnings and examples to draw on for
the current package or any future packages. We strongly endorse the Commonwealth government
working with the state governments collectively to achieve consistent approaches and accessibility to
the loans. Social support measures must also be an integral part of in-event support. As noted
above, support for professional advisors could also be a valuable investment to support long term
resilience as well as immediate issues.
Attracting new dairy farmers
Rural and regional communities need to be attractive places to live as well as work. Infrastructure
must be of a high standard, providing access to good road and rail transport links with cities and/or
larger regional centres, high-speed internet access, reliable mobile phone coverage, and good quality
health and education services for families. This basic infrastructure makes regional, rural and remote
areas attractive places to invest for business, which then provides employment opportunities and in
turn more money for local shires and councils to invest in community infrastructure such as parks,
libraries and sports facilities.
In addition to the details covered within section 5, overarching strategies to attract new
farmers/workers to agriculture include:
Farm viability is critical to attracting young people. Dairy farms will only be attractive places for
young people if they are able to (i) achieve an acceptable standard of living (ii) invest to counter
the potential for declining terms of trade, and (iii) invest to match broader community increases in
earning (keep up with opportunities on offer in society).
Working conditions on dairy farms must match those of other jobs on offer, or young people who
start in dairy will not stay. There is clear evidence that it is not attraction, but retention of people
that is the more persistent challenge. Flexibility (in work hours and timing), personal growth and
14
development (including career paths) and enjoyable work environments are reported as key
1
conditions that employees valued alongside pay rates that are competitive for farming . Good
working conditions are important for farm owners too of course, but sometimes they are traded for
wealth creation.
Vibrant communities are an important factor in retaining a rural workforce. Opportunities for
partners and family members often make or break the decision to stay. Access to hospitals,
recreation facilities, casual and permanent employment off farm are all needed. An adequate
dairy service sector is also important. This is an interdependent relationship - there must be a
sufficient number of farms in a district to sustain a viable, well-serviced dairying community.
3. Enhancing access to finance

How do we better attract private capital into farm investment?
What examples are there of innovative financing models that could be used across the industry?
What would encourage uptake of new financing models?
What alternative business structures could be developed for farming that also retain ownership with
farm families?
How can foreign investment best contribute to the financing and productivity growth of Australian
agriculture?
Investment and the Australian dairy industry
It is well recognised that capital investment in the dairy sector can increase efficiency and productive
capacity. Such investment contributes to incomes, infrastructure and employment, often in regional
areas. It can also help Australia gain access to new export markets.
At the same time, many Australian dairy farmers have been struggling under the burden of increased
debt levels and now find themselves unable to effectively capitalise on improved market conditions.
Investment on-farm is desperately needed and Australian dairy farmers are being increasingly
exposed to alternative models of attracting capital into their businesses without merely increasing
bank debt.
The Horizon 2020 project (a joint initiative of Dairy Australia, the Australian Dairy Industry Council and
the Gardiner Foundation) also identified that there is a significant need for a capital injection into
Australian dairy farming if we are to realise a profitable growth agenda towards 2020. It found that:
1.
2.
3.
The Australian dairy industry is competing for capital, which would provide a potential spur to
the growth of dairy farm production over time;
The Australian dairy industry have a relatively poor understanding of those opportunities and
the investment models available to both farmers and potential investors; and that
Understanding the attributes of investment attraction will improve the effectiveness of industry
promotion and capacity building efforts.
This is supported by figures adapted from the Greener Pastures report released by ANZ in 2012.
This analysis found that for the Australian dairy industry to attain a level of growth equivalent to that
experienced by New Zealands dairy industry over the last decade (2002-2012), an additional $10
billion of capital injection on-farm is required by 2020. Furthermore, this analysis found that for the
Australian dairy industry to regain its share of global dairy trade lost since 2002, a further $6 billion of
capital injection on-farm is required by 2020.
Clearly with figures such as these, the Australian dairy industry, with the support of Government,
needs to be proactive in driving the investment discussion and looking for ways to drive capital
through a broad range of models, derived from both on and off-shore sources.
There are opportunities for investment throughout the dairy supply chain in Australia, including farm
services, farm production, processing, logistics and distribution. This section focuses on investment
within production dairy or inside the farm gate. Opportunities beyond this should be explored directly
with the relevant entities.
1
Nettle, R.A., Semmelroth, A., Ullah, A., Zheng, C., Ford, R. (2011 in progress) The retention of people in dairy
farming what is working and why? Research report to the Gardiner Foundation, The University of Melbourne
15
Australian dairy farm business ownership structures

There are a variety of potential business structures which may be implemented by investors into dairy
farming businesses. Broadly, these fall into three categories, namely:
1. Owner operation
In this scenario, the owners of the land manage the farm business themselves, with or without
additional staff. Obviously a more hands-off approach to routine farm management is possible where
a farm manager and team of staff are employed to operate the farm on a day-to-day basis. However,
even where a full management team is in place, the farm owner is still responsible for staffing and
financing the operation, including compliance with employee health and safety requirements,
industrial awards, working capital and financial management, procurement, administration etc. It is
possible to delegate these tasks to certain agricultural asset managers, who are experienced in
managing farms for absentee owners. However, potential investors should note that ultimate
responsibility for employee health and safety, animal welfare and business solvency rests with the
business owners.
2. Sharefarming / Co-Investment / Equity Participation
Sharefarming, or share dairy farming, is the term used within the industry to describe an arrangement
whereby two parties, the farm owner and a sharefarmer, operate a dairy farm business together.
This could also be construed as a form of co-investment or equity participation whereby two parties
come together to own and operate the business under an overarching agreement.
This style of agreement could be driven by an existing farmer looking to obtain capital to expand
operations, or through an investor looking to establish a mutually beneficial partnership with a current
farming business. The concept of sharing the equity in a farming business, whilst not new to
Australian agriculture, is certainly one that requires time, effort and negotiation to obtain a clear and
equitable agreement.
3. Leasing
Leasing a dairy farm is the most passive option for an external investor as it essentially removes all
responsibility for employment, farm management, asset management and financial control. For a
farmer it becomes attractive when the cost of leasing is lower than their net returns and/or cost of
capital. It also enables a farmer to expand their operation with a limited amount of risk. Farm leases
are typically negotiated on the basis of a fixed return on assets, or a fixed amount per acre/hectare. It
is worthwhile examining new leasing arrangements that provide a higher return to lessors which gives
a greater return on capital providing an increased incentive to enter these arrangements.
Fund Investment in production dairy industry - Institutional investment in dairy production is
reasonably limited within the Australian dairy industry. Within Australia there is currently no retail
investment fund pathway into the sector and there are a limited number of wholesale funds available
to institutional investors. While there have been other opportunities to invest in sectors within the dairy
industry, the wholesale and retail fund industry has struggled to find the opportunities to invest that
can meet their required benchmarks.
What is needed to drive investment into the Australian dairy industry?
The Australian dairy industry has recognised that it need to do a better job in presenting its
credentials in order to attract much needed capital into the sector. At the recent Australian Dairy
Farmers Summit, investment was listed as a key priority need for the industry and a program of
analysis and coordination is subsequently in the process of being developed to facilitate this need.
However, in addition to industry activities (both at a collaborative and individual entity level), it is
recognised that the regulatory environment does and will continue to play a vital role in how
successful the Australian dairy industry is in attracting capital. This will underpin confidence and
certainty for investment in dairy farm assets.
16
4. Increasing the competitiveness of the agricultural sector and its value

chains
How might existing laws and regulations be changed to address any market power imbalances in the
agricultural supply chain, without limiting prospects for global-scale firms developing in Australia?
How can the agriculture sector improve its competitiveness relative to other sectors in the economy?
Which examples of overseas approaches to improving agricultural competitiveness have relevance
for Australia?
Whole supply chain approach
The Australian dairy industry needs to be viewed as integrated supply chain. Milk is a perishable
product, which must be processed before it can be sold commercially. As a result, dairy production is
integrated across the supply chain: dairy farmers cannot operate without domestic processing
capacity, nor can processors survive without domestic farm milk supply. While the rhetoric around an
integrated approach acknowledges this, few of the practical actions proposed address issues that cut
across the supply chain.
Significant regional differences continue to characterise the Australian dairy industry based on
market and product mix, farmer confidence as well as current and future growth prospects.
Like the national economy, the dairy industry continues to be characterised by two speeds growth
and consolidation in exporting regions, contrasted with faltering confidence and contraction in
domestic milk regions.
For most farmers in south-eastern Australia, international conditions determine prices and industry
confidence. In Queensland, Central and Northern New South Wales, and Western Australia,
however, the industry is geared toward domestic fresh milk supply. Ongoing intensity in retail
competition, unsustainable pricing of milk at $1 per litre, disruptions caused by changes in private
label supply contracts and uncertainty surrounding processor milk requirements have undermined
farmer confidence and supply stability.
While overall supply remains good, these regional differences affect the food system within regions,
and, ultimately, the sustainability of a local fresh milk supply. Analysis at the national level fails to
show this nuanced picture, particularly the de-linking of pricing in the drinking milk states from
international prices becoming apparent.
Competition in the dairy manufacturing sector
As in the farm sector, the milk processing sector is undergoing continuing rationalisation. This has
resulted in improved factory capacity, as larger operations have improved their efficiency and
economies of scale. The lack of growth in milk production over the past decade has relieved the
pressure on Australian dairy companies to continue to invest in increasing processing capacity, at
least in the short to medium term. Instead, the challenge has been to remove surplus capacity and to
utilise the existing capacity as profitably as possible.
The Australian dairy manufacturing sector is diverse and includes farmer-owned co-operatives as well
as public, private, and multinational companies. Farmer-owned co-operatives no longer dominate the
industry and now account for around 35% of Australias milk production. The largest co-operative is
Murray Goulburn accounting for nearly 33% of national milk output.
Other Australian dairy companies cover a diverse range of markets and products, from the publicly
listed Bega Cheese Limited; to the privately owned Regal Cream (Bulla Dairy Foods), Burra Foods
and Longwarry Food Park to name just a few; together with many highly specialised cheese
manufacturers. Large multi-national dairy companies have operated in the Australian dairy industry
for many years and currently include Fonterra (New Zealand), Kirin (Japan) and Lactalis (France).
Despite the fact that Australia is a relatively large player in terms of its share of international dairy
trade, none of Australias dairy companies are in the top 20 manufacturers in terms of milk processed
and turnover. This has brought about renewed calls by a number of the larger Australian dairy
processors to bring about further rationalisation within the Australian dairy processing landscape in
order to obtain the scale necessary to compete with international giants such as Fonterra, Arla and
Friesland Campina.
17
The dairy industry has not taken a position on what is the ideal level of rationalisation required within
the Australian dairy processing sector but has recognised that an even regulatory playing field is
desirable as competition for processing resources intensifies. The potential for inequities were
highlighted in the recent bidding for Warrnambool Cheese and Butter, where timing variations
between the Australian Competition Tribunal (ACT) and the Foreign Investment Review Board (FIRB)
processes placed certain companies at a competitive disadvantage. This was an unfortunate situation
that could act to limit shareholder choice and opportunities for mergers.
Mandatory Code of Conduct
It has been the firm position of Australian Dairy Farmers (ADF) that the introduction of a mandatory
Code of Conduct is necessary to balance the market power of the major retailers, along with the
appointment of a Supermarket Ombudsman with teeth to oversee compliance with the Code,
including significant financial penalties.
Unlike New Zealand, where the one company (in this case Fonterra) dominates the competitive
landscape, Australias dairy industry has well over 100 registered dairy processors, who each
compete for milk as well as domestic and international supply contracts. No single milk manufacturer
has a dominant position across the complete national Australian dairy industry. This can influence the
negotiating position of Australian processors with domestic retailers, particularly in areas that are
limited to domestic fresh milk supplies.
Gene technology
Just as consumers have enjoyed technological advances in areas like telecommunications and
transport, plant scientists have also been using new tools and techniques to develop better plants.
Plant breeding and improvement, like medical science, utilises a whole suite of technologies including
computers, high power microscopy and molecular biology.
Gene technology is one of these tools. It has been around for over twenty years and underpins most
biological research. It allows researchers to understand the functions of different genes within a plant
and to modify these functions to improve the plants qualities.
Genetically modified (GM) crops are 18 years old and are currently grown around the world in 27
countries by over 18 million farmers across 175 million hectares. Farmers across the globe have
chosen to adopt new GM varieties for their economic and environmental benefits. Despite this strong
global uptake, they are not permitted to be planted in many States of Australia, although they have
received Federal regulatory approval for their environmental and human health safety.
The Australian dairy industry is a long-term investor in gene technology research, particularly work to
develop new pasture varieties. Current modelling suggests that one of these research projects, high
energy ryegrass, could deliver a benefit of $300 per hectare to Australian dairy farmers.
In order to realise the benefits of R&D investment in dairy gene technology, and that of many other
GM crops currently under development in Australia, there are two fundamental requirements. Firstly,
a clear and transparent regulatory system is required to deliver confidence to all stakeholders
including farmers, researchers, and investors (local and global). The dairy industry supports the
Office of the Gene Technology Regulator and the Act which underpins this system, but believes that if
State-based GM crop assessments are to continue, they must be conducted on a sound and technical
case-by-case basis with clear and transparent market and trade criteria.
Secondly, the community must understand the role of GM in the future of agriculture including the role
of GM in innovation, productivity, global competitiveness, profitability, environmental benefits and
consumer price. If consumers do not understand and accept (or at least not oppose) GM technology,
it cannot be successfully delivered to the market. It is not a role for the dairy industry alone to
educate the public about gene technology. Genetically modified varieties of barley, canola, cotton,
lupins, safflower, sugarcane, ryegrass, wheat and white clover are currently being developed in
Australia. Designing and rolling out a successful conversation with the Australian public about GM
will need government leadership and cross-commodity involvement.
The government therefore has an important role in providing a clear and predictable path-to-market
for this research to enable Australian farmers access to improved plant varieties, which allows them
to remain globally competitive.
18
5. Enhancing agricultures contribution to regional communities

What impact does the growth of populations in regional centres and the decline in more rural or
remote townships have on farming businesses and the agriculture sector?
How can the agriculture sector best contribute to growth in jobs and boost investment in regional
communities, including indigenous communities?
What community and policy responses are needed in rural and regional communities to adapt and
change to new pressures and opportunities in the agriculture sector?
How do we attract the next generation of farmers?
Dairys contribution to the regions
As highlighted in the introduction, the Australian dairy industry makes an enormous contribution to
regional economies. The table below demonstrated how this contribution can be further broken down
against the eight major Australian dairy production regions. The dairy industry is confident that the
economic contribution made by the dairy industry will continue to grow as the industry capitalises on
the immense opportunities that exist for the sector, particularly in overseas markets, such as the
burgeoning Asian region. Ultimately, the ongoing profitability of the Australian dairy supply chain will
underpin the industrys ability to grow, and in doing so, expand the economic contribution of the
sector.
As mentioned previously, a supportive Federal, State and Local regulatory environment that
recognises the dairy industrys economic contribution to local communities and their economies, will
continue to play a vital role in attracting capital and underpinning the confidence for dairy farmers to
grow production. There must also be ongoing investment in regional infrastructure and communities
to ensure they are strong and viable.
2012/13 Australian RDP Breakdown

SubTropical
Dairy
Dairy NSW
Gipps
Dairy
Murray
Dairy
WestVic
Dairy
Dairy SA
Dairy WA
Dairy TAS
AUST
Dairy farms
No.
680
490
1,480
1,515
1,370
268
160
437
6,400
Cows in milk & dry
000
115
150
422
383
350
72
65
149
1,706
People employed on
farm
No.
2,000
2,250
4,907
5,840
5,503
2,500
250
1,500
24,750
People employed in
processing
No.
1,250
4,250
3,321
3,953
3,725
750
750
1,000
19,000
People directly working

in dairy
No.
3,250
6,500
8,228
9,793
9,229
3,250
1,000
2,500
43,750
579
722
1,892
2,252
2,122
536
337
760
9,201
6.3%
7.8%
20.6%
24.5%
23.1%
5.8%
3.7%
8.3%
100%
Volume of milk
produced
Million Lts
Share of National milk

production
Value of milk leaving

farms
$M.
$310
$335
$715
$852
$803
$205
$151
$305
$3,677
Dairy farm contributions

to economy
$M.
$248
$268
$572
$681
$642
$164
$121
$244
$2,941
Value of dairy products

exported
$M.
$47
$148
$680
$810
$763
$14
$44
$244
$2,750
2%
5%
25%
29%
28%
1%
2%
9%
100%
13
36
192
229
216
41
69
799
2%
5%
24%
29%
27%
0%
5%
9%
100%
Share of National
exports - value
Volume of dairy
products exported
Share of National
exports - volume
000 tonnes
19
Attracting the next generation of farmers

Young farmers are the future of the dairy industry. The perpetual question about this future is how to
make the industry attractive to the next generation as a place to work and/or invest. This is not a
trivial or easily addressed question; scratch the surface and some deep-seated issues are evident. It
is not simply resolved by positive image campaigns or training courses. It is primarily rooted in the
viability of individual dairy farm businesses.
This opens a number of significant issues such as affordability of agricultural land (in relation to its
agricultural earning capacity), difficulty for young people to achieve the capital required to purchase
land and have enough equity in the business to manage volatility (this also makes it harder for the
current generation to exit), having enterprises of sufficient scale that they can compete with financial
returns from other investments, having farm businesses with the capacity to survive in a volatile
market (ride out the poor years), and having workplaces that offer decent work and career paths for
individuals.
Despite the fact that these are tough issues, the dairy industry has already conducted research and
begun to pilot programs to identify solutions.
Industry and Government actions
Dairys future depends on recruiting, training and retaining the next generation of farmers, food
scientists, processing workers, and industry service providers. The dairy industry has been actively
developing and implementing strategies to attract, retain and develop a skilled workforce (for example
Cows Create Careers, National Centre for Dairy Education Australia, Dairy Innovation Australia,
postgraduate scholarships).
Cows Create Careers - farm module
The Cows Create Careers Farm module is an innovative Dairy
Australia and Regional Development Program that is delivered
across 22 dairying regions in Australia. It provides a platform to
introduce students to the Australian dairy industry. The major
objective of the program is to create awareness and promote
careers in the dairy industry including dairy farm pathways.
What is involved in the program?
Program handbook for teachers and students is provided to

the school by Dairy Australia
Dairy farmers deliver two calves for a 3 week period to the school
An industry advocate visits the school to talk to students about their career pathway
Students work in teams of 4-5 to complete assessment tasks
Students and teachers attend a presentation and awards ceremony and win prizes
Media coverage of the project such as print media, radio and television
Participation of Schools in Australia
In 2013, 8,357 students from 183 schools participated in the program

366 dairy farmers and industry advocates volunteered their time to be part of the project
The project has a retention rate of approximately 90% of schools each year
Since its inception, 42,450 students have participated in Cows Create Careers
The project has been very successful and has grown significantly since its launch in 2004 and also
includes a dairy manufacturing module.
It is the dairy industrys view that government policy and funding decisions are undermining industry
programs to attract and retain more people in dairy.
Specific issues include:
Lack of funding priority for Vocational Education and Training (VET) courses targeted at
industries with acknowledged skill shortages, such as dairy. Specific issues (mostly statebased) include the need to recognise Agriculture dairy farmer workers and managers on
20
skills shortage lists for eligibility to state and federal programs, and the ineligibility for funding
of people with existing qualifications, even in areas of skills shortage.
In many instances, the models supporting VET vary depending on the jurisdiction in which
they operate, leading to a disjointed approach to training.
Red tape in the 457 Visa approval system leading to delays in recruiting skilled employees
from overseas to fill skills shortage gaps. Some of the challenges with the current process
involve DIBP staff being unaware of the skill requirements for many on-farm roles, and a lack
of understanding about skills and training recognition from overseas training institutions.
The six-month time limits on employment with a single employer under subclass 417 and 462
visas contribute to high turnover within the dairy industry.
The lower overtime penalty rate for the essential daily services of feeding and watering
stock does not recognise that milking twice daily is an essential requirement in the care of
dairy cows. The Award needs to be updated to include milking as an essential service
relating to penalty rate classifications, similar to feeding and watering stock. Potential labour
market flexibility in the processing sector should be examined in addition to the above point.
The Fair Work Australia Modern Award Review (Pastoral Award [MA000035]) minimum
engagement provisions, where no minimum engagement provisions or a minimum
engagement of two hours instead of the current three hours would better reflect the working
practices on dairy farms and facilitate employment and productivity.
Structural impediments to teaching of food science and technology by universities, including
cost of appropriate teaching models.
Dairy isnt currently recognised as a seasonal industry, meaning that it cannot access shortterm labour under the Seasonal Workers Programme.
There is also an opportunity for the Australian Government to support campaigns like Legendairy and
Cows Create Careers with programs that also support agriculture as a career option. These may
include measures such as design of the school curriculum to influence childrens attitudes to the
sector.
Dairy labour agreement
Dairy, like most other agricultural commodities, suffers a chronic skilled labour shortage. While the
industry invests heavily in programs to recruit, train and retain skilled workers within Australia, closing
the gap from the local workforce will take time. In the meantime, recruitment of overseas workers
offers a short-to-medium-term solution.
Farmers currently have two main options: sponsoring management level workers for 457 Visas, or
hiring backpackers on working holiday visas for a maximum permitted six months. The latter is
disruptive for the business, while the former is proving time-consuming and frustrating.
Farmers seeking 457 Visas for prospective employees report excessive paperwork, and subjective
assessment by departmental caseworkers as to whether a 457 Visa is justified for the proposed
duties. Another problem is the ANZSCO skill base criteria, which only recognises overseas workers
with a degree or greater; in dairys case, this restricts recruitment to highly qualified farm managers.
While farmers may be in need of farm managers, they are also in need of senior skilled farm hands
responsible for many daily operational tasks including milking cows, detecting/treating animal health
issues and animal husbandry.
Labour agreements between an employer and the Commonwealth offer a solution. These agreements
are designed to address a genuine, systemic labour market shortage, rather than accommodate an
employers preference for a particular overseas worker, and may include skilled occupations that are
not on the approved list for 457 Visas. Labour agreements are generally effective for two to three
years, and allow for temporary and permanent visas to be granted.
Preparing a Labour Agreement application is time-consuming task requiring specialist expertise
beyond the resources of most individual farmers. Based on the experience of the pork industry, Dairy
Australia is helping industry to prepare a Labour Agreement application for several farm businesses
as a pilot, with a view to setting the standard that could lead to an industry-wide template agreement
in future.
21
Any workforce development strategy should extend beyond the agriculture sector, and explicitly
acknowledge and address people issues across the whole food sector. The strategy should consider
how to address areas of skills shortage, such as food science and technology, food safety and
microbiology and agriculture, for example through targeted scholarships.
The strategy should also consider the importance of making living and working in regional areas
attractive to the next generation. Dairy employs more than 43,000 people directly on farms, in
factories and in associated transport roles across regional Australia. Strategies for upskilling this
regionally-based workforce are critical, and would be facilitated by infrastructure such as high-speed
internet in regional areas through the National Broadband Network.
6. Improving the competitiveness of inputs to the supply chain

How can rural industries and governments better identify, prioritise and fund research, development
and extension?
How can land, water and other farm inputs be more effectively deployed to better drive agriculture
sector productivity, while maintaining or enhancing the natural resource base?
What skills including specialised skills and training, will be required in the future and how can these be
delivered and uptake encouraged?
How can we attract workers to agriculture particularly in remote areas?
How can we promote career pathways for the agriculture sector, including models to enable younger
farm workers to gain broader industry experience?
What irrigation, transport, storage and distribution infrastructure are required to support the food and
fibre production systems of the future and how should this be funded?
Research and development
As recognised in the Australian Governments Rural Research and Development Policy Statement,
the current rural Research and Development Corporation (RDC) model (particularly as it applies to
dairy) remains fundamentally sound and effective. Strong, industry-based RDCs have a key role to
play in delivering desired outcomes because of their unique positioning and capacity to translate
broad, high-level knowledge into effective industry-based innovation and solutions.
Yet the Research and Development environment is changing. The requirement to better engage and
support dairy farmers to identify and act on opportunities within their farm businesses and respond to
pressures for change from other stakeholders is escalating. Hence, there is a need to deliver more
effective and efficient extension services to dairy farmers, in an environment of increasing challenges
and diminishing capacity to address these challenges. The industry challenge is to achieve on-farm
practice change at the pace and scale required to improve on-farm returns across the majority of dairy
farmers.
The Australian dairy industry faces five challenges in relation to supporting on-farm change and
innovation:
1.
2.
3.
4.
5.
The diversity of farm systems and businesses is increasing

Roles and responsibilities in extension delivery are changing
Government funding of public extension delivery is in decline
Extension capability needs building
Novel approaches to increase dairy farmer adoption of innovation are required
Actions to address this issue include providing suitable investment support through Research and
Development Corporations (RDCs) for extension delivery according to who is best placed to achieve
outcomes (e.g. collective, public, private, vocational education and training sectors) on a case-bycase basis. This includes ensuring that public, vocational education and training is adequately
resourced, and that industry and vocational education and training sector resources are increasingly
used to build capability in the private sector. Opportunities to grow capability through professional
development and accreditation of advisers must be further explored and better resourced.
22
The value of research and development to the Australian dairy industry

A study titled The Impact of Innovation on the Dairy Industry over the Past 30 Years, commissioned
by the Department of Primary Industries and Dairy Australia in 2011, evaluated the benefits of
industry and government investment in research, development and extension as well as findings to
improve future investment. The report detailed the pivotal role of research, development and
extension in the phenomenal increase in the dairy industrys productivity over the past 30 years, given
the challenges it has faced.
It found dairy industry output had expanded 90 per cent over the past 30 years and milk production on
a per hectare basis had increased by nearly 200 per cent. Yet despite milk production rising from an
average estimated 2878 litres to 8419 litres per hectare, the amount of grazing land used by the
industry to achieve this feat had actually fallen by around 30 per cent since 1980. These gains have
been largely due to increased pasture production and utilisation, feed supplements and genetic
improvement leading to more efficient cows.
The report also found that had it not been for the dairy industrys innovation, its output would have
declined by an estimated 23 per cent over that time due to a cost price squeeze and the depreciation
and obsolescence of technology.
Extension resources are under pressure
Currently extension is often referred to in the context of agricultural innovation systems, along with
research and development. Extension is about change and in a broad sense can be seen to include
all activity that motivates and equips farmers to improve their skills and practices, including education,
vocational training and information services. The term adoption is commonly used and provides an
apt description of farmers applying new technologies and innovations. For a number of years the D
component of R,D&E has been generally under-resourced in agriculture. The dairy industry has
recognised this and, through Dairy Australia, is currently co-investing with The Victorian Department
of Environment and Primary Industries (DEPI) in this area.
All Australian agricultural industries are moving into a new era of extension following an extended
period of time that has seen the reduction in public extension services, which most sectors, including
dairy, have historically been heavily reliant on. The requirement to better engage with and support
dairy farmers to identify and act on opportunities within their farm businesses, and to respond to
pressures for change from other stakeholders, is escalating. Many farmers have disengaged from
conventional extension and there is a need to deliver better, more focused and relevant extension
services to them in order to drive practice change.
Regardless of the decline in public extension, a new approach to extension is needed that grasps the
opportunities that are emerging to drive structural and delivery change, and to transform the way that
the dairy industry engages with dairy farmers.
The traditional pipeline of extension capability has diminished, yet collective or private sector
contribution to build extension capability has not developed adequately to fill this void. Dairy Australia
has provided scholarships to develop RD&E capability in the past, but this has often taken an ad hoc
approach. A more strategic approach is required in future to provide support to agriculture students to
build greater extension capability and encourage them to utilise this capacity in the dairy industry.
There will continue to be growth in the use of advanced information and communication technologies
in agriculture, providing information to farmers in novel ways. However, there will always be a
requirement to maintain a level of face-to-face communication. Farming is already socially isolating
for many farmers, and with declining farmer numbers this may become a more widespread issue. It is
likely that farmers will always put a high value on personal contact in extension.
Extension efforts should be focused on issues for which there would be substantial benefits to farmers
from changing their practices, especially if those new practices would also generate benefits for the
broader community (e.g. environmental benefits). Extension would not focus on practices that farmers
already have good knowledge about and have decided not to adopt, because non-adoption is a clear
signal that the practices do not generate sufficiently large private benefits. The heterogeneity of farms
and farmers should be recognised when looking at reasons for non-adoption. This more sophisticated
approach to planning extension effort will require greater collection and analysis of information.
23
Dairy Australia has assumed greater responsibility for leading, managing and funding extension
delivery to dairy farmers into the future. Provision of more efficient and effective extension services
delivering greatest benefit for Australian dairy farmers requires a broad level of industry coordination
and collaboration. Dairy Australias motivation is to provide leadership, influence and resources to
deliver this outcome. Significant additional levy funding and management effort will be required to
support this commitment to achieving improved extension services for Australian dairy farmers.
Cross-sectoral approaches
Achieving the productivity growth required, while not increasing environmental risk, requires funding
for research, development and extension. New skills, new technologies and new ways of doing
business are required to balance increasing competition for resources, while remaining profitable.
The dairy industry therefore supports further research into soil and water and other natural resource
base issues. One avenue for this research is the existing rural Research and Development
Corporation (RDC) network, which is already developing cross-sectoral strategies in areas including
water, soils and climate change. Dairy Australia is actively engaged in these strategies and is leading
strategy development in water.
Cooperative Research Centres
Cooperative Research Centres (CRC) play an important role in developing new science and R&D
capacity within the industry. Their close association with industry enables industry-relevant
commercial outcomes.
The Dairy Futures CRC has taken extremely positive steps towards developing technologies that will
potentially double the rate of genetic gain of the Australian dairy herd. Similarly, the development and
use of CRC technologies to boost pasture productivity are also yet to realise their full potential but
may deliver transformational improvements to Australian dairy industry productivity.
While the Australian dairy industry is hopeful that the technologies being developed within the Dairy
Futures CRC will be available for industry use by the end of the CRC funding period, it is vital that
government closely monitors programs such as these to ensure that funding streams are secured so
that research programs can fully reach their potential.
Collaboration
Dairy Australia collaborates extensively with a range of institutions including universities, R&D
organisations, international research agencies, NGOs and cooperative research centres (CRC).
Through collaboration Dairy Australia intends to have access to leading practices and knowledge that
Dairy Australia can leverage in the delivery of our own Strategic Objectives, as well as ensuring that
the broader policy and national research and development objectives of government are realised as
efficiently as possible.
In total, Dairy Australia invests approximately $19 million in collaborative projects. Approximately
$800,000 of this is invested in initiatives with other RDCs such as the Grains Research &
Development Corporation, and the Meat & Livestock Association.
Food processing innovation
The dairy industry acknowledges that much of the value in the food industry is generated post-farm
gate where significant innovation also occurs. The dairy industry adds value through processing to
produce drinking milk, cheese, butter, milk powders, cream, yoghurts and a range of specialty
products. This value-added processing delivers an agricultural industry with a wholesale value of
dairy products in excess of $13 billion a year.
Increasing productivity for food therefore relies on research, development and extension, and
commercialisation all the way along the supply chain. Milk, unlike many other raw materials, must be
processed to preserve its integrity. This strengthens the focus on a supply chain approach to valueadding in this industry. With comparatively low domestic dairy prices and a competitive international
market, innovation to drive improvements in dairy manufacturing and processing is imperative.
Research and development-led innovation includes improvements in all parts of the processing chain
improved equipment and processes that create production efficiencies as well as new product
development.
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Accordingly, Dairy Australia invests in innovation across the supply chain. In particular, Dairy
Innovation Australia Limited (DIAL), established in 2007 and led and funded by the dairy processing
industry in conjunction with Dairy Australia, responds to this need for innovation. Working as a single
entity with multiple Australian dairy companies, DIAL provides a precompetitive research capability
much greater than could be achieved through an equivalent level of individual company R&D activity.
Sector-specific, industry-led innovation hubs such as DIAL have proved successful in generating and
directing R&D investment in areas of market failure, and translating this collectively funded research
to commercial outcomes.
Dairy workforce development and competitiveness
Dairy farms have become increasingly complex to manage. As farms grow, reporting and compliance
requirements grow more complex, and technology plays an expanding role in milk production, the
skills of the people required to successfully run a dairy farm are changing. Farm business
management skills are becoming increasingly important as complexity on-farm grows.
The learning needs of dairy farmers span the entire range of on-farm knowledge, skills and values.
They range from the basic technical capabilities of milking and machinery operation to those
underpinning highly sophisticated management of multi-million dollar enterprises. At all levels from the
most junior member of the team to the manager, successful operation requires the ability to perform
certain tasks (skills), a certain level of information and understanding (knowledge), and a set of
values, perspectives and ways of dealing with people and problems (attitudes) to allow optimum
outcomes. If these three dimensions are not recognised separately, as often happens, the critical one
of attitudes drops off the list and focus is given to the more easily taught dimensions of skills and
knowledge.
Survey of dairy labour needs
The 2012 National Dairy Farm Survey paints the changing picture of farm management and labour
structures. The proportion of dairy farms operated by a single person, or with a partner, was 29% in
2012 compared to 43% in 2007. Nationally, some 68% of farms operate with paid employees, up from
64% in 2011. An estimated 32% of paid staff are employed on larger farms (comprising 301 to 500
cows), which represent 24% of all dairy farms across the industry. Thus people management skills, as
well as animal and technology management, are becoming more critical.
The needs of the owner/operator are the logical starting point for a learning-oriented farm and
industry. If that person does not recognise that learning as integral to success in life and business,
they are unlikely to pursue learning opportunities for themselves, or encourage others in their family
or workforce to do so. This throws into sharp relief the fundamental importance of attitudes such as:
willingness to identify ones own deficiencies, acceptance of the reality of continuous change and the
need to adapt with change or even trigger it; valuing others; willingness to ask dumb questions;
pride of workmanship; capacity to respond intelligently to contingencies. These qualities are most
effectively learned through participation in well-designed adult learning activities as well as through
reflection on personal experience.
The dairy industry has developed an industry endorsed Farm Career Pathway which identifies the key
roles within the industry and the skills and knowledge required to perform these roles competently.
The industry invests in the National Centre for Dairy Education, an alliance of eleven Registered
Training Organisations across Australia, to deliver training programs to meet these skill requirements.
The Dairy Industry is also developing a Stepping Stones process which clearly demonstrates the
steps that young people can take to progress through the industry, and importantly outlines the skills,
knowledge, experience, equity and support needed before progressing to the next step. The kit will
also include worksheets that allow a farm manager to have career conversations with their staff and
develop a training plan for their next steps.
Food processing workforce development
People issues are not just confined to the farming sector labour supply issues facing the food
processing sector should not be ignored.
Reforms to agricultural education alone will not address issues facing food processing such as
shortages of skills in food science and technology, microbiological risk, and process optimisation.
The food industry requires people with skills to enable multidisciplinary approaches to allow
companies access to appropriately trained problem solvers and innovators.
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(NB: see section five for specific issues and actions needed to address these issues)
Freight infrastructure
Growth in the dairy industry relies on improved road, rail and port infrastructure, infrastructure to
support efficient water use, a reliable and expanding power supply, infrastructure to support research,
development and training, and infrastructure for supporting industries (for example, feedmills).
Road infrastructure examples relevant to the dairy industry include:
Stock underpasses to assist in managing biosecurity risks

Maintenance of bridges identified as crucial for access to farms in an emergency
Rural road capacity to enable more efficient milk collection
Transport
Expanded operation of B-triples to reduce truck traffic and improve efficiencies
The dairy industry supports efforts to build the evidence base on food industry trends and market
changes to inform infrastructure planning. The industry also supports an integrated approach across
jurisdictions that supports resolution to the infrastructure constraints faced by the dairy industry.
The dairy industry also encourages Government to examine the competitive settings around freight
infrastructure such as ports that can often operate as monopolies and are able to charge/recover
monopoly rents that are often passed on to others in the supply chain. This can hamper the
competiveness of Australian dairy on international markets for which the industry depends.
Energy
ABARES has identified that electricity accounts for 2.4% of total dairy farm operating costs, compared
with 0.8% in livestock/cropping enterprises. This is because electricity is dairy farmings main energy
source, not the transport fuels on which cropping, sheep and beef grazing rely.
Energy usage patterns and costs in dairies over time are highly complex, and highly individual to each
farm business. They reflect factors such as:
Size of the herd, and type of milking system (eg. rotary milking platform or herringbone)
Milk production systems, whether seasonal or milking all year around
Age and operating efficiency of plant such as milking machines and refrigeration
Seasonal conditions, which may affect the timing and number of cows milked
Seasonal conditions, which may affect the timing and extent of pumping for irrigation
Environmental policy decisions pushing dairy farmers to install new, more energy intensive
irrigation technologies to reduce water use and increase environmental flows in rivers
Upgrades or efficiency measures undertaken to reduce consumption and therefore costs
Renegotiation of tariffs or contracts with energy companies to reduce costs
Analysis commissioned by Dairy Australia indicates that typical dairy farmers are now spending
between $20 and more than $100 a day on electricity to power their dairies. Rising tariffs,
environmental fees such as the carbon price and renewable energy incentives schemes and rising
network charges have contributed to daily costs rising 33-100% for many farms since 2010.
Similarly, large dairy farms with milking herds of more than 600 cows are paying between $75 and
$300 a day for power, up from between $50 and $150 in 2010. Daily energy consumption over the
period has remained fairly steady.
The industry is also a large user of both electricity and gas in manufacturing. Dairy processing
companies are among the top 300 energy users in Australia, and were therefore liable for the carbon
tax. Their international competitiveness is highly sensitive to changes in energy costs, but also
inadequate reliability of supply in regional areas where most factories are located. In particular, dairys
manufacturing sector in particular, many of which have no viable alternatives to gas power, are
concerned about long term domestic gas supplies and prices as the momentum to export gas builds.
Power interruptions can cost companies dearly when they affect the processing of this perishable
product. Power interruptions can cause product to be wasted during processing, and reduce output
26
for sale. Unreliable power supplies also affect farmers, who can lose milk and therefore income if, for
example, refrigeration is shut down and milk cannot be cooled to food safety standards. With many
dairy manufacturers now moving further down the path of plant automation and control systems, even
a small disruption to power, in the milliseconds, can cause considerable down time, downgraded
product as well as potential damage to electronics.
The cost of increased investment in network infrastructure is passed onto farm businesses, but the
reliability of power supply in many regional areas remains inadequate. The dairy industry is seeking
policy reform to ensure that infrastructure upgrades are undertaken so that regional areas enjoy the
same reliability of electricity supply as urban areas, without a price premium for a service that urban
Australians take for granted.
The dairy industry wants to see a more competitive market in regional areas, where farmers and
manufacturers frequently have less choice in electricity suppliers than in urban areas, and are
therefore limited in their capacity to switch supplies and negotiate better deals.
The dairy industry has also sought more transparent pricing on bills. Most bills opened by dairy
farmers combine all charges consumption, network, environmental fees, and the carbon price into
a single tariff. This has led to confusion among farmers as the different drivers behind their rising
costs, and allowed power companies to confuse the extent to which repealing the carbon tax may
results in lower energy costs. Rising energy costs are a constraint, as farmers are generally price
takers and cannot pass additional costs to the consumer.
Government has a critical role to play in regulating the energy sector to ensure that Australian
regional industries can access reliable, secure energy supplies at prices that enable them to remain
internationally competitive.
State and Federal governments also play a critical role in ensuring that the development of new
energy sources such as unconventional gas mining do not undermine the safety, sustainability and
integrity of agricultural production, or the surface and groundwater on which they rely.
Unconventional gas mining
Unconventional gas mining may have implications for water quality and availability, the integrity of
aquifers, and the integrity of waterways from which stock may drink. These potential implications arise
from the mining techniques themselves, and the disposal of produced water. In this context the dairy
industry would be concerned about streamlining approvals systems for new energy development that
involve weakening requirements for baseline environmental monitoring on fugitive gases, surface and
groundwater water quality and quantity, aquifer integrity and waterway health.
Similarly, the dairy industry would not support any move to reduce requirements for ongoing
monitoring throughout the project life and a reasonable period afterwards. All data should be available
on a national and publicly accessible environmental monitoring system to improve the understanding
of unconventional gas minings effects on farms and farming areas.
Farmers must also have the right to voluntary access to their properties. Access agreements must
ensure that landholders are not liable for incidents resulting from third-party access from mining and
unconventional gas operations, and that land is rehabilitated to its original conditions when the mine is
decommissioned.
Energy efficiency is a significant opportunity for reducing energy costs as well as greenhouse
emissions in the dairy industry, as the industry is a large user of electricity on farm, and both
electricity and gas in manufacturing. Some on-site energy generation technologies may also
supplement energy efficiency (such as cogeneration or solar PV or solar thermal).
Dairy farmers are already embracing renewable energy technologies, with 40% of farms in 2012
having installed some form of renewable energy installation (such as heat pumps or solar water
heating). Dairy farmers have also been quick to take up 1700 energy assessments co-funded through
Dairy Australia and the Federal Governments Energy Efficiency Information Program. The audits are
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identifying many no or low cost energy efficiency and energy reduction opportunities, as well as
options that are more expensive but have significant cost savings and greenhouse gas abatement.
But for all these opportunities, there are significant capital cost barriers. In many cases, federal and
state rebate programs assisted farmers with the upfront capital costs, and thereby increased their
participation.
Dairy manufacturers are also embracing new clean technology. For example, dairy manufacturing
projects that were part of the Clean Technology Food and Foundries Investment Program in the 201213 year included more than $25 million investment in equipment upgrades including installing heat
exchange, solar PV and/or gas alternatives for water heating and power, and equipment upgrades for
refrigeration and lighting. Investment in clean technology is expected to reduce emissions intensity at
some dairy plants by up to 50%. Unfortunately this Clean Technology program is now closed and
comparable investment in these types of projects is unlikely to continue.
The emerging question is how to finance large, up-front capital costs for equipment upgrades and
renewable energy options in tight economic conditions. For example, installing heat recovery preheaters and variable speed drives on vacuum and milk pumps on dairy farms have an estimated
capital cost of $5000-$17,000, with a 4 20 year payback period. Similarly, for a dairy manufacturer
to upgrade to new energy efficient refrigeration or to switch to solar power could require a capital cost
of several hundred thousand dollars with a payback period of 3 20 years.
Water
The dairy industry is a major water user for both irrigation and in the dairy. Across Australia, water
availability, security and efficient use are critical drivers for agricultural productivity and food security.
Without careful natural resource management, dairy farmers do not achieve productive farming
systems and profitability. Managing water use and land use is integral to farm management. The way
Government regulates water availability and affordability will directly impact on the profitability and
future of the Australian dairy industry.
Dairy farmers in both irrigated and dryland areas are steadily adapting their practices to produce more
milk with less water. However, periods of drought or low water availability put pressure on production
options, and milk production levels, and this has a flow-on impact on milk companies and regional
economies. Regulation of water resources needs to be achievable, practical and cost-effective, while
optimising social, economic and environmental outcomes. The Government needs to work with the
dairy industry as part of adapting the wider community to reduced water availability.
A 2013 cost-benefit study looking at irrigation upgrades on ten dairy farms in Northern Victoria and
NSW Southern Riverina, found that farm upgrades delivered environmental, social and economic
outcomes. The report found that while farm upgrades cost the Government around $3,700 a megalitre
(ML) for water savings for the environment, at the same time this investment delivered gross
productivity gains to farmers worth an average $9,800/ML and that increased farm production
generates additional regional economic activity worth $6,200/ML. There is a clear case for
Government to continue support for investment in water infrastructure both on-farm infrastructure
and community infrastructure such as dams, covered waterways to reduce evaporation, and methods
to improve water capture.
The Murray Darling Basin accounts for approximately 25 per cent of Australian milk production. With
the Basin Plan now in implementation phase, farmers need certainty in aspects of the Water
Recovery Strategy if they are to plan and adapt. The proposed 2750GL of recovery for the
environment will be a significant achievement. As part of this, up to 1500GL have been identified for
buy-back or State recovery, but there is flexibility in the make-up of the 2750GL. With a significant
reduction in annual average water available for irrigation, trade and carryover (approximately 26 per
cent), dairy farmers will need to boost their productivity by 20-25 per cent if milk production is to
recover to pre-drought levels with this much less water.
A confirmed 1500GL cap will provide certainty for farmers to plan for a productivity challenge that is
already very tough. The Government now needs to provide a clear plan on how this will be
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implemented, including through investment in water infrastructure that will contribute to meeting
targets.
7. Reducing ineffective regulations

How well do regulations affecting the industry meet their policy objectives?
What opportunities are there to reduce ineffective or inefficient regulation?
Which regulations are disproportionate to the risks they are supposed to address?
How do we coordinate across governments to reduce regulations whose costs exceed their benefits?
The dairy industry would welcome ongoing mechanisms to identify regulatory reform opportunities.
This should include regular stocktakes that look at the burden of the sum of regulations individual
Regulatory Impact Statements miss the cumulative increase in regulatory burden. The Productivity
Commissions series of annual reviews of the burdens on business have been useful, but need to be
continually renewed.
While numerous government statements talk about reducing the regulatory burden and the
importance of evidence-based regulation, a gap remains between the agreed best practice principles,
2
and what actually happens . For example, in 2010-11 only 75% (decision-making stage) and 71%
(transparency stage) of Australian Government regulatory proposals complied with governments own
3
best practice regulation requirements . This demonstrates a lack of commitment to best practice
regulation processes, which is at odds with the rhetoric around reducing the regulatory burden.
Dairy industry participants recognise the importance of frameworks, especially for food safety and
environmental sustainability. However, policy and regulation regimes also have significant impact on
the cost structures of many agricultural enterprises including dairy farmers and processors.
The Dairy industry, like other Australian food industries, cannot carry any more regulatory costs or
disincentives to innovation than essential. Australian exporters need to continue to compete on price,
quality and delivery against rising competition.
Government should therefore reaffirm its commitment across all government sectors to the Best
Practice Regulation principles and approaches.
Private sector standards, self, and co-regulation
Regulatory issues faced by the dairy industry go beyond formal regulation, and in many cases
commercial imposts have far greater impact. Examples are numerous in the food industry and include
HGP free beef, sow stall free pork and permeate free milk. While government does not have a role in
developing commercial standards, they cant be ignored when considering regulatory burden and
impacts.
The dairy industry generally supports self-regulatory and co-regulatory approaches, where
appropriate. However, these can also have a regulatory burden (including reporting burdens) and still
need to be evidence-based, well-designed, practical, consistent with good regulatory principles, and
respond to actual market failure.
AgVet chemical regulation
Agricultural and veterinary (agvet) chemical regulations have been one area of particular concern in
recent years for dairy farmers. In this light, the dairy industry has supported the governments initiative
to modernize and simplify the legislation and to reduce the red tape associated with the use of agvet
chemicals on Australian farms. Effective agricultural chemicals and veterinary medicines are critical
for successful farm businesses and the importance of responsible use of chemicals is well understood
and supported by the dairy industry.
Dairy farmers need access to safe, affordable and effective agricultural chemicals and veterinary
medicines in order to manage pests and diseases that would otherwise threaten production of safe
food. This is also important to achieve satisfactory animal health and animal welfare outcomes.
2
Productivity Commission (2012) Regulatory Impact Analysis: Benchmarking, Draft Research Report, Canberra
Office of Best Practice Regulation (2011) Best Practice Regulation Report 2010-11, Department of Finance and Deregulation,
Canberra
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The dairy industry supports the removal of the requirement for agvet chemical re-approval and reregistrations, particularly where these products have a history of safe use. The re-registration process
has been an unnecessary burden with little justification. The reforms will reduce red tape, improve
efficiency and avoid the loss of established treatments.
The dairy industry looks forward to the introduction of the proposed legislative reforms and their
implementation by the Australian Pesticides and Veterinary Medicines Authority.
Front of pack labelling
The dairy industry does not support the Government initiative to introduce the Health Star Rating
Front of Pack Labelling Scheme (FOPL) in its current form. While we acknowledge the scheme is not
yet finalised, in its current form, the scheme is a clear example of regulation not meeting its policy
objectives. Under the scheme, the rating of core dairy foods remains inconsistent with the Australian
Dietary Guidelines and will not achieve the objectives of the scheme to guide consumer choice
towards healthier food options. For example, core dairy foods including every day foods such as
regular fat cheddar, ricotta cheese and yogurt are identified as core foods in the Australian Dietary
Guidelines yet at just 1 2.5 stars they are currently rating below discretionary foods and less than
the core foods benchmark set for the revised Health Star Rating Calculator of at least 3 stars.
Most Australians are failing to meet the recommended minimum consumption of dairy products in the
core food group each day. To empower consumers and minimise their confusion on healthier food
choices, it is important that any regulatory approaches such as the FOPL scheme are aligned to the
Australian Dietary Guidelines, conveying clear and consistent evidence-based ratings.
FOPL is also an example of a regulatory approach where the costs to industry and the government
are high, and yet the public benefits are not so clear. As noted above, the dairy industry endorses a
commitment by Government to best practice regulation processes and considers these processes
should be applied to the proposed FOPL scheme.
8. Enhancing agricultural exports

How can industries and government respond to the key challenges and opportunities to increase or
enhance exports?
How can the Government best take advantage of multilateral and bilateral trade negotiations
(including through the World Trade Organization and through free trade agreements (FTAs)) to
advance the interests of the sector?
How can engagement between industry and government on market access priorities for Australian
agricultural products be improved, including informing negotiations on FTAs?
What changes could be made to biosecurity arrangements, both in Australia and in other countries
that would enhance global trade in agricultural products?
How do we provide the appropriate biosecurity controls at minimum cost?
The Australian dairy industrys long-term growth and profitability is linked closely to its status as a
world competitive producer that can develop and retain global market positions.
Demand for dairy products will continue to grow with the expanding middle class in emerging markets
such as China, South East Asia and the Middle East, changes in diet and increasing urbanisation
together with a rising global population.
Given the right environment, the Australian dairy industry is well positioned to capitalise on this
growth. While the opportunities offered by growing international dairy demand are well understood, a
key question in the medium term is whether the Australian dairy industrys growth rate is sufficient to
maintain relevance in an expanding global market for dairy products. A large proportion of dairy
farmers are signalling little appetite for growth as the pressures on management, cash flows and
profitability increase. From this perspective, a lot of what government can do to facilitate exports has
been discussed in response to Issue 6: A competitive and productive food industry.
A goal such as doubling exports is meaningless. Concentrating on increasing profitability along the
supply chain through exports is a more useful goal than continuing to increase the volume of lowvalue commodity goods.
30
Government should focus trade development programs on increasing the value of what is exported,
rather than just increasing volumes. This is linked to the importance of innovation in process and
product technologies to achieve additional value, and governments role in supporting this innovation,
including through a food regulatory framework that encourages innovation. Trade strategies should
also focus on helping existing exporters increase exports, rather than simply seeking to expand the
number of exporters.
Trade agreements
Internationally, with no multilateral agreement on trade reform in sight, Australias ability to negotiate
significant FTAs with commercially meaningful outcomes will be critical to maximising returns for the
industry. The bilateral agreements negotiated by competitor countries will also have an important
bearing on trade flows, access to, and profitability in markets of choice.
Government should pursue comprehensive trade agreements with all relevant countries and regions
(within Asia: China, Indonesia, and India). This is critical to building long-term business partnerships
and defending existing commercial positions.
The Australian dairy industry is pleased that the Australian Government has managed to secure a
trade deal with the Republic of Korea in recent months. Once ratified, this deal will help to minimise
the competitive disadvantage that Australian dairy exporters have faced in that market since the
United States and European Union secured their own FTAs with Korea.
While the industry acknowledges that there are some minor gains for dairy from the recently
completed Japan FTA, overall, the ADIC has been extremely disappointed by the outcome with this
key trading partner. The deal will mean the Australian dairy industry will save just $4.7 million in the
first year of its implementation rising to an estimated $11.6 million by 2031. This is a very small
saving from the $120 million of total tariffs currently paid to the Japanese Government by Australian
dairy exporters.
The dairy industrys attention now shifts to the FTA with China, now our largest dairy export market.
It has been well reported that the NZ-China FTA has given New Zealand, one of Australias largest
competitors in dairy products trade, preferential market access in China. The estimated trade and
financial benefits for the New Zealand dairy industry have grown rapidly since implementation of the
China - New Zealand FTA on 1st January 2008. The six year period (2008-2013) has witnessed a:
Four and a half fold increase in WMP imports to 562,604 tonnes

Almost eight fold increase in SMP imports to 123,919 tonnes
The financial benefits to New Zealand origin milk powders from lower tariffs versus those paid by
competitors are estimated to have risen to between $40 and $50 million in 2014. This advantage
grows annually as the NZ-China FTA tariff reduction schedule matures each year.
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In negotiating trade agreements, streamlining requirements and technical barriers is also important.
For example, when Tariff Rate Quotas are used, the administration of these quotas in Australia or in
the importing country can be so costly and burdensome as to undermine any competitive gains from
having access to the quotas.
As well as opportunities in Asia, the dairy industry sees significant opportunities in the Middle East. A
comprehensive trade agreement with the Gulf Cooperation Council (GCC) should also be pursued.
This is critical not only to open up new opportunities, but to defend existing share given that the NZGCC FTA, once ratified, will give New Zealand preferential market access in the GCC countries.
From a competitive perspective, EU and US policy reforms will also play a role in shaping future dairy
trade flows as the removal of EU production quotas and the likely development of a new US Farm Bill
signal a new type of engagement with the international market. This in turn may change the markets
in which Australia competes.
The US industry is seeking to increase its export presence and has delivered a fourth consecutive
year of record exports by volume. New investments in milk powder production capacity and ongoing
programs to better meet international specifications and gain market share by US processors are
likely to see further inroads made in coming years.
The Australian dairy industry is also facing subsidised competition from the US industry-funded
Cooperatives Working Together (CWT) program.
The CWT program is subsidising American export products such as cheese and butterfat and
displacing Australian origin product in key dairy markets in Asia. This is having the additional affect of
undermining those commodity prices.
A further issue is that the increased use of non-tariff barriers in priority markets is affecting trade in
agricultural goods including dairy products. The Australian Government should increase its capacity
to work (in collaboration with industry) to identify and react to existing and new non-tariff barriers in
order to minimise impact on trade.
Agricultural counsellors
The Department of Agriculture, Agricultural Counsellor program needs to increase regional coverage
in South East Asia and the Middle East. In addition to existing posts, the program should be
expanded into the following three key emerging markets: Vietnam, the Philippines, and Saudi Arabia.
These countries are high potential growth markets whose needs cant be adequately met through
existing posts (for example, the Thailand posts coverage of key growth areas in South East Asia).
Agricultural Counsellor posts play a major role in Australias efforts to: remove or lower market access
barriers for agricultural products; facilitate trade; monitor emerging international issues; help resolve
quarantine issues; and, provide briefings and assist with visiting delegations.
Where Department of Agriculture, Agricultural Counsellors are located in markets, they can more
effectively engage directly with local officials/government representatives to address access issues as
they arise, and work proactively to identify and prevent non-tariff barriers affecting dairy imports.
As well as representation in key markets, representation in key competitor countries is also beneficial.
Given the role of the EU and the US as agricultural policy setters, on-the-ground representation for
Australia means issues can be addressed before they develop. Moreover, in the case of the EU, the
Commission is reluctant to engage directly with industry so government representatives are
needed as facilitators. A case in point has been consultations on Geographical Indications (such as
those on Danbo and Gouda Holland). Expansion of Agricultural Counsellor positions in emerging
markets should not be at the cost of existing posts.
International trade support structures
The structures that protect Australian exporters ability to defend against technical and regulatory
barriers also rely on a capability to operate effectively in:
World Trade Organisation (WTO) dispute settlement processes

International standard setting forums (Codex, OIE, WCO)
Monitoring and responding to WTO Sanitary and Phytosanitary (SPS) and Technical Barriers
to Trade (TBT) notifications
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FTA and bilateral review committees
The effectiveness of Agricultural Counsellors also relies on being able to draw quickly on expertise
back home, in the Department of Agriculture, as well as agencies like Food Standards Australia New
Zealand and Australian Pesticides and Veterinary Medicines Authority. These resources are also
critical to responding to technical barriers and need to be maintained as a priority.
As an export-oriented industry, international regulatory frameworks are important to Australian dairy.
The dairy industry invests significant resources in monitoring and contributing to international
standard setting, but much of this can only happen at a government-to-government level. It is a critical
role for the Australian Government to continue to actively contribute to and take a lead in these
international processes to support exports.
Government also needs to continue close collaboration with industry to ensure its efforts are focused
on priority issues and achieve practical outcomes that can be implemented by industry.
Consistency of approach
Like other food industries in Australia, the dairy industry needs protection from exotic diseases. A
strong, science-based biosecurity and quarantine system is non-negotiable. However, another
element of maintaining our livelihood is access to overseas markets. To maintain this access, we
need to ensure Australia does not leave itself open to criticism, complaint, challenge and ultimately
trade sanctions because of an unnecessarily harsh quarantine regime.
Australias leadership in international forums also means maintaining a commitment to both the spirit
and the letter of WTO agreements in biosecurity and quarantine systems, and to international
standards such as Codex Alimentarius.
The dairy industry has consistently argued for regulatory harmonisation at national and international
levels, whenever possible. To facilitate exports, Australia regularly asks other countries to adopt
Codex standards as a matter of course, and to adopt standards that allow for good agricultural or
veterinary practice in Australia, where this is not already covered in Codex. In the interest of
facilitating trade, the internationally accepted standards (Codex) should be adopted as a matter of
principle wherever possible. Australias credibility in negotiating access relies on a consistent and
science-based approach.
Promoting the Australian food safety system
Government should more actively and consistently promote the Australian food safety system,
seeking greater acceptance of our system as meeting importing country requirements, and reducing
costly additional requirements (for example audits, port of entry testing).
The Department of Agriculture also needs to actively promote the Australian food safety system and
seek acceptance by importing countries. The Codex framework offers opportunities to support these
principles with importing country governments and seek to streamline overseas requirements. This
would reduce the regulatory impost on food exports from Australia.
Equally as important, the Australian dairy industry has sought to have a streamlined approval to
domestic and international food safety regulations. The Department of Agriculture, as the competent
authority for approving dairy exports, has accepted the national dairy food safety system where
national food safety standards are implemented by state food authorities and the Department
recognises the state systems. Dairy businesses, while still having multiple commercial audits, are now
subject to a single food safety audit for domestic and export requirements. This is a good model that
needs to be actively promoted.
A robust biosecurity regime is fundamental to a dairy industry that is safe, productive and competitive
in the international market. Protecting the dairy industry, agriculture, and the wider community from
biosecurity incidents, and being prepared for a robust and efficient response to biosecurity issues
requires ongoing commitment to investment in biosecurity.
For the dairy industry, preparedness for foot and mouth disease is a particular priority. Foot-andmouth disease (FMD) has been described as the single greatest threat of any disease to Australias
livestock industries. A large outbreak of FMD has the potential to reduce Australian Gross Domestic
Product by $10.3 to $16.7 billion, having significant repercussions on our economy. The Australian
dairy industry seeks specific funding for FMD preparedness.
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As has been indicated previously, Australias enviable reputation for safe quality food relies on robust
systems that manage potential risks. A further area of potential risk is from imported animal feeds. It is
critical that Australia ensures not only that there are appropriate legislative and biosecurity
arrangements in place, but that they are implemented. This means that imported animal feeds must
have robust and verified production systems in place to manage potential risks associated with
chemical contaminants, invasive species and/or animal health.
The current procedure whereby a small sample of imported animal feed is inspected or tested at the
border is inadequate to manage the potentially substantive risks especially as animal feeds may not
be homogeneous products and the potential hazards not uniformly distributed throughout the animal
feed.
Attachment 1
Australian Dairy Industry Council

Policy Priorities Summary
Trade
Conclude FTAs, in particular the China FTA and the Trans-Pacific Partnership, that provide
genuine liberalisation of all dairy products and commercially meaningful opportunities for
Australias dairy industry, to reduce its comparative disadvantage to its major global competitors.
Increase the number of Agricultural Counsellor postings to help remove barriers to trade
(including nontariff barriers) in key international markets such as Vietnam, the Philippines and
Saudi Arabia.
RD&E Funding
Increase total Commonwealth expenditure on agricultural RD&E by one per cent (of total
Government expenditure on RD&E) by 2016 to ensure innovation and growth in the dairy industry
continues, and boost productivity along the supply chain.
Industrial Relations
Remove the 3-hour minimum engagement requirement from the Pastoral Award or make it more
flexible to acknowledge the unique workforce requirements of the dairy industry.
Include milking under essential services in the Pastoral Award 2010 relating to penalty rate
classifications, similar to feeding and watering stock to recognise that milking is an essential part
of animal care.
Immigration
Streamline and fast-track the application and approvals process for 457 visas for skilled dairy
workers, and reverse the restrictions on 457 visas introduced by the former Government.
Second a Department of Immigration and Citizenship (DIAC) Departmental Liaison Officer to ADF
to assist farmers with immigration matters.
Extend the duration of 417 and 462 visas from six to 12 months.
Include dairy on the list of eligible industries for the Seasonal Worker Scheme and on Schedule 1
of the Skilled Occupation List, and revise Australian and New Zealand Standard Classification of
Occupations (ANZSCO) skills descriptions for dairy farmers to align with industry skills
descriptions.
Farmer Health, Safety and Wellbeing
Commit $1.2 million over four years towards a Farm Safety Assessment Program, providing
grants to fund a 3-hour farm safety assessment (at $300 per assessment) to farmers, conducted
by an independent safety consultant.
Provide the National Centre for Farmer Health with funding of $500,000, matched by the Victorian
Government, to enable them to continue their valuable work in raising on-farm awareness of the
importance of health, safety and general well-being.
Infrastructure
Provide funding for strategic regional infrastructure projects beneficial to agriculture and regional
communities.
Deliver on the pre-election promise for funding for current and future rounds of the Roads to
Recovery program.
Finance and Risk Managements
Provide ongoing resources for the Rural Financial Counselling Service to offer one-on-one
sessions for farmers experiencing extreme financial hardship.
Introduce a new program, similar to the Commonwealths $5,500 Professional Advice and
Planning Grants for drought-affected farmers, for farmers experiencing extreme financial
hardship.
Commit to an improved Farm Finance Package including revised criteria for dairy farmers under
extreme financial hardship and improved drought assistance measures.
34
Biosecurity
Invest in preparedness for Foot and Mouth Disease and emergency disease response capability
and surveillance.
Competition Policy
Establish a mandatory Code of Conduct covering the whole supply chain to balance the market
power of the major retailers and appoint an Ombudsman with the powers to ensure compliance.
Modify the ACCC Collective Bargaining authorisation for dairy farmers to strengthen the
bargaining position of dairy farmers, providing further balance in market power to dairy farmers.
Agricultural Education
Classify agriculture and related tertiary courses (Agricultural Science, Agribusiness, etc.) under
the National Priority band for Commonwealth HECS-HELP assistance.
Deliver on the Governments $2 million pre-election promise to incorporate food and fibre
education into the National Curriculum.
Energy/Carbon Tax
Accord dairy processors Emissions-Intensive, Trade-Exposed (EITE) status under any carbon
pricing scheme until all major dairy competitors are subject to similar schemes.
Provide a BAS claim rebate for carbon price costs on power bills for dairy farms, similar to the
diesel rebate for cropping and grazing enterprises.
Ensure adequate funding in emissions reduction programs, including related research, to assist
the dairy industry in undertaking energy efficiency assessments, and to transition to renewable
energy technology and energy efficient equipment.
Water
Murray Darling Basin Plan implementation confirm a clear plan for capping buybacks at
1500GL, and delivering 600GL in infrastructure works and 650GL in environmental works.
Healthy Soils and Waterways
Provide funding for on-farm nutrient testing and management plans to reduce farmers fertiliser
costs, boost soil productivity, and keep waterways and lakes clean.
Provide funding for integrated biodiversity management on farms that boosts productivity, such as
shelter belts for stock and fencing off waterways.
Agricultural Competitiveness White Paper Resourcing
Provide sufficient resources for the implementation of recommendations generated from the
Agricultural Competitiveness White Paper.
Utilise existing research from the National Food Plan (please see the ADIC and DA submission in
response to the National Food Plan Green Paper at attachment 2) and the Asian Century White
Paper to assist with implementation of the above recommendations.
35
Attachment 2:
Australian Dairy Industry Submission to

the National Food Plan Green Paper 2012
36
Australian Dairy Industry

Represented by
Australian Dairy Industry Council Inc. and
Dairy Australia
Response to
National Food Plan Green Paper
Contacts
DA:
Charles McElhone Group Manager Trade & Industry Strategy

03 9694 3763 I CMcElhone@dairyaustralia.com.au
Level 5 IBM Centre 60 City Road, Southbank Victoria 3006
ADIC: Natalie Collard Chief Executive Officer, Australian Dairy Farmers

03 8621 4200 I ncollard@australiandairyfarmers.com.au
September 2012
Contents
The Australian Dairy Industry .................................................................................................................. 2
Key points................................................................................................................................................ 3
Strategic policy priorities ......................................................................................................................... 4
Response to questions in the green paper ............................................................................................. 6
Chapter 3 Australias food policy framework .................................................................................... 6
Chapter 4 Australias food security ................................................................................................... 8
Chapter 5 Safe and nutritious food ................................................................................................. 10
Chapter 6 A competitive and productive food industry ................................................................... 12
Chapter 7 A strong natural resource base ..................................................................................... 21
Chapter 8 Food trade and market access ...................................................................................... 24
Chapter 9 Global food security ....................................................................................................... 29
The Australian Dairy Industry

The dairy industry is one of Australias major rural industries. Based on farm gate value of production,
it is ranked third behind the beef and wheat industries. There are approximately 6,900 farmers
producing close to 9.5 billion litres of milk annually, for a farm gate value of just under $4 billion.
The dairy industry welcomes the chance to present this submission in response to the National Food
Plan green paper.
This is a joint submission from the Australian Dairy Industry Council (ADIC) and Dairy Australia.
The ADIC is the national peak policy body for the Australian dairy industry and represents all sectors
of the industry on issues of national and international importance. Its constituent organisations the
Australian Dairy Farmers Limited (ADF) and the Australian Dairy Products Federation (ADPF)
represent the interests of dairy farmers, manufacturers, processors and traders across Australia.
Dairy Australia is the dairy industry-owned service company, limited by guarantee, whose members
are farmers and industry bodies, including the ADF and the ADPF.
Australian Dairy Industry response to National Food Plan Green Paper
Key points
Australias food policy framework
The National Food Plan needs to achieve an integrated vision for food, beyond just DAFFs
sphere of influence. A Ministerial Food Forum, and arrangements with states and territories
through COAG, should be structured to support this.
Australias food security
A State of the Food System should be undertaken on a regional basis, to properly reflect
regional issues and needs.
Safe and nutritious food
The National Food Plan should put forward specific strategies to improve integration with
National Nutrition Policy, and to improve partnerships between government and primary
industry bodies to increase consumption of core foods.
A competitive and productive food industry
A working group to prepare a workforce development strategy should be established as
proposed in the green paper. This should extend beyond the agriculture sector, and explicitly
acknowledge and address employment and training issues across the whole food sector.
Government should develop a national strategy on the consistent application of modern
biotechnology (including genetically modified crops) in agriculture.
The current rural Research and Development Corporation (RDC) model (particularly as it
applies to dairy) remains fundamentally sound. It is an effective avenue for addressing crosssectoral issues by way of strategies developed through the RDC network. Additional
government funding should be directed to these areas of cross-sectoral investment.
Alignment of research and development post-farm gate is also critical. The dairy industry
supports the National Food and Nutrition Research and Development and Technology
Transfer Strategy as a vehicle for better collaboration, as well as sector-specific, industry-led
innovation hubs such as Dairy Innovation Australia Limited (DIAL).
Government should introduce ongoing mechanisms to identify regulatory reform opportunities
and should reaffirm commitment to the Best Practice Regulation principles and approaches.
Reforms to the regulation of minor use chemicals should be pursued as a priority.
Australian Dairy Farmers (ADF) is keen to participate in a forum to examine options to better
manage supplier/supermarket chain relationships that results in action to balance the market
power of the major retailers.
A strong natural resource base
Further research into soil and water, and other natural resource base issues is supported
the existing RDC network offers an avenue for investing in this research
Food trade and market access
The capacity for direct representation on specific trade issues in key markets should be
increased, particularly through the DAFF International Agricultural Counsellors. Vietnam,
Philippines and Saudi Arabia are high priorities for expanding the Counsellors network.
The Imported Food Control Act 1992 should be reviewed, and the review should also
consider the need to develop an Imported Feed Control Act to manage risks from imported
animal feed.
Strategic policy priorities

Dairy supports the National Food Plans key outcome of:
A sustainable, globally competitive, resilient food supply, supporting access to nutritious and
affordable food.
Achieving this outcome requires a truly integrated vision across government. While the green paper
has recognised the breadth of influences on food, the proposed practical actions are concentrated in
areas within DAFFs direct sphere of influence. This is a missed opportunity.
The Australian Government needs to broaden its approach. To this end, dairy has identified the
following priority strategic policy areas:
Investment in research, development and extension
Market access
People
Health and nutrition
Supply chain issues
While some of these fall outside what is covered in the green paper, the dairy industry believes it is
nonetheless important to highlight how practical government action in these areas will improve the
National Food Plans capacity to achieve its key outcome.
1. Investment in research, development and extension

Substantial ongoing government investment in agricultural and food processing innovation is required
to keep boosting productivity along the supply chain.
The current rural Research and Development Corporation (RDC) model (particularly as it applies to
dairy) remains fundamentally sound and effective. Strong, industry-based RDCs are uniquely
positioned in their capacity to translate broad, high-level knowledge into effective, industry-based
solutions. The existing rural RDC network also provides an avenue for increasing research in crosssectoral issues.
Cooperative Research Centres also play an important role in developing new science and research
and development capacity within the industry. Their close association with industry enables industryrelevant commercial outcomes. The Dairy Futures CRC in particular is making a valuable contribution
to the dairy industry,
Alignment of research and development post-farm gate is also critical. The dairy industry supports the
National Food and Nutrition Research and Development and Technology Transfer Strategy as a
vehicle for better collaboration, as well as sector-specific, industry-led innovation hubs such as Dairy
Innovation Australia Limited (DIAL).
The design of investment is also important, particularly translating research findings on new
technologies and farming systems into general productivity gains. Any review of research investment
models also needs to consider appropriate support for development and extension.
2. Market access
Increasing use of non-tariff barriers in international markets is constraining market access for dairy
exports. DAFF Agricultural Counsellors play a major role in removing or lowering such barriers,
because they can more effectively engage directly with local officials to address access issues as
they arise, and work proactively to identify and prevent non-tariff barriers affecting dairy imports.
Increasing the number of Agricultural Counsellor postings is among the most effective measures the
Australian Government (DAFF) could take to maintain and expand market access. To this end, the
dairy industry urges the government to expand the Agricultural Counsellors postings program into the
following three key emerging markets: Vietnam, the Philippines, and Saudi Arabia.
3. People
The future of dairy depends on recruiting, training and retaining the next generation of farmers, food
scientists, processing workers and industry service providers.
The dairy industry has been actively engaging in strategies to attract, retain and develop a skilled
workforce. However, government policy and funding decisions are undermining industry programs to
attract and retain people in dairy. Specific issues include:
Lack of priority of Vocational Education and Training (VET) funding into courses targeted at
industries with acknowledged skill shortages, such as dairy.
Red tape in the visa approval system leading to long delays in recruiting skilled employees
from overseas to fill skills shortage gaps a review of this process is necessary, in particular
457 Visas, to streamline and improve industry access to overseas workers to fill skills
shortage gaps.
Fair Work Australia Modern Award Review minimum engagement provisions not reflecting
working practices on dairy farms.
The industry welcomes the National Food Plan proposal to establish a working group to prepare a
workforce development strategy focusing on ways to better use existing labour and skills initiatives.
The strategy should extend beyond the agriculture sector, and explicitly acknowledge and address
employment and training issues in food processing.
4. Health and nutrition

The dairy industry recognises the need for policy and regulatory initiatives to address the increasing
rates of obesity and related non-communicable diseases in Australia. It is critical that these policies
and initiatives recognise the health benefits of diets based on nutrient-rich, core foods such as milk,
cheese and yogurt, rather than focussing on a narrow range of negatively perceived nutrients. This is
consistent with the most up-to-date scientific evidence as recognised in the evidence statements used
to develop the National Health and Medical Research Council (NHMRC) draft Australian Dietary
Guidelines.
Poorly targeted or non-evidence based efforts that reduce dairy consumption are a regulatory burden
on industry, and could be counterproductive in achieving the desired health outcomes. The Australian
Government needs to support an evidence-based approach to encouraging healthy eating, starting
with the Australian Dietary Guidelines based on the NHMRCs own evidence statements showing
consumption of milk, cheese and yogurt is linked to positive health outcomes. Low dairy food intake is
a serious problem in Australia. Most Australians dont currently consume enough core dairy foods to
access these health benefits.
5. Supply chain issues

Australian Dairy Farmers (ADF) is keen to participate in a forum to examine options for better
managing supplier/supermarket chain relationships that results in action to address and balance the
current excessive market power of the major retailers. It is vital that farmers and farmer
representatives are involved in this forum from peak bodies such as the National Farmers Federation
and the ADF.
In particular, the ADF supports:
A code of conduct for supermarket companies in their dealings with processors and farmers;
and,
Establishing an ombudsman to enforce compliance, investigate complaints from a whole-ofsupply chain perspective, administer a cost-effective dispute resolution process with
appropriate penalties, and publicly report.
Response to questions in the green paper

Chapter 3 Australias food policy framework
3.1
Do you agree with the proposed outcome and objectives outlined in this green paper to guide
the Australian Governments development of food-related policy and stakeholder consultation
mechanisms?
Integrated vision
Government activities that affect food cover a wide range of areas including policy, regulation,
education and training, investment in research and development, and industry development.
Currently this involvement is piecemeal, inconsistent, sometimes overlapping and often defined
by capability and available policy tools rather than any shared understanding of roles and
responsibilities or overarching strategy.
The National Food Plan needs to achieve an integrated vision across multiple departments,
beyond just DAFFs sphere of influence. While the discussion and objectives in the green
paper recognise the breadth of influences on food, the practical options proposed are
concentrated on actions in areas within DAFFs direct influence, missing an opportunity to
achieve a truly integrated vision across government.
The dairy industry is concerned that while objectives are set in areas beyond DAFFs direct
influence, there is no indication that the relevant agencies support these objectives or the
integrated vision for food policy. Actions in other areas of government may undermine or
compete with the National Food Plans overarching objective. Our response to Chapter 5: Safe
and Nutritious Food, and Chapter 7: A Strong Natural Resource Base provides some examples.
Whole supply chain approach
Food industries need to be viewed as integrated supply chains. Milk is a perishable product,
which must be processed before it can be sold commercially. As a result, dairy production is
integrated across the supply chain: dairy farmers cannot operate without domestic processing
capacity, nor can processors survive without domestic farm milk supply. While the rhetoric
around an integrated approach acknowledges this, few of the practical actions proposed
address issues that cut across the supply chain.
Our response to Chapter 6: A Competitive and Productive Food Industry provides some
examples of actions that should be extended to other areas of the supply chain.
3.2
The Australian Government is seeking feedback on a number of alternatives to improve

leadership and stakeholder engagement on food policy issues. These alternatives are set out in
Section 3.4.1.
Do you have a preference for a particular alternative or a specific suggestion for another
mechanism that would provide better leadership, coordination and stakeholder engagement on
food policy issues in Australia?
A robust and long lived commitment to an integrated vision for food policy and commitment to
implementing the actions proposed in the National Food Plan will be essential to encourage
investment in the long-term future of the food industry. The mechanisms proposed are less
important than achieving better engagement and alignment across all policies impacting on
food. This needs bipartisan support, and commitment beyond short-term political cycles.
Ministerial Food Forum
To the extent that a Ministerial Food Forum is structured to ensure an integrated vision of food
policy, the dairy industry supports the establishment of a forum.
The forum should include key Ministers (such as: Agriculture, Health, Industry and Innovation,
Environment, and Trade) to reflect the integrated food supply chain and the potential for food to
provide health solutions. Others should also be able to be included when actions within their
portfolios will affect the food industry (for example, the Chemicals of Security Concern work in
the Attorney Generals portfolio, which is aimed at terrorism activities but has potential
implications for food production), or where otherwise relevant (for example, Infrastructure,
Education and Training, Climate Change).
The terms of reference for the forum should focus on ensuring all impacts of policies affecting
food are considered, that the policies are not undermining efforts in other areas, and providing
a mechanism for developing cross-cutting solutions.
Stakeholder Committee
A Stakeholder Committee to provide advice on food issues would need to comprise
representatives from all supply chain sectors, including primary producers, processors, and
retailers. While the committee may provide one useful avenue for engagement, it should not be
seen as a replacement for wider industry consultation.
COAG arrangements
These mechanisms also need to coordinate with food policy setting through COAG and
associated Ministerial Councils, recognising that states and territories have responsibility for
much of the policy affecting food.
Current arrangements, as stated in the green paper, are through the Standing Council on
Primary Industries (SCoPI), and the Legislative and Governance Forum on Food Regulation.
In practice this means that the avenues through which food issues are addressed are either
focused only on the primary production end of the supply chain, or are about regulation.
For many of the challenges the system is being called upon to address, regulation (in the form
of formal standards etc) will not be the best outcome, nor are they just primary production
issues.
As it currently stands, there is no way for any improvements in integration at the federal level to
be reflected at COAG, except through the Legislative Forum on Food Regulation. Recognising
that food policy does not equal food regulation, the dairy industry supports the green paper
proposal of increasing engagement with states and territories, through COAG, on food-related
policy using the National Food Plan as a reference point for improved coordination.
Chapter 4 Australias food security

4.1
Do you agree with the analysis that, broadly speaking, Australia is food secure? If not, why not?
Please be specific and provide evidence to justify your position. What additional data could the
government draw on to measure Australias food security?
Food security
The dairy industry broadly agrees with the green papers analysis of Australias food security.
The future of the food supply is tied to the ongoing viability of food industries. Food businesses
along the supply chain must be both profitable and sustainable in the long term to ensure
Australians continue to have access to a nutritious, secure food supply. To support this,
consumers need to value the food they purchase, beyond short-term price concerns.
Dairys strong trade position supports its competitiveness and sustainability, which are essential
for maintaining domestic and global food security.
Our responses to Chapter 7: A Competitive and Productive Food Industry, and Chapter 8: Food
Trade and Market Access are also relevant here.
State of the Food System report
To be useful, a State of the Food System report should be undertaken on a regional basis, to
reflect regional food system issues.
For example significant regional differences continue to characterise the Australian dairy
industry based on market and product mix, farmer confidence as well as current and future
growth prospects.
Like the national economy, the dairy industry continues to be characterised by two speeds
growth and consolidation in exporting regions, contrasted with faltering confidence and
contraction in domestic milk regions.
For most farmers in south-eastern Australia, international conditions determine prices and
industry confidence.
In Queensland, central and northern New South Wales and Western Australia the industry is
geared toward domestic fresh milk supply. Ongoing intensity in retail competition, unsustainable
pricing of milk at $1 per litre, disruptions caused by changes in private label supply contracts
and uncertainty surrounding processor milk requirements have undermined farmer confidence
and supply stability.
While overall supply remains good, these regional differences affect the food system within
regions, and ultimately the sustainability of a local fresh milk supply. Analysis at the national
level fails to show this nuanced picture.
The data collected for a State of the Food System report will be important to support evidencebased policies and programs in the future that properly reflect regional issues and needs.
4.2
The Australian Government is seeking feedback on the option of working with state and territory
governments and the food industry to develop strategies to mitigate risks and maintain
continuity of the food supply in a major emergency. Section 4.5 of Chapter 4 outlines some
options. Do you support these options? Do you have specific suggestions for other options or
strategies?
Food supply in an emergency
The dairy industry is actively engaged with and supports current efforts to maintain the
continuity of the food supply in a major emergency, and is keen to contribute to further work, as
outlined in the green paper.
During an emergency/natural disaster, transportation and particularly road access are critical to
ensure milk can be moved from farm to factory, and final products can be supplied to retailers
and on to consumers. This also applies to the transport of emergency supplies for livestock
welfare and ongoing production.
In recent emergencies (for example floods in Victoria and Queensland) the industry worked with
authorities to ensure transport access was maintained wherever possible. Communication with
industry and practical flexibility (for example mapping safe routes and allowing milk trucks
through otherwise closed roads) are important in an emergency.
Resumption of power is also critical to allow continued milking and alleviate animal welfare
issues, as well as for cooling milk so that it does not have to be discarded.
4.3
Do you agree with the analysis of the factors that contribute to individual food security? Do you
support the approaches outlined? Do you have specific suggestions for other options or
strategies?
Individual food security
Clear integration is important between the National Food Plan, a National Nutrition Policy and
efforts to ensure that all Australians consume healthy amounts of nutritious core foods.
Currently individual food security tends to be measured by access to fruits and vegetables.
However, Australians generally do not consume enough dairy foods to get their minimum
recommended intake of essential nutrients. Under-consumption is even more marked in
vulnerable groups such as teens and the frail elderly, for whom the health implications of poor
nutrition are even more serious.
This issue needs to be addressed with a clear integrated policy framework, as discussed in our
response to Chapter 5: Safe and Nutritious Food.
Chapter 5 Safe and nutritious food

5.1.
The Australian Government has strategies, policies and programs in place to:
ensure all Australians have access to a safe and nutritious food supply
support healthy lifestyles
reformulate foods, improve food labelling and educate consumers
improve nutritional outcomes for Indigenous Australians
provide a comprehensive and effective food safety regulatory environment
build capacity to control known and emerging food safety risks.
This green paper provides details of these initiatives and outlines the Australian Governments
future policy directions, including the development of a national nutrition policy.
Are there additional issues the government should focus on in its future policy directions? What
factors should the government consider in developing new, and reviewing existing, polices and
programs?
Nutritious food
The dairy industry recognises the need for policy and regulatory initiatives to address the
increasing rates of obesity and related non-communicable diseases in Australia. To successfully
address these important issues it is critical that policies and initiatives recognise the health benefits
of diets based on core foods, rather than focussing on a narrow range of negatively perceived
nutrients. This is consistent with the most up-to-date scientific evidence as recognised in the
evidence statements for core dairy foods (milk, cheese and yogurt) used to develop the draft
Australian Dietary Guidelines.
Efforts to encourage healthy eating (such as front of pack labelling, school canteen guidelines,
health claims regulation and the Food and Health Dialogue) should promote and recognise the
health benefits of core foods recommended in the Australian Dietary Guidelines, particularly those
that are currently under-consumed.
The health and economics case to encourage increased dairy consumption is strong. Low dairy
intake is already a serious problem in Australia seven out of ten females and six out of ten males
1
2
(12 yrs +) fail to get their minimum recommended intake . The situation is worse for teens . New
research indicates the estimated healthcare cost attributable to low dairy product consumption is
3
comparable with total spending on public health in Australia ($2 billion in 2009-2010) .
Poorly targeted or non-evidence-based efforts that reduce dairy consumption are not only a
regulatory burden on industry, but could be counterproductive in achieving the desired health
outcomes.
Integrating the National Food Plan with National Nutrition Policy would have real benefits by
putting nutrition policy in the context of the food system, and the foods people actually eat, rather
than focussing on a narrow range of nutrients.
The National Food Plan should put forward specific strategies to improve integration. The
proposed Ministerial Food Forum may go some way to achieve this, but given the increasing
pressure to pursue nutrition outcomes through food regulation, a more structured collaboration
may be required.
Australian Dietary Guidelines
The National Health and Medical Research Council (NHMRC) is proposing to encourage
Australians to consume mostly reduced-fat dairy products in its current review of the Australian
1
Doidge & Segal (2012) Most Australians do not meet recommendations for dairy consumption: findings of a new technique to
analyse nutrition surveys. Australian and New Zealand Journal of Public Health 36: 236-40.
2
Baird, DL, Syrette, J, Hendrie, GA, Riley, MD, Bowen, J and Noakes, M. (2012) Dairy food intake of Australian children and
adolescents 216 years of age: 2007 Australian National Children's Nutrition and Physical Activity Survey., Public Health
Nutrition.
3
Doidge, Segal & Gospodarevskaya (2012) Attributable risk analysis reveals potential healthcare savings from increased
consumption of dairy products. Journal of Nutrition 142: 1-9 (In Press).
10
Dietary Guidelines. This proposal ignores the NHMRCs own evidence statements confirming that
the many health benefits of milk, cheese and yoghurt apply to all dairy products, not only reduced
fat varieties. This perpetuates a perception that regular fat milk, cheese and yoghurt are somehow
unhealthy and linked to obesity when in fact, the NHMRC 2011 review of the evidence confirmed
that the many health benefits of milk, cheese and yoghurt apply to all dairy products, not only
reduced fat varieties.
The Australian Government needs to support an evidence-based approach to encouraging healthy
eating, starting with Australian Dietary Guidelines based on the NHRMCs own evidence
statements.
Addressing all core foods
Initiatives devised to encourage healthier food choices also need to address the range of core
foods that are under-consumed, not just fruit and vegetables.
For example, the COAG National Partnership Agreement on Preventative Health provides funding
to state health departments for implementing nutrition policy. One desired outcome is to increase
the proportion of the population who meet national guidelines for healthy eating. However
performance measures are focused mainly on fruit and vegetables. As a result state health
departments focus their activities only on fruit and vegetable consumption, rather than reflecting all
core foods that are under-consumed.
The National Food Plan should consider ways to improve partnerships between government and
primary industry bodies (including rural Research and Development Corporations) to increase
consumption of core foods.
Improved data
Evidence-based policy making in the Australian context requires regular, coordinated population
health and nutrition surveys, along with a robust health and nutrition research program.
The current Australian Health Survey 2011-13 is urgently required to update the data from the
1995 National Nutrition Survey, and the extension of the health information collected is a useful
step forward. To properly support evidence-based policy this information needs to be collected
much more frequently and consistently.
Food safety
The dairy industry has a history of working with federal and state regulatory agencies to ensure
food safety regulations are outcomes-focused, science-based and proportionate to risk. This
streamlines the common objectives of both government and industry for safe dairy food
production, without added regulatory burden. Furthermore, it allows businesses to innovate and
incorporate technology changes while continuing to identify and manage their food safety risks.
The Australian food safety system needs to be actively promoted and all supply chain participants
encouraged to continue to undertake their responsibilities.
11
Chapter 6 A competitive and productive food industry

6.1
This green paper sets out the governments proposed approach for supporting productivity
growth and global competitiveness in the food industry, which includes: a market-based policy
approach; ongoing reforms to improve biosecurity and help industry adapt to climate change
and drought; fostering and investing in innovation; building human capability and a skilled
workforce; better regulation along the supply chain; effective competition laws; and broader
infrastructure investments and regulatory reforms.
Are there gaps or deficiencies in this proposed approach?
Australia sells almost half its annual milk production directly into export markets as
manufactured food products and ingredients. At the same time, Australia applies minimal
barriers to commercial dairy imports. The dairy industry therefore recognises the importance of
remaining competitive in a global market. Regulatory burdens and high costs in areas such as
labour, energy and infrastructure all affect the competitiveness of the industry.
In addition to responses to questions below, human capability and a skilled workforce are
among the most important issues that will affect the dairy industrys future. The adoption of
new technologies and added complexity will place increased demands on the people in dairy in
the future. Priorities include leadership development; assisting the development of skills on
farm, in the service sector, and in processing; and, further development of formal training and
education and career pathways in the industry.
Farm workforce development
Dairy farms have become increasingly complex to manage. As farms grow, reporting and
compliance requirements grow more complex, and technology plays an expanding role in milk
production, the skills of the people required to successfully run a dairy farm are changing.
The 2012 National Dairy Farm Survey paints the changing picture of farm management and
labour structures. The proportion of dairy farms operated by a single person, or with a partner,
was 29% in 2012 compared to 43% in 2007.Nationally, some 68% of farms operate with paid
employees, up from 64% in 2011. An estimated 32% of paid staff are employed on larger farms
(comprising 301 to 500 cows), which represent 24% of all dairy farms across the industry.
Thus people management skills, as well as animal and technology management, are becoming
more critical.
Food processing workforce development
People issues are not just confined to the farming sector. The analysis in the green paper is
focused on issues in the primary production sector, but the labour supply issues also facing the
food processing sector should not be ignored
Reforms to agricultural education alone will not address issues facing food processing such
as shortages of skills in food science and technology, microbiological risk, and process
optimisation. The food industry requires people with skills to enable multidisciplinary
approaches to allow companies access to appropriately trained problem solvers and
innovators.
Industry and government actions
Dairys future depends on recruiting, training and retaining the next generation of farmers, food
scientists, processing workers, and industry service providers.
The dairy industry has been actively developing and implementing strategies to attract, retain
and develop a skilled workforce (for example Cows Create Careers, National Centre for Dairy
Education Australia, Dairy Innovation Australia, postgraduate scholarships).
However, government policy and funding decisions are undermining industry programs to
attract and retain more people in dairy.
12
Specific issues include:

Lack of funding priority for Vocational Education and Training (VET) courses targeted
at industries with acknowledged skill shortages, such as dairy. Specific issues (mostly
state-based) include the need to recognise Agriculture dairy farmer workers and
managers on skills shortage lists for eligibility to state and federal programs, and the
ineligibility for funding of people with existing qualifications, even in areas of skills
shortage.
Red tape in the 457 Visa approval system leading to delays in recruiting skilled
employees from overseas to fill skills shortage gaps.
The Fair Work Australia Modern Award Review (Pastoral Award [MA000035]) minimum
engagement provisions, where no minimum engagement provisions or a minimum
engagement of two hours instead of the current three hours would better reflect the
working practices on dairy farms and facilitate employment and productivity.
Structural impediments to teaching of food science and technology by universities,
including cost of appropriate teaching models.
The industry welcomes the National Food Plan proposal to establish a working group to
prepare a workforce development strategy focusing on ways to better use existing labour and
skills initiatives. While industry has an important contribution to make, the dairy industrys
experience has shown the importance of government involvement, at both state and federal
levels, to ensure that policy and funding decisions support industry programs.
A workforce development strategy should extend beyond the agriculture sector, and explicitly
acknowledge and address people issues across the whole food sector.
The strategy should consider how to address areas of skills shortage, such as food science and
technology, food safety and microbiology and agriculture, for example through targeted
scholarships.
The strategy should also consider the importance of making living and working in regional
areas attractive to the next generation. Dairy employs more than 40,000 people directly on
farms, in factories and in associated transport roles across regional Australia. Strategies for
upskilling this regionally based workforce are critical, and would be facilitated by infrastructure
such as high speed internet in regional areas through the National Broadband Network.
6.2
The government is seeking to increase the value of Australias food exports from across the
supply chain, including the value-added component.
a)
Do you think that a target of doubling the value of our food exports by 2030 is
achievable? If not, what target would be?
b)
How could this be achieved in a market-driven economy like Australia? What would
government and business need to do?
c)
What would be the costs and benefits of these actions?
See response to Chapter 8: Food Trade and Market Access
6.3
The use of new technology in food products is likely to be increasingly important in Australia
and around the world, helping to meet evolving desires and needs of sophisticated consumers
and ensuring an adequate global supply of food for a growing population. However, some
people are concerned about new technology despite substantial regulatory arrangements to
manage any potential risks.
What should governments, businesses, peak associations and consumers be doing in
response to this trend?
13
New technologies
Innovation and the use of new technologies will be essential to improve productivity,
differentiate and improve existing products and expand export opportunities.
Support for research and infrastructure to translate basic science to practical applications will
be essential to enable Australia to be truly innovative and reap the benefits of investment
through the application of new technologies in the food sector. With a perishable product, the
dairy sector is particularly reliant on processing to open opportunities to increase returns.
Government support for sector change through the introduction of new technologies should be
considered.
Regulation of new technologies
The dairy industry supports the need for a robust regulatory approach to assure consumer
confidence and safety with regard to new technologies.
At the same time, regulation must be evidence-based and proportionate to risk, and should
encourage rather than stifle innovation that benefits both consumers and industry.
The dairy industry recommends that policies be developed that allow the integration of
innovative new products and processes into the regulatory framework without impeding
competition or trade (both domestically and internationally) and that apply equally to imported
and domestic products.
This includes a role for government agencies such as Food Standards Australia New Zealand
(FSANZ) in managing consumer perceptions so that a requirement for a pre-market
assessment is not misinterpreted as indicating an unsafe product. If a new technology is
deemed safe, it is a responsibility of regulatory authorities to communicate effectively to all
stakeholders, including consumers, to help allay unwarranted concerns and anxieties.
Biotechnology
The dairy industry considers that biotechnologies offer significant potential benefits to
producers, processors and consumers, and to Australia.
Through the Dairy Futures Cooperative Research Centre, the industry invests in research into
pasture and animal biotechnology applications.
A clear and transparent regulatory system is required for the confidence of all stakeholders.
The current regulatory arrangements through the Office of the Gene Technology Regulator
(OGTR) and FSANZ are appropriate. The dairy industry supports current requirements for
labelling, but would be concerned if the standards provisions were extended to foods that may
be produced using gene technology but do not in themselves contain any novel DNA or protein.
As well as ensuring these rigorous safety requirements, government also has an important role
to play in supporting new technologies such as biotechnology and addressing barriers that
constrain development and adoption.
The dairy industry fully supports a national strategy on the consistent application of modern
biotechnology (including genetically modified crops) in agriculture, including considering
constraints to adoption and the path to market. This should also look at the potential
advantages offered by biotechnology developments, review consumer expectations and
consider communications to allay consumer concerns.
6.4
One option to increase agricultural productivity to help the sector meet future export growth
opportunities and challenges, such as increasing productivity growth in a changing climate, is to
increase rural R&D investments over a number of years. This would be in addition to continually
seeking better ways to increase the overall benefits of this investment.
a)
Is this the best way to help the agricultural sector meet the challenges and opportunities
of the coming decades? Why/why not?
b)
What would be the costs and benefits of this approach?
14
c)
How could any additional investment be targeted to achieve the greatest overall benefit
to Australia?
Substantial ongoing investment in agricultural and food innovation, including research,

development and extension (RD&E), will be required to keep boosting productivity along the
supply chain.
Research, development and extension model
Increased funding is critical, and well-supported by the evidence of significant benefits to
industry and the Australian community through productivity growth, higher living standards and
a wide range of social and environmental spillovers from investment in rural RD&E. These
include a safe and stable food supply, improved human health and nutrition, an enhanced
national knowledge and skills base and improved environmental conditions arising from
4
sustainable on-farm management practices.
Investment program design is also important, particularly in translating research findings into
new technologies and farming systems to generate whole-of-chain productivity gains.
Declining state financial and policy support for development and extension services is shifting
responsibility for leading, funding, and managing development and extension. Continued
government investment in these areas, driven by industry needs, is required to keep boosting
farm productivity.
Any review of research funding or investment models also needs to consider models for
development and extension.
Rural Research and Development Corporation network
As recognised in the Australian Governments Rural Research and Development Policy
Statement, the current rural Research and Development Corporation (RDC) model (particularly
as it applies to dairy) remains fundamentally sound and effective.
Strong, industry-based RDCs have a key role to play in delivering desired outcomes because of
their unique positioning and capacity to translate broad, high-level knowledge into effective
industry-based innovation and solutions.
Challenges such as climate change will require increased cross-sectoral collaboration in
research, development and extension. The existing rural RDC network provides a funding
framework for addressing these cross-sectoral priorities based on strategies agreed between
government and the RDCs. Dairy Australia is actively engaged in this work through the RDC
network.
Pursuit of these cross-sectoral strategies should not be at the expense of industry productivity
growth, and additional government funding should be directed to these areas of cross-sectoral
investment.
Cooperative Research Centres
Cooperative Research Centres (CRC) play an important role in developing new science and
R&D capacity within the industry. Their close association with industry enables industryrelevant commercial outcomes.
The Dairy Futures CRC has taken extremely positive steps towards developing technologies
that will potentially double the rate of genetic gain of the Australian dairy herd. Similarly, the
development and use of CRC technologies to boost pasture productivity are also yet to realise
their full potential but may deliver transformational improvements to Australian dairy industry
productivity.
While the Australian dairy industry is hopeful that the technologies being developed within the
Dairy Futures CRC will be available for industry use by the end of the CRC funding period, it is
vital that government closely monitors programs such as these to ensure that funding streams
are secured so that research programs can fully reach their potential.
4
Mullen, J.D. (2007) Productivity growth and the returns from public investment in R&D in Australian broadacre agriculture,
Australian Journal of Agricultural Economics, vol. 51, pp. 35984.
15
Food processing innovation

The green paper focuses on rural R&D and in doing so fails to acknowledge that much of the
value in the food industry is generated post-farm gate; significant innovation occurs here, too.
The dairy industry adds value through processing to produce drinking milk, cheese, butter, milk
powders, cream, yoghurts and a range of specialty products. The estimated value of farm
production is $4 billion annually and total value-added production (ex-factory) is $12 billion.
Increasing productivity for food therefore relies on research, development and extension/
commercialisation all the way along the supply chain. Milk, unlike many other raw materials,
must be processed to preserve its integrity; this strengthens the focus on a supply chain
approach to value-adding in this industry. With comparatively low domestic dairy prices and a
competitive international market, innovation to drive improvements in dairy manufacturing and
processing is imperative.
Research and development-led innovation includes improvements in all parts of the processing
chain improved equipment and processes that create production efficiencies as well as new
product development.
Accordingly, Dairy Australia invests in innovation across the supply chain. In particular Dairy
Innovation Australia Limited (DIAL), established in 2007 and led and funded by the dairy
processing industry in conjunction with Dairy Australia, responds to this need for innovation.
Working as a single entity with multiple Australian dairy companies, DIAL provides a
precompetitive research capability much greater than could be achieved through an equivalent
level of individual company R&D activity.
Sector-specific, industry-led innovation hubs such as DIAL have proved successful in
generating and directing R&D investment in areas of market failure, and translating this
collectively funded research to commercial outcomes.
An increase in government investment is needed if the food industry is to overcome the many
challenges of globalisation and realise the growth opportunities in meeting the consumer
drivers of health, convenience and premium foods. Government funding for ventures like DIAL
should be considered as an opportunity to capitalise on existing industry investments .
The National Food and Nutrition Research and Development and Technology Transfer Strategy
considers the entire food supply chain from farm gate to the consumer. It has focused primarily
on post-farm while ensuring a close alignment with the sectoral commodity plans that cover onfarm production. This strategy aligns with the goals and objectives of the National Food Plan
and will link closely to the sectoral strategies to ensure impact across the entire value chain.
Government also has a role in ensuring that taxation and regulatory settings support innovation,
including continued commitment to the research and development tax credit.
6.5
The Australian Government is interested in identifying and evaluating future regulatory reform
opportunities. How could food industry stakeholders best help to achieve this? What do you
believe are the merits (costs and benefits) of the possible options in section 6.7.4?
Regulatory stocktakes
The dairy industry welcomes ongoing mechanisms to identify regulatory reform opportunities.
This should include regular stocktakes that look at the burden of the sum of regulations
individual Regulatory Impact Statements miss the cumulative increase in regulatory burden.
The Productivity Commissions series of annual reviews of the burdens on business have been
useful, but need to be continually renewed. The dairy industry supports the option put forward
in the green paper of the Australian Government working with the states and territories through
the Standing Council on Primary Industries (SCoPI), to undertake a qualitative analysis of
regulatory changes since the 2007 Productivity Commission report on the regulatory burden on
primary industries, and identify and scope potential further improvements. This should be
extended to also consider regulatory changes since the 2008 report on the manufacturing
sector. As stated elsewhere in this response, proposed actions need to consider the rest of the
supply chain, service sectors and people issues, and not just concentrate on the primary
16
production sector. As discussed below, a stocktake of regulations also needs to consider other
requirements, including commercial and importing country requirements.
Existing mechanisms for best practice regulation
While the green paper and numerous other government statements talk about reducing the
regulatory burden, and the importance of evidence-based regulation, a gap remains between
5
the agreed best practice principles, and what actually happens . For example in 2010-11 only
75% (decision-making stage) and 71% (transparency stage) of Australian Government
6
regulatory proposals complied with governments own best practice regulation requirements .
This demonstrates a lack of commitment to best practice regulation processes which is at odds
with the rhetoric around reducing the regulatory burden.
Government should reaffirm its commitment across all government sectors to the Best Practice
Regulation principles and approaches.
Private sector standards, self, and coregulation
Regulatory issues faced by the dairy industry go beyond formal regulation, and in many cases
commercial imposts have far greater impact.
The green paper states that the government will continue to limit its involvement in private
sector standards. While government does not have a role in developing these, they cant be
ignored when considering regulatory burden and impacts.
The dairy industry generally supports self-regulatory and co-regulatory approaches, where
appropriate. However, these can also have a regulatory burden (including reporting burdens)
and still need to be evidence-based, well-designed, practical, consistent with good regulatory
principles and respond to actual market failure.
Government mandating of industry-developed voluntary systems can lead to significant
burdens for example, duplication between related industries with different systems and
should also be subject to proper regulatory impact assessment.
6.6
One way for food businesses to add value is through increased quality, such as high product
standards, new traits or nutritional attributes. Governments in Australia generally adopt little or
no role in regulating quality, except where required for public health reasons.
a)
What opportunities are there for businesses to add value through quality attributes?
b)
Is there a role for government to encourage this or remove barriers such as regulation?
(please explain/elaborate).
New process and product technologies

The key to achieving additional value from consumer driven demands lies in research and
support for developing and implementing new technologies to identify, capture and preserve
value-added traits and quality through processing, for delivery to markets. Government support
for processing innovation needs to recognise the value of these quality attributes, as well as
product safety.
Health claims
As the green paper discusses, one way to add value through innovation that offers significant
potential for the dairy industry is through nutritional attributes.
Developing these attributes relies on effective research and development to support innovation.
To make this investment worthwhile, communication of innovation is also critical. Current and
proposed regulations regarding health claims make it difficult to communicate to consumers
5
Productivity Commission (2012) Regulatory Impact Analysis: Benchmarking, Draft Research Report, Canberra
Office of Best Practice Regulation (2011) Best Practice Regulation Report 2010-11, Department of Finance and Deregulation,
Canberra
6
17
both the inherent benefits of dairy and improved nutritional attributes gained through innovation.
This risks disadvantaging Australian manufacturers and processers competing in global
markets. It can also put foods at a disadvantage compared to supplements with the same
health benefits.
This reinforces the need for integrated policy development in the food space, so that positive
actions in one area are not inadvertently impeded by actions in another.
6.7
The Australian Government welcomes further specific feedback about particular regulations
that significantly affect food businesses, by imposing direct and/or indirect costs and by limiting
commercial opportunities.
a)
Where possible, information would be appreciated about: the specific regulations of

concern; the nature and size of the impost (time, cost and lost business opportunities);
possible ways to improve the regulation and the likely benefits and beneficiaries; and the
most important benefits of those regulations.
b)
Are there any areas in which stakeholders feel improved regulation is needed to help the
market function properly?
Increasing regulation
The range of regulations and regulatory issues affecting the dairy industry is expanding each
year.
There are opportunities to streamline current regulations, and reduce their burden through:
harmonisation across commodities, nationally and internationally; reducing reporting
requirements; reducing overlapping or duplicative regulations; and improving poor or
inconsistent enforcement resulting in patchy compliance and a playing field that is not level.
The overview of Government interactions with the food industry in food safety regulation on
page 162 of the green paper is useful and shows the complexity and breadth of regulation in
this area. However, the pressure to increase the food industrys regulatory burden is mainly
coming from interests outside traditional areas of food regulation, such as environment and
public health. For example:
A trend to regulated programs requiring actions to save energy, water or waste
instead of using market place mechanisms (for example, Container Deposit Schemes
being considered by COAGs Standing Committee on Environment and Water).
An apparent disconnect between the drive to achieve public health objectives through
food regulation, and the efforts to reduce the regulatory burden and pursue evidencebased policy (for example, health claims; front of pack labelling).
The potential for regulatory burden also comes from the combined impact of many small
regulatory changes that, when considered by themselves, are not overly burdensome, but in
the context of the range of existing regulations and other requirements add unnecessary
complexity and cost. All proposed regulations should look at the context and existing
regulations first.
One recent example is the Attorney Generals proposed approach to Chemical Security:
Precursors to homemade explosives. The dairy industry has argued that a comprehensive set
of controls and processes already exist to protect national security in relation to nitric acid and
hydrogen peroxide directly and incidentally. Therefore no further intervention in dairy business
operations is supported. The burden of demonstrating this has so far fallen on the industry.
Rather, the onus needs to be on government to demonstrate something new is needed.
Current reforms
The dairy industry notes that the proposed way forward includes implementing, as a matter of
priority, reforms to regulation of agvet chemicals, food labelling and biosecurity. These
examples illustrate the tension in any review of regulation between reducing regulatory
burdens, and meeting ever increasing societal expectations. None of these reviews can be
18
said to reduce regulation. In each case increased requirements or government powers have
the potential to increase regulatory burden. The dairy industry recognises that better
regulation is not always less regulation; however, these kinds of reviews should not be
considered to reduce regulatory burden, or counted by government as such.
The processes underpinning current biosecurity amendments, and the reforms to agvet
chemicals regulation have been particularly problematic. In both cases documents were
released piecemeal, and a coherent overview of reforms was lacking. There was also a lack of
systematic analysis of costs and benefits of reforms.
Agvet chemicals
The last few years have seen a significant amount of work on reforming regulation of
agricultural and veterinary chemicals. As it stands it is unclear whether these reforms will
actually be an advance on current agvet regulation, for example by facilitating access to useful
chemicals and reducing usage costs.
It is disappointing that these processes have achieved so little, and have not been better
integrated.
Issues with improving access to useful chemicals, especially for minor uses, so that responsible
usage is on-label and legal, have not been addressed. The green paper raises the potential for
a reform to examine options to improve the regulation of minor use chemicals. The dairy
industry supports this examination, but notes how unsatisfactory it is that these issues have not
been addressed in the existing reforms.
It is also an example where a more integrated approach to address problems may have led to
better solutions. Issues with permissions to use chemicals in ways not detailed on approved
labels (off-label use) at state levels are partly due to registration processes at the national level
that do not support sensible and responsible access to chemicals for some uses. Without due
consideration of all the issues in an integrated way, progress in one area may constrain
opportunity to find solutions to existing problems in other areas, such as registration. There is
also potential for unintended consequences and/or large total costs in relation to benefits, once
all the reforms are considered together.
6.8
Competition issues are canvassed in the green paper. Generally speaking there is evidence
that competition can benefit consumers in various ways, including placing downward pressure
on prices and encouraging innovation and greater choice.
a)
What are considered to be some of the regulatory or structural barriers to competition in

the food industry?
b)
How could the operation of the industrys voluntary Produce and Grocery Industry Code
of Conduct be improved?
c)
What would a regulatory approach such as a mandatory code and/or supermarket

ombudsman achieve over and above current arrangements (bearing in mind that any
investigation would need to be based on a complaint)?
d)
How might the projected growth of private label products affect competition within the
food industry, either positively or negatively? Who do you consider will be affected and in
what way?
Private labels
The expanded use of private label lines in supermarkets is a key component of retailer
strategies. Deep-discounting on private label milk lines since January 2011 has had the
following effects:
A lift in sales of cheaper private label products, weakening the overall wholesale
returns to processors with consequent flow-on impacts to dairy farmers. This has
19
occurred within the supermarket, and at the expense of convenience and food service
outlets.
Market share loss from branded milk to private labels in supermarket sales, with some
categories, such as modified milks, losing 10%.
Sharply lower sales of branded modified milk products that target a health-related
proposition for consumers.
Downward pressure on farm gate prices for producers supplying white milk processers
in NSW, Queensland and WA. Where new supply contracts are being negotiated with
farmers, prices are lower to reflect the pressure on processor margins and the
changing requirements for milk supply.
As already stated in response to Question 4.1, regional differences continue to characterise the
Australian dairy industry. The impact on average retail sales and, ultimately on wholesale
returns has varied state-to-state, due to the differences in retail prices, brand and sales channel
mix between states.
Options for managing supply chain relationships
The ADF is keen to participate in a forum to examine options for better managing
supplier/supermarket chain relationships.
It is vital that farmer representatives from peak bodies such as the National Farmers Federation
and ADF are involved in this forum.
In particular, the ADF supports:
A code of conduct for supermarket companies in their dealings with processors and
farmers; and,
Establishing an ombudsman to enforce compliance, investigate complaints from a
whole-of-value chain perspective, administer a cost-effective dispute resolution process
with appropriate penalties, and publicly report.
6.9
The government is seeking feedback on the possibility of building the evidence base on food
industry trends and market changes. This could aim to inform private and public sector decision
making, including for infrastructure planning and future food industry needs. This could help
ensure Australia has adequate resources in place to support food sector growth.
Are you aware of any critical information gaps, particularly about growth opportunities such as
in Asia? How could these gaps be addressed, and if they were, how might this help planning?
Infrastructure
Growth in the dairy industry relies on improved road, rail and port infrastructure, infrastructure
to support efficient water use, a reliable and expanding power supply, infrastructure to support
research, development and training, and infrastructure for supporting industries (for example,
feedmills).
Road infrastructure examples relevant to the dairy industry include: stock underpasses to assist
in managing biosecurity risks; maintenance of bridges identified as crucial for access to farms
in an emergency; rural road capacity to enable more efficient milk collection, transport, and
expanded operation of B-triples to reduce truck traffic and improve efficiencies.
The dairy industry supports efforts to build the evidence base on food industry trends and
market changes to inform infrastructure planning.
20
Chapter 7 A strong natural resource base

7.1
Pressure to increase food production in coming years, in response to increased demand from a
growing global population, could place additional stress on Australias natural resource base.
What further initiatives could the government consider to encourage sustainable farming and
fishing practices that balance economic, social and environmental benefits?
Cross-sectoral approaches
Achieving the productivity growth required, while not increasing environmental risk, requires
funding for research, development and extension. New skills, new technologies and new ways
of doing business are required to balance increasing competition for resources, while remaining
profitable. The dairy industry therefore supports further research into soil and water, and other
natural resource base issues. One avenue for this research is the existing rural RDC network,
which is already developing cross-sectoral strategies in areas including water, soils and climate
change. Dairy Australia is actively engaged in these strategies and is leading strategy
development in water.
Water
The dairy industry is a major water user for irrigation and in the dairy. Across Australia, water
availability, security and efficient use are critical drivers for agricultural productivity and food
security.
However, policies and research to improve agricultural water management and efficiency are
undermined by competing policies to recover water for the environment using market-based
mechanisms that undermine the commercial viability of shared irrigation districts. The reliance
on buybacks to recover environmental water in the Murray Darling Basin is a case in point. A
partnership approach is more appropriate, where the government invests in on-farm water
efficiency measures in return for a share of the savings for the environment. This supports
increased dairy productivity and regional development, as well as improving environmental
health.
Low carbon economy
Similarly, policies to support a low carbon economy risk leading to a decrease in the intensity of
production (e.g. reduced fertiliser use, lower stocking rates, promotion of organic farming) and
thereby increasing the amount of land required to produce the same amount of food.
Government policy needs to take into account the tension between the need for both increased
sustainability and increased production by providing policy and research funding support for
technologies that maximise production intensity. Precision farming technologies, new molecular
breeding techniques and more targeted use of inputs could play a role in increasing productivity
whilst minimising impact on the environment. Development of these resource efficient
technologies will not necessarily be supported by the market due to the potentially long time
frames and the risk of government policy favouring ecosystem services rather than production.
Biofuels
Demand for natural resources to support increased food production will also be affected by the
increasing use of resources for non-food crops such as biofuels. Policies that mandate and/or
subsidise biofuels production will increase feed grain prices, and may decrease the capacity of
the Australian dairy industry to adapt to increased climate variability.
Sustainable landscapes
Research into sustainable landscapes rather than just focusing on sustainability at the farm
scale is also important. At a landscape scale it may be possible to identify areas that are best
suited to providing ecosystem services and other areas suited to high-intensity production.
Current policy tends to focus on the farm scale and not the landscape scale.
21
7.2
Australian society places high expectations on the environmental and social responsibility of
Australias food industry, although this is not always reflected in purchasing behaviour. What is
preventing markets from encouraging (via price signals) the food industrys responsible
management of the production base?
Sustainability Framework
Sustainability encompasses more than just natural resource management. The Australian dairy
industry is currently developing a Sustainability Framework with the vision to enhance
livelihoods, improve wellbeing and reduce our impact so that the Australian dairy industry is
recognised worldwide as a responsible, responsive and prosperous producer of healthy food.
The dairy industry is focusing on the following areas:
Enhancing livelihoods:
Creating industry prosperity Goal: Improve the profitability and competitiveness of
the industry
Supporting communities Goal: Enhance the resilience and prosperity of
communities
Investing in dairy people Goal: Enhance the expertise of and prospects for our
people
Improving wellbeing:
Ensuring health and safety Goal: Produce safe dairy foods and ingredients
Maximising nutrition Goal: Provide valued nutritional products that contribute to
food community health outcomes
Caring for our animals Goal: Deliver best care for our animals
Reducing impact:
Minimising our environmental footprint Goal: Maximise resource use efficiency
and Minimise waste
The industrys sustainability work is well aligned with the objectives articulated in the green
paper.
Returns for environmental and social responsibility
Dairy farmers and processors have a strong track record, working to be economically viable
while improving the health of the environment, workforce and the broader community. They
understand the interdependencies between sustainability and industry prosperity.
Requirements to meet environmental and social responsibility do not translate into direct dollar
returns. Most businesses wanting to demonstrate their credentials place the burden to do this
on their suppliers and it ripples along the chain.
Consumers expect environment and social issues to be looked after, but are generally unwilling
to pay any premium.
Government needs to look at this wider context of drivers and actions for environmental and
social responsibility when considering any regulations in these areas.
7.3
This green paper outlines a number of initiatives aimed at reducing food waste across the food
supply chain in Australia. What specific further waste management measures could the
government consider that would meet the multiple objectives of increasing food security,
providing healthier diets, improving environmental performance and addressing climate effects?
Reducing waste
The dairy industry is actively investing in projects to benchmark and reduce inefficiencies in
milk processing, particularly in water and energy use. This work has multiple benefits in
reducing waste, while also reducing costs and improving efficiency.
This is an example where rural RDCs are actively working to achieve environmental outcomes.
Support for the RDCs is an effective way for government to facilitate this kind of work.
22
Regulatory burden
Profitable supply chains enable actions to be taken to deliver environmental stewardship as
well as economic, community and animal care outcomes.
As already stated, measures and regulations with environmental objectives need to be
consistent with good policy making and regulatory principles.
A recent example is the Container Deposit Scheme being considered by COAGs Standing
Committee on Environment and Water (SCEW). The dairy industry participates actively in food
and beverage container recycling programs with the specific aim of demonstrating responsible
food packaging stewardship and practices, and ultimately reducing the volume of packaging
entering landfill and contributing to litter in the streets and Australian environment generally.
The SCEW is currently looking at policy options with potential to increase packaging recovery
rates and decrease public littering. Versions of a Mandatory Container Deposit Scheme have
been aggressively promoted, above alternative stewardship options that offer more costeffective ways to reduce beverage container waste problems, with comparable performance in
litter reduction.
Carbon tax
Environmentally driven policies like the carbon tax mean dairy farmers and processors will pay
more for energy. The interaction of these new policy initiatives with commercial markets and
existing trade policies is complex and multi-layered.
Inadvertent imposts of government strategies on export exposed industries, which do not have
the opportunity to recover costs, could significantly affect the international performance and
competitiveness of Australian food industries. These impacts must be acknowledged and
considered in policy development.
23
Chapter 8 Food trade and market access

8.1
The Australian Government is seeking to expand its food trade relationships in Asia over the
medium to long term. This will require access to markets and a reduction in trade barriers for
food exports. This objective could be pursued in a number of ways, including through further
free trade agreements, strengthening Australias agricultural counsellor network, as well as
pursuing improvements to the multilateral rules-based trading system.
a)
What could government and business do to expand food trade opportunities with Asia?
b)
What kind of benchmark should Australia aim for? For example, should we seek to
double our food exports to Asia by 2050?
c)
How could this be achieved, and what would be the costs and benefits of doing so?
d)
Which further countries in the Asian region should Australia seek to pursue trade
agreements with?
Trade opportunities
The Australian dairy industrys long-term growth and profitability is linked closely to its status as
a world competitive producer that can develop and retain global market positions.
Demand for dairy products will continue to grow with the expanding middle class in emerging
markets such as China, changes in diet and increasing urbanisation together with a rising
global population.
Given the right environment, the Australian dairy industry is well positioned to capitalise on this
growth. While the opportunities offered by growing international dairy demand are well
understood, a key question in the medium term is whether the Australian dairy industrys growth
rate is sufficient to maintain relevance in an expanding global market for dairy products. A large
proportion of dairy farmers are signalling little appetite for growth as the pressures on
management, cash flows and profitability increase.
Therefore much of what government can do to facilitate exports has been discussed in
response to Chapter 6: A competitive and productive food industry.
Within this context a goal such as doubling exports is meaningless. Concentrating on
increasing profitability along the supply chain through exports is a more useful goal than
continuing to increase the volume of low-value commodity goods.
Government should focus trade development programs on increasing the value of what is
exported, rather than just increasing volumes. This is linked to the importance of innovation in
process and product technologies to achieve additional value, and governments role in
supporting this innovation, including through a food regulatory framework that encourages
innovation.
Trade strategies should also focus on helping existing exporters increase exports, rather than
simply seeking to expand the number of exporters.
Trade agreements
Internationally, with no multilateral agreement on trade reform in sight, Australias ability to
negotiate significant free trade agreements will be critical to maximising returns for the industry.
The bilateral agreements negotiated by competitor countries will also have an important bearing
on trade flows and access to and profitability in markets of choice.
Government should pursue comprehensive trade agreements with all relevant countries and
regions (within Asia: Japan, China, Korea, Indonesia, and India). This is critical to building
long-term business partnerships and defending existing commercial positions. Korea has
already completed bilateral trade agreements with two of our biggest competitors: the United
States and the European Union. Those deals have left Australias dairy exporters at a
significant competitive disadvantage in that market. Similarly, the NZ-China FTA has given New
24
Zealand, one of Australias largest competitors in dairy products trade, preferential market
access in China.
In negotiating these agreements, streamlining requirements and technical barriers is also
important. For example when Tariff Rate Quotas are used, the administration of these quotas
in Australia or in the importing country can be so costly and burdensome as to undermine any
competitive gains from having access to the quotas.
Beyond Asia
As well as opportunities in Asia, the dairy industry sees significant opportunities in the Middle
East. A comprehensive trade agreement with the Gulf Cooperation Council (GCC) should also
be pursued. This is critical not only to open up new opportunities, but to defend existing share
given that the NZ-GCC FTA, once ratified, will give New Zealand preferential market access in
the GCC countries.
From a competitive perspective, EU and US policy reforms will also play a role in shaping future
dairy trade flows as the removal of EU production quotas and the likely development of a new
US Farm Bill signal a new type of engagement with the international market. This in turn may
change the markets in which Australia competes.
8.2
The Australian Government proposes to continue to improve coordination of market intelligence

across government and food export businesses to improve market access, address technical
trade barriers and strategically position the Australian food industry to exploit potential trade
opportunities.
a)
What specific mechanisms should the government consider to achieve this outcome?
b)
How would you foster greater cooperation and coordination between industry and
government to improve Australian market access for foods?
Increased use of non-tariff barriers in priority markets is affecting trade in agricultural goods
including dairy products.
The Australian Government should increase its capacity to work (in collaboration with industry)
to identify and react to existing and new non-tariff barriers in order to minimise impact on trade.
Agricultural Counsellors
The DAFF Agricultural Counsellor program needs to increase regional coverage in South East
Asia and the Middle East. In addition to existing posts, the program should be expanded into
the following three key emerging markets: Vietnam, the Philippines, and Saudi Arabia. These
countries are high potential growth markets whose needs cant be adequately met through
existing posts (for example, the Thailand posts coverage of key growth areas in South East
Asia).
Agricultural Counsellor posts play a major role in Australias efforts to: remove or lower market
access barriers for agricultural products; facilitate trade; monitor emerging international issues;
help resolve quarantine issues; and, provide briefings and assist with visiting delegations.
Where DAFF Agricultural Counsellors are located in markets, they can more effectively engage
directly with local officials/government representatives to address access issues as they arise,
and work proactively to identify and prevent non-tariff barriers affecting dairy imports.
As well as representation in key markets, representation in key competitor countries is also of
benefit. Given the role of the EU and the US as agricultural policy setters, on-the-ground
representation for Australia means issues can be addressed before they develop. Moreover, in
the case of the EU, the Commission is reluctant to engage directly with industry so government
representatives are needed as facilitators. A case in point is consultations on Geographic
Indicators. Expansion of Agricultural Counsellor positions in emerging markets should not be at
the cost of existing posts.
25
Support structures
The structures that protect Australian exporters ability to defend against technical and
regulatory barriers also rely on a capability to operate effectively in:
World Trade Organisation (WTO) dispute settlement processes;
International standard setting forums (Codex, OIE, WCO);
Monitoring and responding to WTO Sanitary and Phytosanitary (SPS) and Technical
Barriers to Trade (TBT) notifications
FTA and bilateral review committees.
The effectiveness of Agricultural Counsellors also relies on being able to draw quickly on
expertise back home, in DAFF, as well as agencies like FSANZ and APVMA. These resources
are also critical to responding to technical barriers and need to be maintained as a priority.
As an export-oriented industry, international regulatory frameworks are important to Australian
dairy. The dairy industry invests significant resources in monitoring and contributing to
international standard setting, but much of this can only happen at a government-togovernment level. It is a critical role for the Australian Government to continue to actively
contribute to and take a lead in these international processes to support exports.
Government also needs to continue close collaboration with industry to ensure its efforts are
focused on priority issues and achieve practical outcomes that can be implemented by industry.
Consistency of approach
Like other food industries in Australia, the dairy industry needs protection from exotic diseases.
A strong, science-based biosecurity and quarantine system is non-negotiable. However,
another element of maintaining our livelihood is access to overseas markets. To maintain this
access we need to ensure Australia does not leave itself open to criticism, complaint, challenge
and ultimately trade sanctions because of an unnecessarily harsh quarantine regime.
Australias leadership in international forums also means maintaining a commitment to both the
spirit and the letter of WTO agreements in biosecurity and quarantine systems, and to
international standards such as Codex Alimentarius.
The dairy industry has consistently argued for regulatory harmonisation at national and
international levels, whenever possible. To facilitate exports, Australia regularly asks other
countries to adopt Codex standards as a matter of course, and to adopt standards that allow for
good agricultural or veterinary practice in Australia, where this is not already covered in Codex.
In the interest of facilitating trade, the internationally accepted standards (Codex) should be
adopted as a matter of principle wherever possible. Australias credibility in negotiating access
relies on a consistent and science-based approach.
Cooperation and coordination between industry and government
The dairy industry welcomes better cooperation and coordination between industry and
government on technical market access issues.
Where this already occurs, it has allowed market access issues to be resolved that may have
otherwise resulted in refused shipments. However, while positive when it does occur, this sort
of cooperation is not always the case.
One barrier may be the potential conflict between the role of DAFF as both a regulator, and the
coordinator to respond to market access issues. Often issues arise with shipments sitting at a
port, for example, so a clear avenue to address issues quickly that is somewhat separate to
regulatory structures would be useful.
Dairy Australia is keen to be actively consulted in any developments in this area.
8.3
The government is developing a white paper on Australia in the Asian Century. It is anticipated
increased productivity and wealth in Asia will result in increased demand for high value foods.
26
What specific initiatives should the government consider to ensure Australian food exporters
participate fully in these emerging opportunities?
Promoting the Australian food safety system
Government should more actively and consistently promote the Australian food safety system,
seeking greater acceptance of our system as meeting importing country requirements, and
reducing costly additional requirements (for example audits, port of entry testing).
DAFF also needs to actively promote the Australian food safety system and seek acceptance
by importing countries. The Codex framework offers opportunities to support these principles
with importing country governments and seek to streamline overseas requirements. This would
reduce the regulatory impost on food exports from Australia.
Equally as important, the Australian dairy industry has sought to have a streamlined approval to
domestic and international food safety regulations. DAFF, as the competent authority for
approving dairy exports, has accepted the national dairy food safety system where national
food safety standards are implemented by state food authorities and DAFF recognises the state
systems. Dairy businesses, while still having multiple commercial audits, are now subject to a
single food safety audit for domestic and export requirements. This is a good model that needs
to be actively promoted.
Electronic certification
The dairy industry also seeks to increase the use of electronic certification to streamline import
requirements. This was a priority identified during the Dairy Export Ministerial Task Force and
is actively being pursued by the dairy industry. The export documentation infrastructure within
DAFF needs substantial upgrades to meet developing e-commerce needs.
The Australian Government also needs to prioritise promotion and advocacy for this approach
in discussions and negotiations with trading partners. Electronic certification was identified in
the Beale review, but resources have not been provided by government to implement the
recommendation.
Regulatory reform
In addition to the regulatory issues already discussed, government should more consistently
consider and prioritise potential impact of regulatory requirements on trade. This includes
considering the impacts of policies like the carbon tax on the competitiveness of Australian
exports.
It also includes considering international implications when setting domestic food regulations.
The Australian dairy industry has maintained a world competitive position in relation to low cost,
high quality milk production and has earned a reputation for reliable supply of safe, high
functional dairy ingredients on world markets.
Although many importing countries have their own food standards, they look to Australia for
information on best practice regulation, and some countries require products to meet the
exporting country (Australias) requirements.
While the market for some high value functional ingredients within Australia may not support
their development, the potential for these in some Asian markets may make the investment in
innovation worthwhile provided they can be marketed.
8. Additional points
Review of the Imported Food Control Act 1992
The dairy industry supports a review of the Imported Food Control Act 1992. The review should
clarify the arrangements made to ensure imported foods meet Australian standards. This
should include review and verification of systems and controls throughout production and
processing, rather than just end point inspection of a percentage of imports. This would be
consistent with the arguments Australia presents internationally for acceptance of our
27
production and processing systems to produce food to meet market requirements, over port of
entry testing.
The review should also consider the need to develop an Imported Feed Control Act to manage
risks from imported animal feed.
Review of the Export Control Act 1982
Government and industry accepted all recommendations from the Beale Review. It is important
that these be implemented to streamline exports. Again, government needs to promote the
consistent food safety outcomes provided by the Australian food safety system and harmonise
domestic and international requirements. Importing requirements should be outcome-focused
and proportionate to risk. There appears to be a move by some countries to more prescriptive
end point testing requirements. The Australian Government should resist this and promote the
Australian system.
28
Chapter 9 Global food security

9.1
It is in Australias national interest to promote global food security. The Australian Government
considers Australia can make the most effective contribution to global food security by focusing
on: technology and expertise transfers to developing countries; trade-related development
assistance; advocacy and support for appropriate policies at the global, regional and national
level; and short-term emergency food assistance. Do you support the Australian Governments
analysis? If not, what are the key gaps? Please be specific and provide evidence to justify your
response.
Global food security
The dairy industry supports the analysis of global food security in the green paper.
In particular we note the green papers statement that foreign government policies that distort
world trade in food commodities adversely affect food security. The Australian Government
should work internationally to ensure the food security debate does not become a vehicle for
hidden protectionism or a means of imposing arbitrary barriers on access to export markets.
29

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Australian Dairy Industry

The Agricultural Competitiveness Issues

About the Australian Dairy Industry Council

Ensuring food security in Australia and globally ............................................................ 10

Farmer decisions for improving farm gate returns ......................................................... 12

Enhancing access to finance ............................................................................................. 14

Enhancing agricultures contribution to regional communities .................................... 18

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Improving the competitiveness of inputs to the supply chain ....................................... 21

Reducing ineffective regulations ...................................................................................... 28

Enhancing agricultural exports ......................................................................................... 29

Attachment 1: Australian Dairy Industry Council Policy Priorities Summary ........................................ 34

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Overseas labour access

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

The Importance of the Australian Dairy Industry to the

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

9. The Australian dairy industry is

Industry volatility is hurting confidence

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Response to questions in the white paper

The dairy industry has made strong

The industry has experienced a slow

The outlook for 2013/14 is for relatively

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Implementing a risk-based approach to biosecurity management;

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

2. Farmer decisions for improving farm gate returns

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

3. Enhancing access to finance

Australian dairy farm business ownership structures

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

4. Increasing the competitiveness of the agricultural sector and its value

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

5. Enhancing agricultures contribution to regional communities

2012/13 Australian RDP Breakdown

Cows in milk & dry

People directly working

Share of National milk

Value of milk leaving

Dairy farm contributions

Value of dairy products

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Attracting the next generation of farmers

Program handbook for teachers and students is provided to

Participation of Schools in Australia

In 2013, 8,357 students from 183 schools participated in the program

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

6. Improving the competitiveness of inputs to the supply chain

The diversity of farm systems and businesses is increasing

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper

The value of research and development to the Australian dairy industry

Australian Dairy Industry response to the Agricultural Competitiveness Issues Paper