The primary driver is a growing global population, expected to reach 9.6 billion by 2050. That’s a lot of mouths to feed. Meat consumption will increase by 73 per cent, and dairy consumption will double. By anyone’s maths, continuing with business as usual is never going to meet the future demand for safe, accessible dairy nutrition. The only answer is to expand supply, especially in emerging and developing economies where we know demand will grow the fastest.
More than 4.4 billion people live in Asia — that’s more than two-thirds of the world’s population — and governments want to ensure that a reasonable proportion of their food needs can be met locally. We have a role to play in sharing our dairy expertise and assisting in the development of robust dairy industries around the world.
Farming is a business, and to be sustainable, it must be profitable. We leverage our expertise as a global leader in responsible dairying, nutrition and dairy excellence to assist dairy industries around the world to grow.
By making it possible for local dairy producers to produce more milk, and to do so profitably and safely, we are helping countries develop viable and sustainable dairy industries. We can help countries meet a growing percentage of their domestic needs, while at the same time maintaining the global trade in dairy, which is so important for food security and ongoing access to dairy nutrition. Everybody wins — and this is something we are seeing first-hand in countries where we are working hand in hand with the local dairy industry.
Take Sri Lanka, an important export market for Fonterra and a country where we also source local milk from about 4000 farmers. In Sri Lanka, a typical dairy farmer has a herd of just four cows. Milk production tends to be low due to poor nutrition and the slow growth rates of replacement cows.
Since 2013, we have worked with a pilot group of farmers to provide them with support around animal nutrition. Less than two years on, 50 per cent of the farms in the pilot are cultivating grass with high nutritional value and farmers have achieved increases of 40 to 60 per cent in feed production, animal growth rates and milk volume. We are now working to transfer the knowledge from this pilot to our other farmer suppliers.
In China, Fonterra owns two farming hubs running 24,000 milking cows. By 2025, our aim is to produce one billion litres of high-quality, safe milk each year from these farms for our Chinese customers. Our farms each employ around 250 local staff who we are training from the farmgate through to dairy science and research.
In Australia, Fonterra collects around 1.6 billion litres of milk a year. Fifteen years ago, the Australian and New Zealand milk pools were roughly the same size, each producing around 10 billion litres of milk each year. Today, Australia’s milk pool has dropped, to 9.24 billion litres. Last year, New Zealand produced 20.6 billion litres.
We believe there is significant capacity for growth in the Australian dairy industry. The best way to achieve that growth is by encouraging our farmers to do what they do best — produce safe, high-quality milk. And our role is to help our farmers run profitable businesses so they have the confidence to invest back on farm and grow.
In Australia, we do this through our Fonterra SupportCrew and GroPlan programs, which provide our suppliers the advice and support they need to build and grow their businesses. Since the introduction of the SupportCrew program, we’ve collectively seen more than $2 million returned to our farmers’ bottom lines — money that can then be used to reinvest in their businesses.
We firmly believe that we can grow the Australian milk pool, just as we are growing milk pools around the world. Regardless of where we operate, we have two basic drivers — high-quality milk and a sustainable profitable business model. The Fonterra strategy is to grow the volumes of milk we sell and to add value to that milk to generate a profitable and sustainable return for everyone in the supply chain.
We put in place an integrated model — from grass to glass — so security and food safety is built into the supply chain from start to end. This is our take on dairy development. It makes sense commercially, it makes sense for the communities we work in, and it makes sense for a world where demand for dairy nutrition is only going to keep growing.
Maury Leyland is managing director of people, culture and strategy at Fonterra Co-operative Group. She is a speaker at the Global Food Forum in Melbourne tomorrow.
