Joining a growing cohort of wealthy Australian investors, Harvey’s recent $A34 million investment into one of Australia’s largest dairy farms signals a strong belief in the growth potential of dairy.
Whilst Australian domestic consumption of milk is relatively stable – 106 litres of drinking milk per capita – the same can’t be said for growing Asian markets. In 2012, China alone consumed 46 billion litres of milk.
Compare this with Australia’s consumption in the range of five billion litres and it’s clear where the upside sits. China’s appetite for dairy will only grow: 2030 estimates sit at a staggering 74 billion litres.
Australian dairy exports have grown from $A969 million in 1980 to $A3.2 billion in 2014, a growth rate of 3.6 per cent. While Australia accounts for an estimated 2 per cent of the world’s milk production, it accounts for 7 per cent of the world’s dairy trade.
Australia’s competitive advantage lies in targeting high-value segments and shifting away from the globally competitive volume play. Markets like the Philippines, where there has been a 31 per cent export growth over the past year, or Indonesia, with 22 million milk-loving children under four, present targeted and unique opportunities for the Australian dairy industry.
However, with production hovering around 9.2 billion litres, Australia simply won’t be able to capitalise on these markets if it doesn’t shift production upwards. It’s not a case of flicking a milk flow switch – an organised, whole of industry and supply chain response is required.
Source: BlueNotes