Market corruption hits WA dairy

TRADE reform is crucial to the long-term viability of the Western Australian dairy industry, with WA lagging behind other States in terms of dairy exports.

Industry sources say sustained growth in the local industry depends on securing sustainable overseas dairy trade through improved market access and higher dairy product prices.

Dairy Australia spokesman Chris Phillips said trade reforms could generate about $2.5 billion in additional economic activity through Australia’s dairy communities.

“We think there is not enough understanding of how important the dairy industry is to trade in Australia,” he said.

“The world dairy market remains one of the most corrupted in terms of export subsidies.

“We really need reform in export subsidies and export markets.”

Mr Phillips said a focus on reform was particularly important for the WA dairy industry.

“The WA industry doesn’t export a lot of milk at the present time in relative terms compared to the eastern States, but from a long-term industry growth perspective trade reform is very important for future export opportunities.”

Mr Phillips said reform to trade barriers in dairy markets would enable the Australian industry to profitably export more products, into more markets, at better prices.

“These higher prices are the key to lifting Australian farm gate prices, and boosting economic development within rural communities,” he said.

Australia is excluded from most major dairy markets, including the US, Europe and Japan, with the bulk of Australia’s trade in Asia and the Middle East.

“We don’t have any real opportunities for market growth in Europe and the US. We trade where we are allowed, that is, Asia and the Middle East,” Mr Phillips said.

WAFarmers dairy section president Tony Pratico said there were real opportunities for the WA industry due to its proximity to South-East Asian markets.

Australia’s excellent reputation as a producer of high quality milk would secure more contracts similar to the $200 million joint venture between Challenge Dairy and China’s Sanyuan food company, he said.

He said WA was ideally placed to tap in to niche markets.

“We are about the only dairy region that could supply Asia with liquid milk due to proximity to markets,” Mr Pratico told WA Business News.

First, however, WA must drastically increase production to reach a critical mass and remain viable.

Long-term growth remained a major concern for a sustainable WA dairy industry, he said.

“To grow our industry and get the economies of scale, we need to double our industry to compete in world markets.”

Mr Pratico said that while WA dairy farmers lead the nation in terms of milk production per cow, they accounted for only 3.6 per cent of national milk production.

Further, less than 20 per cent of WA dairy products are exported.

To increase this figure, Mr Pratico said healthier export markets were required for WA to remain competitive both overseas and domestically.

“Clearly, it’s very hard to separate States and as they [other States] access bigger and better markets they become less of a threat to us,” he said, adding that other States looked for new domestic markets as well as those markets overseas.

Mr Pratico said the role of Challenge Dairy Co-operative was crucial in this endeavour.

“The only drivers we’ve got to farm gate prices are commercial drivers because the WA market is driven by corporates,” he said.

“To access healthy export markets we need Challenge Co-operative to drive it and to reach critical mass in the industry.

“Trade barriers are a real concern for the industry for growth in both the long and the short term.”

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