Australian Dairy Undervalued in Domestic Market

December 16th, 2019


Category: Dairy

(Farm Online) – There has been considerable discussion recently around the acquisition of major dairy processors by foreign companies.

Some of the hype has been alarmist.

For example, Lion Dairy and Drinks was owned by a foreign company, Japan-based Kirin, before its acquisition by China-based Mengniu Dairy in late November.

However, there is a clear – and deeply concerning – message emerging from this trend: Australian dairy is seemingly valued more internationally than it is domestically.

Dairy farmers can’t help but feel that Australian retailers, politicians and consumers don’t value their industry.

Most consumers continue to opt for the heavily discounted supermarket home-brand milk and cheese.

Retailers refuse to lift the retail price of these products in a meaningful way and ensure the profits flow on to farmers.

Politicians have been divided on how to combat the problems facing the industry.

The result is that Australian dairy farmers are leaving their farms – in droves.

If dairy products like fresh milk, cheese and butter are not reasonably priced, farmers will not be able to run sustainable and profitable businesses.

If they do not make a profit they won’t be able to continue production.

While butter and cheese can be imported, the highly perishable fresh milk cannot.

For consumers, the short-term gains of heavily discounted milk prices could be overturned by the eventual loss of fresh milk from supermarket shelves.

Meanwhile, overseas markets cherish Australian dairy and are happy to pay for it.

Foreign-owned processors see value in investing in the Australian dairy industry, because of demand for Australian dairy overseas.

Mengniu has said they will export Australian dairy products to China and countries in south-east Asia, despite a milk shortage in Australia.

The dwindling supply of fresh milk and the diversion of dairy products overseas spell disaster for the Australian consumer.

When will Australian consumers, retailers and politicians value the safe and high-quality products the Australian dairy industry is putting right in front of them?

Soon, we hope.

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