Developing export markets for Australian branded dairy products is the key to dairy farmers dealing with power of supermarkets in the domestic market, a dairy leader will tell next month’s Global Food Forum.
Mike Logan, chief executive of Dairy Connect, a NSW industry body representing dairy farmers, milk vendors, dairy processors and manufacturers, said Australia needed to do with branded dairy exports what New Zealand had done with dairy commodity exports.
Mr Logan will appear on a panel at the forum in Melbourne on April 15 that will look at whether the supermarket duopoly is hurting or helping suppliers and farmers.
He said dairy farmers in NSW had been selling into only one channel for the past decade.
“The dairy industry’s relationship with supermarkets is a commercial relationship,” he said.
“Supermarkets are in a position of power and are willing to use it.”
But the dairy industry could wrest back some of that power if it was selling into another channel, such as exports of quality branded products.
“The supermarkets could still sell for milk for $1 a litre but they could subsidise it instead of farmers,” he said.
Mr Logan said NSW co-operative Norco had shown what could be achieved, selling fresh milk into China for up to $9 a litre.
Norco was creating the best value for its farmer members – selling into both the supermarket and export channels.
Its export markets put it into a stronger position when negotiating with the supermarkets.
Norco was building its offshore markets for fresh and flavoured milk brand products into Asia, not just China.
Mr Logan said unity was the missing link for Australian dairy to achieve in the export markets.
“We all worship at the altar of competition,” he said.
Competition was good domestically, but when Australian companies were selling in Asia, they were not in competition.
“We need to find ways, within the law, to do things in a co-ordinated way, such as logistics and national brands” Mr Logan said.
“NZ has acted with united and had huge growth.
“We need to act with unity in a similar way in the branded market.
“We can make a difference if farmers and processors work together.”
The Global Food Forum will also feature Coles managing director John Durkan and Fonterra’s managing director of people, culture and strategy Maury Leyland.
By: Carlene Dowie, Associate Editor, Australian Dairy Farmer
Source: Australian Dairy Farmer