Get the dairy industry to a better place? Easy answer: more profit for dairy farmers. More profit DOES NOT mean more production. It requires managing costs and trying to maintain revenues.
What change is required? Easy answer: Identify strengths and weaknesses and change the weaknesses.
Strengths: quality, price and, so far, supply => thanks to farmers and ,yes even, processors.
Weaknesses: low/unreliable return to farmers, difficulty to long term plan, ageing farmer base => due to poor market structures and supporting free markets instead of free enterprise.
A better place requires greater farmer profitability: Free markets must satisfy a myriad of assumptions to deliver efficient outcomes and frequently this does not happen. Governments must bring back city milk regulation for a price premium; shift power from supermarkets back to farmers. Governments must manage water and any other controllable resource in a PRODUCTIVE ECONOMIC manner; simplifying natural resource management is essential to profitable farming. Governments must be prepared to defend effective local industry from overseas products inferior in any way. Governments also need to critically question to influence of superannuation and organisations with big ideas that tend to lead to big problems.
No doubt the dairy industry became mature in the late 80s, margins got tighter and some adjustment was inevitable. But in addition to this, interference in sound structures like dairy and water regulation has turned an industry with solid foundations to one that doesn’t know where it will be in six months, let alone2025.
You want to take the industry forward? Might be time to look back at how the visionary’s set it up and had success.
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