Questions and Answers

  • What is the Australian Dairy Plan ?

    The Australian Dairy Plan is a bold new industry led initiative to deliver increased profitability, confidence and unity across the dairy industry over the next five years and beyond. It has been developed by four partner organisations (Australian Dairy Farmers, Australian Dairy Products Federation, Dairy Australia and Gardiner Dairy Foundation) with its development led by Independent Chair, John Brumby AO. It is the first time key organisations representing the whole dairy supply chain have worked together to deliver a single set of national priorities for the industry.

  • Why was the Dairy Plan created ?

    The Australian Dairy Plan was conceived in response to one of the most challenging periods experienced by the industry. Milk price volatility and a succession of very dry seasons had impacted farm profitability across the country, causing a significant contraction in the number of dairy farmers and the size of the national milk pool. All parts of the supply chain recognised that collective action was needed to reset the industry's direction, through a strategic plan designed to rebuild its profitability, confidence and unity.

    Experience from other countries and industries shows how a national plan that is widely adopted can drive major positive change – examples include the successful expansion of the Irish dairy industry, the turnaround of Australia’s cotton industry and the unification of the New Zealand dairy industry.

  • How was the Dairy Plan developed ?

    The plan was formed from one of the most extensive listening exercises in the history of the dairy industry. Its five key commitments and supporting initiatives were shaped by the views of over 1,500 farmers, processing workers and service providers who took part in a nationwide consultation process involving 25 workshops across the country and numerous meetings with other key industry stakeholders. This process culminated in a two day national workshop attended by 130 representatives from across the industry. A draft plan was produced in December 2019 and, after a further period of industry consultation and additional analysis of industry trends, the final plan was released on 28 September 2020.

  • How will the Dairy Plan achieve its objectives ?

    The aim of the plan is to reset the industry’s direction after a number of challenging years. The plan aims to deliver increased profitability, confidence and unity across the dairy industry over the next five years and beyond. It is based on five key commitments:

    • We will reform industry structures to create a more cohesive dairy industry and strengthen our influence with key stakeholders.
    • We will attract and support new people and investment to build our industry.
    • We will increase our effort in marketing and promotion to build greater levels of trust and to improve the value of dairy.
    • We will intensify the focus on farm business skills to improve profitability and better manage risk.
    • We will restore trust and transparency between farmers and processors to strengthen industry confidence.
  • How long did it take to develop the Dairy Plan ?

    Work on the Dairy Plan commenced in early 2019. Following an extensive nationwide consultation process between May–July 2019, a draft plan was published in December 2019. After a further period of industry consultation, the final plan was launched on 28 September 2020.

  • What are the next steps now the Dairy Plan has been launched ?

    The four partners together with all sides of industry are committed to working together to implement and deliver the Dairy Plan’s goals. Each of the partners will refresh their organisational strategies to ensure alignment with the Dairy Plan. To ensure the highest levels of commitment and accountability, regular reporting to key stakeholders and Government will occur every six months. This progress and performance monitoring and reporting is to ensure the Dairy Plan does not ‘sit on the shelf’ and vital progress is made.

  • How will the Dairy Plan's success be measured ?

    The Dairy Plan's key success measures are:

    • Increased profitability across the dairy supply chain – with greater than 50 per cent of farms achieving profit of at least $1.50 EBIT/kgMS (average over five years)
    • Increased confidence of dairy businesses in the industry's future – with more than 75 per cent of farmers and processors confident about the future
    • Greater unity across the industry by working together to address key challenges – with more than 75 per cent of farmers and processors positive about industry unity.

    Implementation of the plan can build milk production from 8.7 billion litres currently to 9.6 billion litres by 2025, create an additional $500 million of farm gate value each year and over 1,000 new jobs, mostly in rural and regional areas.

  • What difference will the Dairy Plan make for dairy farmers ?

    A core objective is to help farmers be consistently more profitable noting the more volatile operating environment the industry faces. Dairy farmers today need access to high quality business and risk management tools. As one specific priority initiative the plan will intensify the roll-out of Our Farm, Our Plan. Our target is for all dairy farm businesses to have a documented long-term plan and for at least 75 percent of dairy farms to be using risk management tools and products within five years. There are many other benefits to farmers in the other commitments and core programs. Reform of industry structures will help to create a more cohesive industry and strengthen its influence with key stakeholders. A focus on attracting new people and investment to the industry will also assist farmers to grow their businesses. There is also a commitment to providing farmers with greater transparency for farm gate milk prices.

  • Does the Dairy Plan rely on big new investments from Government ?

    The Plan has been developed by the industry, for the industry. There is no specific ask from government, however we believe there is a significant opportunity for the Federal Government to work with the industry to maximise dairy's contribution to its target of increasing agricultural production to $100 billion.

    The plan highlights opportunities to drive down costs of energy which are a major cost for dairy farmers and manufacturers. We will work with governments at state and federal level to encourage the expansion of programs and new initiatives to produce lower cost and more sustainable energy for the whole dairy industry.

  • Does the Dairy Plan contain specific measures to drive down farm costs ?

    While this is a constant quest for farmers, Commitment 4 of the Dairy Plan brings a more intense focus to managing costs in a volatile operating environment so that margin can be maintained more consistently as markets and seasons fluctuate.

    The plan highlights opportunities to drive down costs of energy which are a major cost for dairy farmers and manufacturers. We will work with governments at state and federal level to encourage the expansion of programs and new initiatives to produce lower cost and more sustainable energy for the whole dairy industry.

    The core programs in research and development, policy, trade and market development, people development and sustainability also have a strong focus generating margin consistently as well by reducing key farm costs and such as feed costs higher returns.

  • How will the Dairy Plan support increased industry confidence ?

    The Dairy Plan recognises that the dairy industry includes the whole of the supply chain and success is not confined to any one part of it. Rebuilding trust between farmers and processors is a key objective of the Dairy Plan and vital to strengthening industry confidence and unity. The processing sector is committed to providing increased transparency around farm gate milk prices and the introduction of a new Milk Value Portal has been designed for that purpose.

  • How will the Dairy Plan support increased industry unity ?

    The commitment of all parts of the supply chain to working together to deliver the commitments of the Dairy Plan is already supporting increased cohesion in the industry. Longer term, reform of industry structures will deliver greater leadership of the industry, with wide-ranging and positive impacts including a stronger ability to advocate for the dairy industry, improved and more transparent priority-setting for research, development, extension and industry services, and more efficient investment in initiatives that advance the industry. But achieving meaningful reform is challenging, depending crucially on broad-based industry support.

  • Why doesn't the Dairy Plan include a clear recommendation for industry reform ?

    Reform of industry structures is one of the key commitments of the Dairy Plan [Commitment 1]. These reforms are very important and require wide industry and stakeholder engagement. The work is already well progressed and an industry engagement and design process is underway ahead of vote on a new structure to be held in the first half of 2021.

  • What are the main differences between the draft Dairy Plan and the final document ?

    Since the release of the Draft Dairy Plan in December last year, we’ve made a number of refinements throughout the entire document in response to industry feedback. This includes further work on our growth scenarios and profitability target as well as a stronger focus on cost reduction. We’ve also included more detail regarding the initiatives that will support the delivery of the Dairy Plan and how they will be accomplished.

  • Why is the Dairy Plan any different from previous plans ?

    The Dairy Plan sets the strategic direction and outlines the specific actions necessary to drive value and productive changes to achieve this objective over the next five years and beyond – engaging the whole of the supply chain.

    It is fundamentally different to any of those that have preceded it, with a number of unique features that give it a greater chance of success:

    • A sustained commitment to collective action: this is the first time in the industry's history that these four partner organisations have worked together to deliver a plan with a single set of national priorities.
    • An industry-wide, national engagement: the key shared priorities for the industry have been confirmed through one of the largest listening exercises in our industry's history, reaching over 1,500 people.
    • A focus on the drivers of business success: while previous plans have focused on growth targets, the Dairy Plan focuses on the drivers of business success – profitability, confidence, unity – recognising this is the path to long-term sustained growth by driving value and value creation across the supply chain.
  • How much did the Dairy Plan cost ?

    The forecast spend on the Dairy Plan was $900,000, including nationwide consultation and workshops, production of reports, marketing, independent chair and secretariat. This budget was projected through to delivery of the draft plan in December 2019 and final total costs will be determined post the finalisation of the plan.

  • What are the ongoing implementation costs of the Dairy Plan ?

    There is a phased approach to the implementation of the Dairy Plan and budgets will be agreed by the partner organisations for each phase. There will be some ongoing administration costs to support monitoring and reporting of the plan's implementation.

  • How has the development of the Dairy Plan been funded ?

    The Dairy Plan has been jointly funded by Australian Dairy Farmers, Australian Dairy Products Federation, Dairy Australia and Gardiner Dairy Foundation.

  • What was John Brumby's role ?

    John Brumby was engaged as Independent Chair to oversee development of the plan. He chaired regular meetings of the partner organisations and oversaw the development of the plan and key documents and meetings with key stakeholder groups. An important part of his contribution was to help the partner organisations find consensus and build a clear set of priorities and actions. As an external party to the dairy industry, he brought an impartial perspective that helped to test existing assumptions and future priorities. His extensive experience in public life, regional development and agriculture brought considerable expertise to the development of the plan.

    We thank John for his leadership and commitment to the industry. With the release of the plan, his work is now complete.

  • How will the Milk Value Portal work and what is the timeline for its implementation ?

    The Milk Value Portal (MVP) will explain how milk pricing works and the factors affecting milk prices offered to farmers across Australia, addressing the complex question 'What is the farm gate milk price (FMP) and value of milk at different times of the year'.

    Data will be collected and aggregated directly from processors to explain the value (or average FMP) of milk at different times of the year and across a range of parameters including region, farm size, time of year and milk components.

    This would, for example, facilitate a greater understanding of the implications of flat versus seasonal supply to the year-average FMP and the FMP if located in Burnie (Tasmania) versus Beaudesert (Queensland).

    It will also feature information on the other key influences on FMP, including an explanation of the global benchmarks and market insights that influence milk price, e.g. global supply/ demand of milk, dairy commodity prices, exchange rates, Australian milk supply/ demand.

    This information will be made available through a simple, interactive, mobile friendly website.

    The Milk Value Portal delivers on Commitment 5 of the draft Australian Dairy Plan, which aims to "restore trust and transparency between farmers, processors and retailers to strengthen industry confidence".

    The MVP will be led by processors through the ADPF, with support from DA and ADF, and is due for release by the end of 2020.