Media Release


John Brumby speech at Trans Tasman Dairy Leaders Forum

6 May 2019

Introduction

It’s a great pleasure to be at this unique gathering today, with so many leaders of the Southern Hemisphere’s dairy industry under one roof.

And it’s a great privilege to have taken on the role of Independent Chair of the Australian Dairy Plan.

The dairy industry has been a constant presence in my life and career – from my days growing up on the family farm at Coleraine when small dairy farms and butter factories were a feature of the agricultural landscape … right through to my time as Minister for State and Regional Development in the Victorian Government, supporting projects such as cattle underpasses, irrigation upgrades, new investments in processing facilities and major additions to our research and development effort, like AgriBio at La Trobe University.

When you’ve spent as much time as I have thinking about the future of the regions, the state and the nation, you can’t help but recognise dairy as central to our Australian identity and particularly our regional economies.

  • The Australian dairy industry is the fourth biggest in the world with a six per cent market share;
  • It’s Australia’s third largest rural industry;
  • It achieved a farmgate production value of $4.3 billion last year;
  • It’s a huge exporter – the largest user of containers out of the Port of Melbourne;
  • And dairy directly employs 42,600 people.

We should be proud of these achievements.

However, there’s no question the industry is facing some challenges - in fact, not just challenges, but big challenges.  But at the same time there are real opportunities ahead, with new technologies coming online, new markets opening up across Asia and beyond, and increased demand from existing markets.  We are living in an era when the geopolitical and economic balance is shifting markedly from west to east and where we are uniquely placed at the heart of the fastest growing region in the world.

For all these reasons - and others that I will touch on in a moment - the Australian dairy industry is at a critical juncture.  It’s timely that the theme of this year’s Australian Dairy Conference was ‘Bold Leadership’.  To navigate the challenges and seize the opportunities, farmers, processors and the broader dairy community need to work together and speak with one voice.

That’s what the Australian Dairy Plan is all about.

Today I want to outline the reason for the initiative, what we hope to achieve, how it will work and how you can be involved.

The Australian Dairy Plan

I mentioned before that the industry is facing big challenges:

  • The impact of drought and continuing dry conditions;
  • Volatile local and global markets;
  • Significant cost pressures and serious challenges to profitability for many farmers;
  • Breakdowns in trust between some producers and processors;
  • Challenges to processing companies – including those represented here today – who face a shrinking national milk pool;
  • And price challenges in Asian markets that can now look beyond our region for supply.

But this is just the shortlist.  There are a whole range of other factors which we need to address.  In the global context, our competitors have caught up and are now moving ahead of us in international markets.  At home and abroad, social license issues are gaining more prominence – public expectations regarding the environment and animal welfare are changing and consumers are increasingly questioning the attributes of their food.  We need to win back the narrative about the sustainability of dairy and the value and health benefits of dairy products.

And overlaying all of this is the challenge of climate volatility and the impact of climate change.  Irrespective of whether individuals agree about climate change or not, change is coming.  Change is coming because world leaders have agreed the Paris Climate Agreement, and that Agreement sets targets for CO2 reductions.  The challenge for dairy - and for agriculture more generally - will be to increase production to feed a hungry world, while at the same time reducing CO2 emissions.  And of course adding to the list (as you will be discussing later today), is increasing global protectionism, Brexit and the US/China trade wars.

The reality is that when you put all these issues together, they present big challenges - there is no easy or simple answer and no one person has all the answers.

That’s why we need to hear from everyone.  There is a wealth of ideas and experience out there, and the Australian Dairy Plan is about listening, gathering, analysing and synthesising those ideas.

It’s about creating a roadmap towards a dairy industry that is:

  • More profitable across the supply chain;
  • More confident about competing at a local and global level;
  • And more united.

Why do we think this will work?  Because we’ve seen it work before.

During my years in Federal and State Parliament, I’ve seen many other industries succeed in the face of what at the time seemed insurmountable challenges.

As Federal Member for Bendigo in the mid-eighties and a member of the Prime Minister’s Country Taskforce, I remember vividly the laments and pessimism of winemakers and the Australian wine industry as we talked with industry leaders across Australia.

But the industry recognised its challenges, set out to address them and focused on the huge international opportunities, particularly the rise of China and the growth of Asia.

Today, Australian wine is exported to more than 120 countries, the industry is a major regional employer, and wine exports exceed $2.5 billion – a massive ten-fold increase from the days of doom and gloom in the late-eighties.

A similar story can be told about our tourism and accommodation industry - which was inward looking, lacking innovation and investment, and dominated by sub-standard two and three star motels.

The industry got its act together, got its myriad of industry organisations working in the same direction, lifted standards, strengthened branding and marketing, and accepted that in the 21st century we are competing not just with the operator in the next town, but also with competitors throughout our region and around the world.

Today, international arrivals exceed 9 million visitors per annum, injecting more than $40 billion into the Australian economy.

The lesson is that there is real power when diverse people, businesses and organisations from a common industry come together around a common goal.  I can’t stress that strongly enough.

At the moment, many in our industry wonder if there really is light at the end of the tunnel.  Can we recover, restore profitability and grow, or are we destined to be a stagnating industry with a declining share of the national and international market?  It’s a stark choice and I have a very clear view of the road we need to take.

The Australian Dairy Plan has the collective support of four of the most influential Australian dairy organisations:

  • Dairy Australia;
  • Australian Dairy Farmers;
  • The Australian Dairy Products Federation;
  • And the Gardiner Dairy Foundation.

The starting point for the Plan is the excellent ‘State of the Industry’ report produced by our partner organisations and published today.  This report identifies the issues and tells us where we are today - the Australian Dairy Plan will tell us where we need to go and what we need to do to get there.

So how will it work?

Over the coming months we will be listening to stakeholders from every corner of the industry.

Next week we’ll begin a series of independently facilitated consultation workshops across the regions.

The findings of these workshops will be distilled to form the agenda of a national workshop which will conclude the consultation phase of our work.

The output of this workshop will inform the final Plan, which will be a consistent national narrative about the future positioning of the industry.

The final Plan will inform the strategic direction of all major industry players.

My role is to be the ‘Chair of Chairs’ - to help our partner organisations find consensus and build a clear set of priorities and actions.

As an external party, my job is to offer an impartial perspective and challenge existing assumptions.

While no issue is off limits, I will call out proposals that lack rigour, lack ambition or look backwards.

One thing I can guarantee:  this will not be a worthy piece of blue sky thinking that gathers dust on a shelf.  I would not have accepted this role without the commitment of industry organisations to embrace real, transformational change.

The Australian Dairy Plan will include specific targets, actions and measures.  To be successful, industry will need to commit to these and industry bodies will need to incorporate them into their strategic plans.

So how can people be involved?

  • Our consultation workshops will visit key regional centres of every major dairying district in Australia over the coming weeks;
    [Sign up for your local workshop at https://www.dairyplan.com.au/get-involved]
  • People can participate online at dairyplan.com.au;
  • And people can talk to State Dairy Farmer Organisations and Regional Development Programs.

For the processing sector, I encourage you to support the process, get involved in the roundtables, put forward your views and listen to the views of others.

In the challenges experienced by dairy in recent years, the public’s focus has understandably been on the impact on our farmers.  The impact on the processors is sometimes overlooked.  The truth is that the shrinking of the national milk pool is a concern for everyone in dairy, not least the companies represented in this room that have made significant investments in processing capacity and have large commercial contracts to service.

For our industry to be globally competitive and grow market share, we are required not only to be able to fulfil demand with actual products, but also at the right price.  Asian markets which Oceania producers traditionally considered as being in our own backyard are in reality in everyone’s sights today.  We must be mindful that the actions we agree upon as part of the Australian Dairy Plan must underpin our ability to remain at the cutting edge of production efficiency globally.

So your role and your views are vital.

Conclusion

The Australian Dairy Industry has a long and proud history of working together through tough times.

We have a good story to tell, but in my view, the challenges we face today are bigger and more complex than the industry has faced before.  If we are to write the next chapter of dairy’s story, we not only need to be honest about the issues we face, but also open to taking difficult decisions and supporting radical change if required.  Most importantly, we will need to speak strongly and clearly with one voice – even when this may involve addressing uncomfortable truths.

I can say unreservedly from my experience in government at both Federal and State level, that speaking with one voice and with a clear view about the future is absolutely crucial - people in government have huge demands on their time and are required to wrestle with increasingly complex policy issues.  A divided industry, unable to reach consensus on the way forward, simply won’t get the attention or support of government.

Ultimately I see the Australian Dairy Plan providing industry with the opportunity to gather itself, recognise its strengths as a powerhouse of state and regional economies and put in place a roadmap for a better future.  Following the challenges and negativity of recent years, we need to retell this story – not only to remind those enduring real hardship why they got involved in dairy in the first place, but for the generations to come who need to see this as a viable and attractive career and way of life.

While we face big challenges, there are also positive signs we can point to:

  • Local consumption is growing in both volume and value;
  • International demand for Australian products continues to grow;
  • Our ‘clean and green’ reputation serves us well in Asian markets, especially China;
  • Commodity prices have stabilised;
  • And processing companies have invested in building capacity.

The question today is how to work together to take advantage of these ‘green shoots’.

That’s what the Australian Dairy Plan is all about, and I encourage everyone to get on board.

I look forward to hearing the presentations today, and talking to many of you in person.

And I look forward to the many conversations I’ll be having in the coming months.

Thank you.

Media enquiries:

Susan Hunter — Media Relations
03 9694 3727 I 0417 540 059 I media@dairyplan.com.au