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Strategic Plan 13-16 - Web PDF
Strategic Plan 13-16 - Web PDF
Plan
2013/14 - 2015/16
Dairy at a Glance
National Dairy Herd (end 2012/13 forecast) 1.61 million cows
Average Herd Size 240 cows
Milk Annual Production 9,350 million litres
Average Annual Milk Production Per Cow 5,818 litres
Dairy - Australias 3rd Largest Rural Industry $4 billion value at farmgate
$9 billion at wholesale & export pricing
Australian Per Capita Consumption Drinking milk 106 litres
Cheese 13 kgs
Dairy Industry Workforce Direct employment of 45,000
Milk Utilisation Cheese 34 per cent Major Markets For Australian Australia 2,825,700 t
SMP/butter 28 per cent Dairy Products (Tonnes) (incl. 2,385,000 of drinking milk)
Drinking milk 25 per cent Japan 115,000 t
WMP 11 per cent Greater China 109,000 t
Casein/butter 1 per cent Singapore 90,000 t
Other 1 per cent Indonesia 48,000 t
Malaysia 47,000 t
Dairy 38% of milk production is Production Of Main Milk Powders 371,000 t
- Major Export Industry exported Commodities (tonnes) Cheese 340,000 t
Value = $2.76 billion Butter (CBE) 120,000 t
7 per cent of world dairy trade
5th largest exporter
Glossary
Acronym Description Acronym Description
ABV Australian Breeding Values NCDEA National Centre for Dairy Education Australia
ADF Australian Dairy Farmers NFF National Farmers Federation
ADIC Australian Dairy Industry Council NGO Non Government Organisation
ADPF Australian Dairy Products Federation NPV Net Present Value
AOP Annual Operating Plan NRM National Resource Management
BCR Benefit Cost Ratio OH&S Occupational Health and Safety
BMCC Bulk Milk Cell Counts PAG Policy Advisory Group
CRC Cooperative Research Centre PKMS Project and KPI Management System
CSIRO Commonwealth Scientific & Industrial Research Organisation POS Probability of success
DA Dairy Australia R&D Research and Development
DAFF Department of Agriculture, Fisheries and Forestry RD&E Research, Development and Extension
DIAL Dairy Innovation Australia Ltd RDC Research and Development Corporation
DM Dry matter RDP Regional Development Program
FBM Farm Business Management RO Research Organisation
FTA Free Trade Agreement SDFO State Dairy Farmer Organisation
GGF Geoffrey Gardiner Foundation SMP Skim Milk Powder
H1 Horizon 1 SP1 Strategic Priority 1
H2 Horizon 2 SP2 Strategic Priority 2
H3 Horizon 3 SP3 Strategic Priority 3
HR Human Resources SFA Statutory Funding Agreement
H&N Health & Nutrition TRG Trade Reference Group
ITC Information, Technology & Communications UHT Ultra High Temperature
KPI Key Performance Indicator VET Vocational Education and Training
LRS Levies Revenue Service WMP Whole Milk Powder
1 Dairy at a Glance/Glossary
Managing Directors It is my pleasure to present Dairy Australias
Foreword Strategic Plan for the period 2013/14 to
2015/16. Dairy Australia remains committed
to its vision of delivering the worlds best
services in order to grow an internationally
competitive, innovative and sustainable dairy
industry.
The 2012/13 season has challenged the This Strategic Plan focuses on building the
Australian dairy industry, as lower farm gate foundations to support resilience and
prices have combined with increased input growth. Our priorities are clear and concise:
costs, and difficult seasonal conditions in making farm businesses more profitable
key dairying regions have seriously tested and competitive; protecting and promoting
the resilience of farm businesses and our industry, and growing skills and
families. These conditions have constrained capability.
production, which will finish at
I am excited by the opportunities the future
approximately 9.3 billion litres, a little lower
holds and have every confidence that we
than 2011/12. As the season draws to a
will achieve meaningful outcomes through
close, tightening international supplies are
ongoing collaboration across the industry
seeing a rapid increase in commodity
and through the implementation of this
prices. This combined with a weakening
Strategic Plan.
Australian dollar should translate to higher
farm gate price during 2013/14.
Our industry remains in a favourable
position. Our opportunities include the
increased demand from Asia for dairy
produce, product innovations and the
achievement of greater production Ian Halliday
efficiencies. Managing Director
Like any industry, however, we will not be
without challenges. These are likely to
include currency volatility, rises in input
costs, protection offered to competitor
exporters, animal and food activism,
changes in consumer preferences and the
ongoing demand for a skilled workforce.
Dairy At A Glance 1 5.3 SP3: Grow and Capability 49
5.3.1 Overview 49
Glossary 1 5.3.2 Capability Development 51
5.3.3 Workplace Strategy, Planning and Coordination 51
Managing Directors Forward 2 5.4 DA Supporting Activity 52
5.4.1 DA Operations 52
1 Executive Summary 4
2 Introduction 10 6 Expenditure Allocations & Returns 54
2.1 Purpose 11 6.1 Alternate Views of Expenditure Allocation 55
2.2 Context: Supporting Policy and Studies 12 6.2 Planned Returns 56
2.3 Context: Industry Support Structure 13 6.3 Project Portfolio Balance 57
6.3.1 Risk Return Spread 57
2.4 Context: Role of Dairy Australia 13
6.3.2 Time Horizon 58
2.5 Vision and Mission 14 6.3.3 Risk Profile 58
3 Industry Context / Trends / Outlook 16 6.4 Government R&D Priorities 59
3.1 Overview 17 6.5 Collaborative Expenditure 59
3.2 Domestic Environment 19
3.2.1 Commercial Environment 20 7 DA Operational Strategy 62
3.2.2 Farm Operation & Profitability 20 7.1 Budget Planning 63
3.2.3 People 22 7.1.1 Delivery and Overhead Costs 64
3.2.4 Other Key Issues 22 7.1.2 Planned Reserves 65
3.3 International Markets 24 7.1.3 Dynamic Budget/Funding Flexibility 65
3.4 Key Issues 28 7.2 Organisation Structure & People 67
7.2.1 About Dairy Australias People 67
4 DA Strategy 30 7.2.2 Organisation Structure 67
4.1 Overview 31 7.3 Governance, Compliance and Risk Management 69
4.2 Investment Strategy 33 7.3.1 Governance Framework 69
4.3 Investment Structure and Allocation 33 7.3.2 Board 70
4.4 Expenditure and Allocation 35
7.3.3 Governance and Compliance Reporting 71
7.3.4 Risk Management 72
5 Detailed Initiatives 38
7.4 Corporate Communication 73
5.1 SP1: Increasing Farm Profitability and Competitiveness 39
7.5 IT, Systems & Processes 73
5.1.1 Overview 39
7.6 Performance Management and Evaluation 73
5.1.2 Farm Margin Improvement 40
5.1.3 Manufacturing Margin Improvement 42 References 74
5.1.4 Market Support and Insights 43
5.2 SP2: Protecting and Promoting our Industry 45
Attachments 76
5.2.1 Overview 45
A SWOT Analysis/Strategy Response 77
5.2.2 Industry Promotion 48
B Project Listing 81
5.2.3 Industry Protection 48
C Strategic Program Key Performance Indications 85
3 Section title
1 Executive
Summary
The Australian dairy industry is facing a Role / Constraints: Scope / Objective:
range of challenges at both local and DAs role is to fund and manage pre- DA receives almost $34 million annually
international levels. Dairy Australia competitive activities that are important to from levy payers and $19 million in
(DA) is in the process of making the future of the dairy industry but would not matching research and development funds
directional and project level changes to occur effectively or efficiently if the market from the Australian Government. State
its program of work to best support the was left to its own resources. These are Governments, universities, research
long term sustainability of the industry. typically in the areas of R&D, extension, organisations and other dairy support
This document outlines the strategy for capability, trade and regulatory support, organisations, contribute approximately a
investment over the years 2013/14 to central data collection and pre-competitive further $30 million to DA funded projects.
2015/16. promotion. As such, it is the objective of DA to
responsibly invest these funds in a way that
best addresses stakeholder needs and
supports the future sustainability of the
industry.
Strategic Issues:
The key current and longer term issues
facing the industry are as follows:
Access to Emerging
technology social trends
Social/regulatory
Access to and pressures in the
availability of new Decline in areas of health, ethical
technologies including Climate and environmental, are
service
genomics, automation, change emerging that are not
funding
ITC generally positive to
dairy
Generally less
favourable climate for A decline in capacity
dairy farming in some of services to dairy
geographical areas; farmers, including a
access to water in winding back of state
irrigation zones government-based
extension services
5 Executive Summary
Key Drivers
201316 Strategy
% of Project Expenditure
Strategic Priority
Investment Focus
1. Farm
margin improvement 1. Demand enhancement 1. Workforce planning and action
>>Animal performance and fertility >>Promoting the benefits of dairy >>Providing the dairy industry
>>Feedbase and nutrient use efficiency to consumers with the people it needs
>>Resource management 2. Encourage a positive 2. Skills and knowledge
>>Farm business management industry culture >>Supporting training and education
2. Post-farm margin improvement 3. Industry reputation management
3. Career pathways development
>>Processor productivity >>Maintaining dairys licence to operate
4. Leadership
and innovation 4. Risk management
>>Development of industry leaders
3. Access to profitable >>Identify, monitor and help manage
international markets issues impacting the industry 5. Extension
4. Providing market information >>Contribution to industry policy >>Transfer of technology, skills and
and insights 5. Understand, measure and resources to farmers
>>Supporting industry decision making support industry sustainability
Investment Theme
Industry Sustainability
Reducing
Enhancing livelihoods Improving wellbeing environmental
impact
Reducing
Creating industry Supporting Investing in Ensuring health Maximising Caring for our
environmental
prosperity communities dairy people and safety nutrition animals
footprint
DA Strategy
SP1: Increasing farm profitability SP2: Protecting and SP3: Growing capability
and competitiveness promoting our industry and skills
> Continue to invest in innovation and > Invest more into Legendairy activities >C
ontinue to invest in activities that build
productivity improvement at farm and to foster a positive culture within the industry capability (farm, processor, R&D)
processor level to support improved industry and positive community and help maintain or attract people to the
industry profitability and long term sentiment towards the industry to protect industry.
sustainability, with a strong emphasis on dairys licence to operate. >R
amp-up of leadership educational
extension activities to drive adoption. > The Dairy Industry Sustainability initiatives.
> Continue to support activities that assist Framework reporting will provide >M
aintain and build extension services,
in maintaining or improving access to transparent credible evidence to support despite reductions in co-funding, to fully
international markets. the Legendairy key messages. capitalise on investment in other program
> Continue to provide a central source > Define the health and nutrition benefits areas.
of useful information to help support of dairy consumption and communicate
decision making about future direction. these messages to consumers and key
community influencers.
7 Executive Summary
Dairy Australia 201316 Strategic Plan 8
9
Introduction
2.1 Purpose 11
2.2 Context: Supporting Policy and Studies 12
2.3 Context: Industry Support Structure 13
2.4 Context: Role of Dairy Australia 13
2.5 Vision and Mission 14
Strategic Program
Summaries
2013/14 Project Listing
2013/14
11 Introduction
2.2
Context: Support Policies
and Studies
DA Strategy
Horizon 2020
National Primary
Industries Research,
Situation & Outlook Australia in the National Dietary Australian Dietary Murray Darling
Development and
In Focus Asian Century Guidelines Guidelines Basin Plan
Extension
Framework
13 Introduction
2.5
Vision & Mission
The dairy industry continues to be one of 3.1.1 Growth Expectations 3.1.2 Profitability and Pricing
Australias major rural industries. Based on
a farmgate value of production approaching Strong growth characterised the dairy Increasing levels of market and margin
$4.0 billion in 2011/12 (approximately $9.1 industry through the 1990s, but that growth volatility of the industry (see Figure 5) in the
billion at wholesale & export pricing), it ranks has stalled in the last decade. In the last five to six years has served to
third behind the beef and wheat industries. meantime, our major export competitor undermine confidence in the outlook for
It is estimated that approximately 45,000 New Zealand, has expanded significantly many farmers who are seeking reliable
people are directly employed on dairy farms (see Figure 4). returns on which to build a longer term
and by dairy companies within Australia. future. Australian dairy farmers operate in a
The industry has experienced a slow
Related transport and distribution activities, deregulated and open market and have
recovery from drought with rains returning in
and research and development projects, done so for over a decade with the only
recent years replenishing storages and
represent further employment associated government involvement being
restoring irrigation levels. Milk production
with the industry. Dairy is also one of administration of food standards and safety
growth in 2011/12 of 4% was the strongest
Australias leading rural industries in terms assurance systems. Consequently,
in a decade, but 2012/13 will see
of adding value through further downstream international markets and prices are the
approximately a 2% reduction due to dry
processing. Much of this processing occurs major factors determining the price received
conditions in SE Australia.
close to farming areas, thereby generating by farmers for their milk.
significant economic activity and The outlook for 2013/14 is for modest
At an average of just over US$40 per 100kg
employment in rural and regional Australia. production growth to between 9.4 and 9.6
of milk in 2012, Australian dairy farmers
billion litres, based on surveyed herd growth
generally received a price comparable to
intentions, cow condition and assuming
many of the major producing countries (see
normal seasonal conditions offset limited
Figure 6).
fodder reserves. Southern exporting regions
should lead growth given positive global While farmers experienced approximately a
prices. Production in domestic supply 10% drop in farmgate pricing in 2012/13,
regions is likely to be flat in response to the projections for 2013/14 suggest strong
market signals and uncertainty around opening milk prices (up 15-20%) which may
supply contracts. be tempered later in the year due to export
competitive pressures.
Based on production intentions for
three-year growth recorded in the 2013 Australias competitive position has changed
National Dairy Farmer Survey and assuming over recent years. Farm cost structures
reasonable seasonal conditions and prices, have increased in response to the need to
milk production could range between 9.8 adapt to drier conditions, with rain fed
and 10.2 billion litres by 2015/16. pastures contributing a lower proportion of
the total feed available. Despite the
increased rainfall in the last couple of
seasons, farm cost structures have not
returned to those of a decade ago for a
range of reasons. At the processor level,
lack of volume growth has resulted in a lack
of infrastructure expenditure leading to little
or no productivity gains. Consequently,
Australias share of international trade has
trended lower as local milk production has
contracted over the past decade.
Reversing this trend is now a major focus of
DAs strategy.
The following domestic and international
trends, opportunities and challenges will
shape the Australian dairy industry and the
investment environment for DA during the
three-year period of this Strategic Plan.
20
New Zealand
15
ML (000)
Australia
10
0
9495 9697 9899 0001 0203 0405 0607 0809 1011 1213 (p = projection)
300
250
Earnings
Business Net Worth
200
1991 = 100
150
100
50
0
81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11
90
80
70
60
Canada US
USD/100kg
50
40 EU-25 EU-27
30
New Zealand
20
Australia
10
0
03 04 05 06 07 08 09 10 11 12 13 (p)
Regional challenges remain, especially powders) and farmgate pricing is much between industry co-operatives and a major
where drinking milk is the focus: more closely linked to the international retailer may lead to changes for the drinking
Significant differences exist between the commodity prices. There has been a trend milk supply market, with new processing
industrys geographic regions (see Figure 7) towards consolidation of manufacturing in capacity intended in Melbourne and Sydney.
from both a natural resource and economic SE Australia which is unlikely to be reversed. The touted price premium may provide
perspective. The only significant new investment in more dairy farms with improved profitability
capacity that has occurred in recent times is and longer term financial certainty but this is
The WA, QLD and northern NSW regions are in Tasmania, with $250 million invested by a yet to be proven.
closely tied to the fresh drinking milk market number of companies resulting in a 40%
(see Figure 8), with a requirement for more In any case, addressing the diversity of
increase in processing capacity in that
expensive year round supply systems on needs across Australias dairy regions is one
State. Murray Goulburn Cooperative is set
farms. Retailer strategies (as described later) of the key challenges in delivering
to invest as part of its move into the fresh
have direct impact on farmgate pricing. appropriate research, development and
milk market and is also expanding its UHT
extension services. DA cannot always
capability to meet increasing Asian demand.
In other regions there is volume adopt a one-size-fits-all approach when
manufacturing capacity (cheese and The recently announced arrangements considering RD&E investment.
100
80
Per cent
60
40
Drinking Milk
20 Manufactured product
Exports
0
00 12 00 12 00 12 00 12 00 12 00 12
QLD NSW VIC SA WA TAS
19 The
Section
Industry:
title Context / Trends / Outlooks
3.2.1 Commercial Environment 3.2.2 Farm Operation and the past 20 years. Continued productivity
Profitability gains are needed in the production of home
Pressure on white milk pricing: Over the grown feeds and in the conversion of these
past 5 years, branded milk has increased in The profitability of many dairy farm resources and bought-in supplements, into
price by an average of 1% annually. businesses is again under pressure: milk protein and fat to maintain this
Simultaneously, private label milk has fallen Post drought profitability (see Figure 10) has advantage. Estimated home grown feed
towards the $1/L mark (-4% average been undermined by rising farm input costs consumption per hectare is still low
reduction) and farmgate prices have (fuel, fertiliser, purchased feeds and compared to potential pasture yields. There
suffered a similar decline (-4%). electricity) and the squeeze on farmgate has not been a significant change in
milk price. Currently, farm profitability is average pasture or forage consumption
The strategies of the major retailers reflect
highly variable with a range between -3% over the past decade and there is
the value-seeking behaviour of Australian
and 17%. considerable opportunity for the majority of
consumers who are still spending cautiously
despite recent interest rate cuts. The $1/L Volatility in income has resulted in many dairy dairy farmers to improve profit from their
strategy of a major retailer is a loss leader farmers taking a year-to-year perspective on existing pastures, forages and supplements.
approach aimed at improving market share farm financial performance rather than wealth Effective natural resource management
in a highly concentrated but competitive creation over the longer term. is increasingly important: The efficient
food market. use of resources and energy is an
International competitiveness is important for
The recent strategies of the major retailers all dairy farmers regardless of whether they increasing issue for Australian dairy farmers
will help support on-going low priced house supply a domestic or export orientated both in terms of cost control and to meet
brands. These strategies will inevitably market as no Australian market or geography community expectations for environmental
damage the sales of branded milk to the is protected from high-quality, lower-cost performance. The sustainability of nutrient
benefit of house brands, and enhance the competitors. A positive future for the use, particularly nitrogen, is expected to
power of the retailers in the local milk supply Australian dairy industry involves achieving escalate based on experiences in overseas
chain. DA has limited ability to impact on-farm business success while operating dairy industries. Climate change provides
retailer strategies but it can help improve internationally competitive farm systems. added uncertainty for dairy farmers and an
farm profitability via investment in the additional risk which erodes profitability.
development of new and higher margin Australian feedbase competitiveness has Managing climate variability is, and always
products and on-going productivity eroded: Low cost production of home has been, part of managing a dairy farm
improvements on farm and within the grown pastures and forages has and the best preparation for an uncertainty
processor sector. underpinned the competitive advantage of is a comprehensive risk management plan.
Australian dairy farmers in global milk Improved on-farm efficiency is vital for farm
production. However, feed costs comprise profitability and managing climate
the largest proportion of on-farm variable challenges.
costs, and have increased significantly over
2.0
1.5
$ per litre
1.0
0.5
0.0
0708 0809 0910 1011 1112 1213(p)
175
150
125
100
75
50
$ 000s
25
(25)
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13(p)
5,800 60%
6 week in-calf rates
Milk yield per cow (L) 58%
5,600
Average annual milk yield per cow (L)
56%
5,400 54%
6 week in-calf rates
52%
5,200
50%
5,000
48%
4,800 46%
44%
4,600
42%
4,400 40%
00 01 02 03 04 05 06 07 08 09
14,000 300
No. of registered dairy farms
Average herd size
12,000
250
10,000
200
No. of farms
No. of cows
8,000
150
6,000
100
4,000
50
2,000
0 0
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 (p)
90 300
% positive about future
Investment intentions next 12M
80
Production intentions more in 3Y 250
70
200
60
Per cent
150
50
100
40
50
30
20 0
05 06 07 08 09 10 11 12 13
Sth East Asia Other Asia Europe Middle East Africa Americas Other Total
$m $m $m $m $m $m $m $m
Butter/AMF 71 47 23 29 10 15 5 201
Milk 42 48 0 5 1 0 17 113
AUD
0.60 130
kt
Nevertheless, Australian dairy industrys
long-term growth and profitability is linked 110
closely to its status as a world competitive 0.40
90
producer and productivity gains must
remain a key focus across the supply chain. 70
0.20
In a small open economy policy responses
50
are limited so it is even more important the
dairy industry actively pursues wide-ranging 0.00
improvements in productivity. 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
ML milk equivalent
the next decade. 40,000
Australia will be one of a range of dairy
exporters (EU, US and New Zealand) that 30,000
will be competing for this additional
demand. While Australia is geographically 20,000
well positioned, price will be a key driver as
the Asian market has low capacity to pay a 10,000
premium.
0
While Australias geographic positioning
(freight time and cost) and counter- 2011 EU NZ + AUS US Other Latin trio Unmet 2021
$/L
ML
The findings from the Horizon 2020 study > Australian dairy industrys competitors it is an important risk management
effectively summarise the key issues facing are moving quickly to galvanise their strategy for progressive industry players.
the industry: positions - shoring up effective trade >C
ultural change required: The current
> The changing world economic order is alliances and integrated business models culture of the Australian dairy industry
driving rising demand for food to take advantage of growing markets. In provides limited support or opportunities
commodities in the developing world. many cases this is being actively to celebrate success, with most attention
While incomes will rise in these markets, supported by governments pursuing trade focused on those who are struggling with
affordability will be the key to maintaining agreements and facilitating strategic the challenges of market and climate
the role of dairy in addressing the investments and market development. volatility. This is reducing the overall
nutritional needs of a significant > Dairys licence to operate and sell is confidence of the farm sector in profitably
proportion of the population. being rapidly shaped by rising community supplying growing dairy markets and
> The expanding world market for dairy expectations including positive animal limits the attractiveness of the industry for
products and ingredients provides welfare, environmental and social investment of both financial and human
significant opportunities for the Australian outcomes. Building trust with capital.
industry. While the market for dairy communities, customers and consumers >O
ngoing innovation is critical to future
products will continue to grow, increasing will be more important in the future. This prosperity: Milk supply constraints over
climatic variability and pressures on will require the general community having the past decade have contributed to an
natural resources is likely to constrain a greater connectedness with the industry under-investment in technology and scale
supply expansion. and product, backed with credible in Australias dairy factories and this has
> The tight balance between supply and evidence. Industry leadership in hurt cost-competitiveness. It is imperative
demand from large producing/exporting agricultural sectors worldwide is that the industry develops and leverages
and importing regions will mean struggling to keep ahead of rapidly its ability to be flexible and agile, and
commodity prices will continue to be changing agendas and influencers. seeks opportunities to service high value
volatile. This, added to wider sources of > Sustainability incorporating improved markets rather than seeking to compete
uncertainty and instability from currency profit, environmental and social outcomes on price alone.
fluctuations, means input markets will is at the core of strategy for successful
A SWOT analysis has also been undertaken
continue to impact industry returns and multinational food companies and dairy
as part of this review of the operating
farm incomes. Management within farmers, as a focus on efficient resource
environment and as an input to strategy.
uncertainty has become a new skill use and positive and transparent
The detail of the SWOT and its implications
requirement. practices. This is not a marketing fad or a
for DAs strategic direction can be found in
source of differentiation for higher prices
Attachment A.
DAs strategy addresses the key on-going > The ultimate high level objective is the export market environment for Australian
and emerging issues facing the industry that long-term sustainability of the industry. dairy products, prevention of access
are within DAs remit. While the current Sustainability is a complex concept with erosion in key markets, and promoting
program of work remains appropriate in many components on-going industry awareness and active buyer preference
general, DA will make changes to internal profitability, food safety and security, for Australian dairy products.
structures and investment priorities to better animal welfare and ethical production, >C ontinue to provide a central source of
address these emerging issues, especially responsible use of natural resources, useful information to help DA and
those identified by Horizon 2020. environmental footprint (carbon, energy, industry stakeholders understand their
water, biodiversity etc). As the central industry and make informed decisions.
While farm profitability remains the highest
investment manager, DA must responsibly >M aintain support of planning and
priority, the revised strategy places an
allocate funds across this spectrum within education programs that support the
increased emphasis on the issues of
a long-term (10 year) view of the industry. on-going availability of skilled personnel to
sustainability and reputation
Strategically, DA will also provide the industry.
management as part of the industrys
investment into other key areas that >U nderstanding our stakeholders: DA
licence to operate. The objective will be
support the long-term sustainability of the will invest in systems to enable improved
to impact existing negative industry
industry, namely risk management, stakeholder feedback on the value of its
sentiment, improve farmer confidence and
capability building and reputation customer/stakeholder facing programs.
encourage investment in both financial and
management.
human capital. The Legendairy >E ffective use of funds: In a funding
> Building trust with community environment that is tightening, it has
promotional program (see Section 4.2) is a
underpins sustainability: A key strategy become increasingly important that DA
new and important element of this approach
in winning ongoing respect and uses its funds as effectively as possible.
with the target audience including dairy
confidence from consumers, customers Under the National Primary Industry
farmers, consumers and the key influencers
and community will be establishing Research, Development & Extension
of our society.
effective emotional connections to Framework, the outcomes of Dairy
The focus of DAs investment over the maintain dairys right to produce and sell. Moving Forward provide DA with a guide
coming 3 years will be as follows: DA will invest more into industry to effective investment across RD&E.
> Focus on farm profitability: As it has promotion (LegendairyTM) activities to Collaboration with research organisations
done since inception, DA will continue to foster a positive culture within the industry locally and internationally also provides
place most of its focus and investment and positive community sentiment DA with the ability to stretch its funding as
(59%, see Section 4.1) into projects that towards the industry to protect dairys far as possible.
directly have the potential to improve the licence to operate. This includes The Horizon 2020 study developed a
general prosperity of the industry, in defining the health and nutrition benefits number of strategic imperatives for the
particular on-farm. DA will continue to of dairy consumption and communicating industry. Where appropriate, DA has
invest in innovation and productivity these messages to key community responded to the recommendations in this
improvement at farm and processor level influencers. plan, the detail of which can be found in
to support improved industry profitability > DA will continue to support activities Section 4:
and long-term sustainability, with a strong that assist in maintaining or improving
emphasis on extension activities to drive access to international markets including
adoption. securing a more favourable and profitable
31 DA Strategy
Outcome for What to do differently What will support this Relevant DA
industry Strategic Programs
Improved Farm > Develop effective > Develop new tools and > Animal Performance
Profitability processes to focus on supported decision- > Farm Business Management
whole of farm business making > Feedbase & Animal Nutrition
outcomes over time > Partnership delivery > Attracting & Retaining People
> Facilitate R&D joint of R&D Re-engineer > Extension & Change
ventures on farm knowledge systems and Management
engagement > Sustainability Reporting
> Target delivery of
programs for effective
investment
We attract > Support a profitable > Sustain and widen > Farm Business Management
investment and growth agenda in dialogue on the future > Manufacturing Margin
good people response to an > Support the segment of Improvement
expanding dairy market the farm sector in the > Attracting & Retaining People
> Create roadmaps to industry intent on > Workforce Strategy, Planning
wealth, including entry growing wealth & Action
pathways
> Celebrate success on > Showcasing successful > Industry Promotion
farm on wealth creation, operators, targeting
sustainable practices effectively for uptake by
and innovation others
Australian Dairy > Adopt a front-foot > Celebrate success, > Industry Promotion
exceeds community approach to support with simple > Industry Reputation
and consumer sustainability based on rationale Management
expectations the industrys framework > Stronger emotional > Sustainability Reporting
> Build industry esteem connect, not evidence
from within with positive overload
image management
A key harmonising theme of DAs revised To simplify and better target the investment >R
educing the number of Strategic
strategy for the period 2013/14 - 15/16 is model, the number of Strategic Priorities Programs from 25 to 17.
Sustainability which derives from work on (SPs) has been reduced from 4 to 3 (see >R
educing the number of projects from 98
the Dairy Industry Sustainability Framework Figure 23), their definitions narrowed and to 69.
reinforced by the findings of the Horizon objectives defined. >O
nly allocating projects to a single
2020 study. The approach is to have a Strategic Program rather than splitting
Achieving the outcomes within these
cohesive strategy that places an appropriate projects between 2 or more Strategic
Strategic Priorities will help build a platform
level of investment/effort across three Programs.
for the dairy industrys return to profitable
strategic priorities (SPs):
and sustainable growth. Furthermore, the Strategic Programs consist of a range of
> SP1 - Increasing farm profitability & key focus under SP2 (Protecting and projects which are individually proposed and
competitiveness: Supporting local and Promoting our Industry) has become approved. The full list of projects can be
international competitiveness to improve Legendairy which is described in detail in found in Attachment A. Each of these
farm profit performance. Section 4.4. These three Strategic Priorities Strategic Program areas is discussed in
> SP2 - Protecting and promoting our are broken down into Strategic Objectives detail in Sections 4.3 onwards.
industry: Promoting the benefits of dairy and Strategic Programs of work that
products and managing industry generally match with the critical issues
reputational and culture issues. facing the industry as discussed earlier.
> SP3 - Grow capability & skills: Ensuring Further simplification of the investment
the industrys human resources have the model has occurred via:
skills to be productive and that there is an
adequate supply of quality people.
33 DA Strategy
Key Drivers
201316 Strategy
% of Project Expenditure
Strategic Priority
Investment Focus
1. Farm
margin improvement 1. Demand enhancement 1. Workforce planning and action
>>Animal performance and fertility >>Promoting the benefits of dairy >>Providing the dairy industry
>>Feedbase and nutrient use efficiency to consumers with the people it needs
>>Resource management 2. Encourage a positive 2. Skills and knowledge
>>Farm business management industry culture >>Supporting training and education
2. Post-farm margin improvement 3. Industry reputation management
3. Career pathways development
>>Processor productivity >>Maintaining dairys licence to operate
4. Leadership
and innovation 4. Risk management
>>Development of industry leaders
3. Access to profitable >>Identify, monitor and help manage
international markets issues impacting the industry 5. Extension
4. Providing market information >>Contribution to industry policy >>Transfer of technology, skills and
and insights 5. Understand, measure and resources to farmers
>>Supporting industry decision making support industry sustainability
Investment Theme
Industry Sustainability
Reducing
Enhancing livelihoods Improving wellbeing environmental
impact
Reducing
Creating industry Supporting Investing in Ensuring health Maximising Caring for our
environmental
prosperity communities dairy people and safety nutrition animals
footprint
60,000
1
50,000
40,000
$000s
Figure 25: Forecast & 3 Year Plan Expenditure Figure 26: Three year project expenditure
by Strategic Priority
3 Year Plan
2012/13
$000s 2013/14 2014/15 2015/16 3 Year
Forecast
Budget AOP Budget Budget Plan Total
35 DA Strategy
Dairy Australia 201316 Strategic Plan 36
37
Detailed Initiatives
This section describes DAs strategic 5.1.1 Overview A positive future for the Australian dairy
direction over the planned 3 years based industry involves achieving on-farm
upon Strategic Priorities to Strategic Improved farm profitability is DAs top business success while operating
Program level. The projects and key Strategic Priority (59% of planned internationally competitive farm systems.
performance indicators (KPIs) for each expenditure - $67.6 million over 3 years) As can be seen in the allocation of funding,
Strategic Program can be found in with a range of pre-competitive programs of investments and activities to support
Attachments B and C respectively. work to support this goal. DAs role in increasing farm profitability are critical to
enhancing the industry competitive achieving this outcome. The dairy industry
advantage is comprised of the following is an integrated supply chain subject to
strategic elements: variability in markets, climate and input
> Farm margin improvement ($46.5m): availability. It is important that the industry
Supporting productivity on-farm to has access to the latest knowledge and
protect and improve profitability across analysis on which to base its decisions and
varied production systems. the best technology, practices and systems
> Manufacturing margin improvement to enhance its ability to grasp opportunities
($11.6m): Facilitate innovation across the and meet future challenges.
supply chain to improve efficiency and
profitability.
> Market support and insights: ($9.5m)
- Create and maintain access to preferred
export markets.
- Gain market intelligence and conduct
analysis to help farmers and others
prepare and plan for the future.
Strategic Program
Objective Animal Performance
Feedbase and Animal Nutrition
Farm - Margin
Resource Management
Improvement
Farm Business Management
Alignment and Integration
Priority
Manufacturing
SP1 Margin Manufacturing Margin Improvement
Improvement
39 Detailed Initiatives
5.1.2 Farm Margin Improvement the opportunities facing the industry and costs. This has the dual benefit of improving
being constrained by a number of confidence and a positive farm business
Objectives: challenges. Farm profitability is highly culture with an emphasis on creating
> Support programs, activities and variable across farming regions and wealth; as well as increasing the
information that contribute to increased between farms. For example in 2011/12, international competitiveness of the
farm profitability, competitiveness and return on assets across Victorian farms Australian feedbase (including reducing the
greater control of input costs. varied from -3% to 17%. Production costs costs of production per unit of forage). It is
> Deliver coordinated capability building for on many farms have grown as input costs also vital, people in the industry have the
farmers and their advisers in key areas have increased and changes to farm skills required to competently perform their
that underpin farm margin improvement. production systems have been roles and that there is rapid and widespread
> Invest in research and development, implemented. Imperatives for productivity adoption of best practice and technology
including international collaborations, to gains remain, driven by needs to improve through innovative extension and change
address knowledge gaps in key areas, both profitability and resource use efficiency. methods.
and to ultimately improve farm
performance. The challenges and opportunities that will Direction & Targets: DAs strategic
need to be addressed to underpin future response is to fund initiatives in the following
Focus of Investment: The farm sector of growth in production and productivity of the areas to support the viability of dairy farming
the Australian dairy industry is delicately Australian dairy industry include increasing enterprises and establish the foundations
balanced between growing in response to farm profitability and greater control of input for growth:
Figure 28: Investment priorities for farm margin improvement 2013/14 - 15/16
The functional areas above are supported by Alignment & Integration. This investment provides support for RDPs and Dairy Moving
Forward - key industry programs that contribute to priority setting, collaboration, capability building and delivery of programs.
41 Detailed Initiatives
5.1.3 Manufacturing Margin > To improve margins for dairy DA will assist in the transfer of DIAL
Improvement manufacturers by targeting new product developed intellectual property into
and process opportunities. Australian manufacturing sites through
When compared to global markets, the streamed funding for this purpose in
Australian dairy manufacturing sector Investment Focus: DAs ongoing strategy
conjunction with company members
comprises small to medium sized is to utilise Dairy Innovation Australia Ltd
co-investment. Improving their technology
processors. This lack of scale reinforces (DIAL) as the pathway for processing
transfer capability will be an important focus
the need for a central mechanism for oriented investment. DIAL membership
for DIAL.
collaboration in the area of innovation and includes all major processors. This
technology development. DAs role is to structure enables leverage of DA levy payer The underpinning new products strategy
ensure that the overall strategic direction of funding contributions by a factor of 4:1. focuses on isolating synergistic components
central pre-competitive research and During 2013/14 DIAL will review its model of to enhance benefits and command greater
innovation is relevant to the industrys needs operations to better reflect DA and levy value. The strategy has deliberately moved
across all time horizons. payer expectation that provides DA with away from isolating minor individual
greater say over the direction of DIAL components to fractions containing multiple
Milk contains many components that have expenditure. components, which typically also reduces
health and nutritional benefits. Isolating the cost to manufacture and is a more
these components into new products offers There are five potential future projects to be
natural fit with a functional food offering.
considered to the value of $1.1m in this
the opportunity for higher product margins,
Strategic Program for 2012/13 relating to There is a planned scaling back in the
but involves increased risk (both technically
cheese yield, high solids evaporation, smart number of projects in this area to 2. The
and commercially) for manufacturers. DAs
dewatering and benchmarking of waste. continuing projects are New Product
support can help reduce the barriers facing
The key focus of DIAL investment is opportunities with gut health benefits and
dairy companies to make the most of these
development and transfer of technologies to Improving the industry uptake of high
opportunities.
deliver value added products, smarter margin products. This provides a focus on
Objectives: manufacturing processes and build the largest functional food market category
> To accelerate the delivery of an innovative, knowledge and innovative capability. Highly (gut health) in which dairy is already well
internationally competitive, profitable and leveraged investment in 2013 will allow core credentialed. The other project area aims to
sustainable Australian dairy manufacturing technologies in cheese manufacture, improve the uptake of such opportunities by
industry. process efficiency, new product formulation industry.
and shelf life extension to be developed and
> To provide Australian manufacturing with
delivered through established capability.
a strong integrated R&D capability that
contributes to global competitiveness.
Figure 29: Strategic Direction Priorities for Milk Processing Oriented Activity
Knowledge & Insights $4.4m > Information that is useful to stakeholders in > Service rating for overall services is > 7/10
3.8% their business decision-making is collected, > Positive feedback, use of analysis and data
analysed and made available in development and assessment of
> Information provides insights which improve programs
strategic planning and program delivery for
DA
43 Detailed Initiatives
5.1.4.1 International Market 5.1.4.2 Knowledge and Insights
Support
DA is uniquely placed to serve as a
Exports represent 40% of dairy production centralised collection point for data sourced
and are the key pathway for industry on a confidential basis from key
growth. Under this program, DA seeks to manufacturers and government sources.
maintain and enhance international market There is a need for provision of timely and
access for Australian exporters. credible information to all dairy industry
participants as well as stakeholders such as
Objectives:
government, banks and service providers,
> To secure a more favourable and
as a basis for decision-making and
profitable export market environment for
investment. However, the growth of
Australian dairy products through
information in print and online poses a
strategic trade policy reforms and
challenge for time-challenged dairy industry
agreements.
stakeholders in searching for relevant data
> To prevent the potential erosion of access and developing insights that are actionable
opportunities and conditions in key in their businesses. These programs
markets through the implementation of provide a centralised point for accumulated,
regulatory or policy changes. relevant knowledge for the industry.
> In key export markets, support higher
exporter returns by developing and Objective:
maintaining industry level platforms that > To collect, analyse and make available
generate a close awareness and active information that is useful to stakeholders
buyer preference for Australian dairy in their business decision-making.
products. > To provide information and develop
insights to improve strategic planning and
Focus of Investment: DA will support program delivery for DA.
government initiatives focused on trade
agreements with all relevant countries and Investment Focus: DA sources data
regions (within Asia: Japan, China, Korea, cost-effectively for industry by maintaining a
Indonesia, and India). This is critical to central database of international datasets
building long-term business partnerships that can be accessed by stakeholders. The
and defending existing commercial collected knowledge (that is developed from
positions. The global trading environment is these activities) is then used to facilitate DA
becoming more challenging through an and industry-level business planning and
escalation of behind-the-border measures prioritisation for the positioning of dairy in
and technical trade barriers. Increased use national and international debates on dairys
of such non-tariff barriers in priority markets economic, social and environmental
is affecting trade in agricultural goods contribution.
including dairy products. Therefore, in DA also coordinates stakeholder surveys to
negotiating these agreements, streamlining understand farmer demographics,
requirements and technical barriers is also sentiment, issues and intentions, evaluate
important. For example, when tariff rate issues addressed by programs and
quotas are used, the administration of these incorporate key challenges and issues into
quotas in Australia or in the importing strategic planning.
country can be costly and burdensome as
to undermine any competitive gains from The DA Library provides a central repository
having access to the quotas. for research reports, books and journals as
well as cost-effective access to online
Scope of effort: information which can be utilised by all
> Co-ordinate the development of industry industry stakeholders. The library provides a
positions/preferred approaches in key help desk, dealing with over 6,000 enquiries
trade negotiations; facilitate their each year.
presentation to, and adoption by, national
and international audiences. The knowledge that is developed from
> Provide direct technical support to these activities is also used to facilitate DA
government/industry negotiators in and industry-level business planning and
strategic trade negotiations and disputes prioritisation for the positioning of dairy in
that affect Australian dairys national and international debates on dairys
competitiveness or conditions of access economic, social and environmental
to preferred markets. contribution.
> Provide a policy/market access help desk
for industry (including assessment of the
commercial implications of policy and
market reforms in major producing
regions).
> Work closely with exporters to develop an
integrated suite of industry level marketing
activities that complement commercial
sales and improve the perceived value
and confidence that buyers attach to
Australian dairy.
5.2.1 Overview new technology and social network Stakeholder confidence in the future of the
platforms; the growing influence of NGOs; industry is one important driver in ensuring it
Collaborative priorities for Australian industry rising scepticism of company ethics, survives and flourishes. This is a statement
promotion and protection include motives and practices; and, ongoing backed up by observations from the
contributing to an industry prioritising financial and economic volatility. There is Horizon 2020 study, which identified that a
exercise (endorsed by ADIC) and increased public scrutiny on ethical and key strategy in winning ongoing respect
implementing the Horizon 2020 sustainable production systems which and confidence from consumers, customers
recommendations and DA will work in means the Australian and global dairy and community will be establishing effective,
collaboration with ADF, ADPF and the wider industries need to develop effective emotional connections on key propositions.
industry in this regard. Horizon 2020 strategies to manage reputational issues. In response to the drivers of reputation and
outcomes have strongly indicated that a Public concerns and actions are enabled by industry integrity, DAs strategic response is
sustainable dairy industry is one that builds a voice that is spread rapidly through many comprised of 3 key elements, which form a
and maintains its reputation with the new digital and social media channels. The self re-enforcing system of influence that
community. As such, the focus and issues impacting the reputation of the strengthens relationships, enables policy,
activities under SP2 have been revised to industry include: drives demand and supports dairying
better address this objective. Investment in > Challenges to the food safety and security operations. These elements establish the
this priority will be $22.8 million (20% of systems. foundations upon which to integrate,
total expenditure) over the 3 years of the > Responsible use of natural resources. coordinate and monitor ongoing dairy
plan and is divided into 2 strategic reputation activity.
> Size of our environmental footprint.
objectives and 4 programs:
> Animal welfare and ethical production 1. Relationships: Stakeholder
> Industry promotion ($13.2m): Promoting
methods. communications which engage external
the benefits of dairy products to
stakeholders and build stronger
community and community influencers, Any measures to enhance the reputation
relationships.
and benchmarking industry sustainability. and integrity of the industry must include
2. Policy Support: Capacity-building
> Industry protection ($9.6m): Helping increasing commitment to national animal
activities which support the industrys
industry manage current and future risk health programs and bio-security
voice and influence policy development.
areas and helping to improve the preparedness. The challenge in doing this
reputation of the industry within the effectively is to avoid duplication and 3. Demand: Industry promotion which
community. excessive compliance burdens. showcases the benefits of industry and
Underpinning this changed landscape is the grows demand.
Recent changes in the reputational need for the dairy industry to maintain its
landscape are exerting pressures on social licence to operate - the implicit
organisational and industry reputations in consent of government and society to allow
Australia and abroad. These pressures companies and industries to carry out their
include changes in community and commercial activities with a minimum of
consumer expectations about how goods regulatory interference or opposition from
are produced; increasing scrutiny through local communities.
Industry Promotion
Priority Industry Promotion
Sustainability Reporting
SP2
45 Detailed Initiatives
A summary of objectives and targets across
the four Strategic Programs is as follows:
roving Wellbeing
Imp
Farming
Consumer
Communities
l Impact
E n han
nt a
ci n
Societal Shapers
e
gL
nm
ive
ro
oo
En
li h
vi
ds g
in
Re d uc
47 Detailed Initiatives
5.2.2.2 Sustainability Reporting 5.2.3 Industry Protection 5.2.3.2 Industry Reputation
Objective: Sustainability reporting (often 5.2.3.1 Australian Industry Support Objective:
noted as Corporate Social Responsibility or > Maintain/improve community sentiment
Objective: To provide industry support in
ethical sourcing) is increasingly becoming a towards dairy.
the areas of:
requirement for the dairy industrys major
> Environmental and natural resource > Maintain/improve key opinion leaders/key
customers. While Asian markets are yet to
management policies (water, energy, stakeholders positive attitude towards
fully embrace this, it is happening in Europe
climate change, soil and biodiversity dairy.
and North America. The large multinationals
management, natural disaster relief, etc), > Supporting industry infrastructure and
like Unilever, Nestle, Danone and others all
and regulatory affairs. policy resources.
have requirements relating to sustainable/
ethical sourcing. In Australia, the major > Policy areas of financial management, > Maintain/build relevance of health and
supermarkets have Sustainability infrastructure, workforce and education, nutrition benefits of dairy to target
requirements. All aim to have reached and health and nutrition. segments.
specific goals by 2020. > Positively influence perceived benefits of
Investment focus: This program supports
dairy amongst key influencers of target
Investment Focus: This industry the dairy industrys development of strategic
segment.
framework will provide a solid platform that policy and drives the implementation of the
Investment Focus:
can be leveraged by individual dairy outcomes of policy change. Specific
initiatives and activities will support the dairy > Development and implementation of an
companies for their own sustainability plans,
industrys development of strategic policy integrated, focused and disciplined
while attempting to ensure dairy farmers are
positions and achieve outcomes that will program of marketing and
shielded from direct cost implications at the
improve profitability and improve the communications strategy to realise
individual farmer level. Smaller
industrys reputation as a safe food source reputational improvements via
manufacturers can also use the industry
and good environmental steward. This Legendairy.
strategic framework if they do not have their
own. The whole-of-industry approach will includes: > Engage, arm and mobilise the industrys
also build on work already underway across > Commissioning expert analysis to review greatest assets (farmers and their
the supply chain, not just levy funded/DA existing and proposed policies, and communities) with the messages, tools
activities. identify innovative policy solutions; and the confidence to tell the industry
preparing background briefings and other story.
The Sustainability Strategic Framework will communication materials to support > Market the dairy story to societal shapers:
enable the dairy industry to meet corporate policy positions. These are the influencers of our society
social responsibility agendas of the whether they are government, community
> Relationship management initiatives,
industrys major domestic and international or non-governmental organisations.
including attendance and presentations in
stakeholders in a way that does not add > Market the dairy story to consumers
government and stakeholder consultation
unnecessary cost burdens. The desired based on quality and health benefit
forums, conferences, public speaking,
outcomes of the framework are: messaging.
and support for industry representatives
> Whole of dairy supply chain is recognised attending meetings and other > Position Legendairy around three key
as sustainable. engagement opportunities. sustainability objectives: Enhancing
> Consumers and community trust in the > Co-investment with other RDCs and livelihoods; Improving wellbeing and
Australian dairy industry. research entities in reviewing the effects, Reducing environmental impact.
> Dairy industry maintains its right to costs and benefits of current and
produce - no additional sustainability proposed policy levers.
assurance measures required.
> Industry reputational promotion activities
> Australian dairy industry is actively sought and events, such as a Legendairy
out by customers as a preferred supplier picnic at Parliament House, Canberra;
of sustainable inputs/products. social media engagement; Legendairy
> Governments acknowledge dairy industry marketing initiatives.
as a leader in sustainable production
systems and seek to reduce regulatory
burdens and engage with the dairy
industry when developing policies
impacting the industrys sustainability.
> User friendly sustainability benchmarking
tools are established and add value to the
whole of chain sustainability work being
undertaken.
> DA drives towards consistency with the
wider global industry e.g. Sustainable
Agriculture Initiatives (SAI).
5.3.1 Overview Pressure on farm profitability makes it The other key element under this strategic
difficult for farmers to afford additional priority is extension, with the objective of
An important role of any central body is labour and many farmers are working longer effectively transferring the outcomes of farm
fostering the capability of the industrys hours as a result. Retention of farm workers based R&D to people on farm. The
human resources as people are critical to remains an issue and comes at a cost to a challenge of change management and
industry performance. There is little dairy dairy business. The estimated turnover rate extension for Australian dairy is magnified
specific education and training support for for the dairy industry is 35% (compared with by the diversity of dairy farm businesses,
the industry beyond those programs that 18.5% for all Australian organisations) and is which are geographically dispersed,
are sponsored by DA. Investment in this conservatively estimated to cost the dairy non-uniform and increasingly regionalised in
priority will be $20.6 million (18% of total industry $60m per annum. Local labour character.
expenditure) over the 3 years of the plan shortfalls are being supplemented by an
and is divided into the following strategic increase in overseas workers seeking
elements: employment in Australia. Dairy farmers
> Capability building ($19.9m): compete with other industries for skilled and
Educational programs and Extension semi-skilled labour and this is hindered by
activity focused on transfer of technology, the fact that the image of agriculture and
skills and capability to the farm. the dairy industry is still poor.
> Workforce Planning & Co-ordination
($0.7m): Research and planning to In response to the workforce issues and
ensure that the industry has the right mix trends that present challenges to the
of people and skills in the future. growing skills and capability, DA will pursue
The image and general regard of the dairy the following strategic activities in order to
industry is an issue when seeking to attract continue to develop the dairy industry
young or new entrants into the labour workforce:
market. School students are faced with a > Regional ownership and implementation
huge array of options dairy is just one of of workforce planning and action
the many and it is difficult to articulate a initiatives.
point of difference. Considerations such as > Measurement of impact resulting from
clear and attractive career path, type of job, training and development activities.
work life balance, remoteness, and wealth > Transition from awareness programs to
creation opportunities are not fully employment outcomes.
understood by those outside the industry > Understanding of effective business
and this acts a barrier to entering the transition mechanisms and the supporting
industry. skills and knowledge required.
SP3
Workforce Planning
& Coordination Workforce Strategy Planning & Action
49 Detailed Initiatives
Almost 20% of DAs project expenditure is
directed towards capability focused projects
across the following 3 strategic programs:
Extension & $12.5m > Dairy industry assumes greater ore than 25% farmer participation
>M
Change 11.0% responsibility for leading, managing in DA sponsored activity
Management and funding extension delivery to >1
00% of requests for technical input
dairy farmers into the future into NRM and climate change policy
responded to by DA
51 Detailed Initiatives
5.4
DA Supporting Activity
5.4.1 DA Operations direct engagement, national and regional 5.4.1.2 Statutory Reporting
event sponsorships, on-line and a range of
5.4.1.1 Communications targeted resources. This program encompasses the statutory
obligations of the organisation:
For farmers to continue to support the levy
Strategic Direction: In the two years
system, they want their opinions and needs > Hosting of the Annual General Meeting.
leading up to the 2012 Dairy Levy Poll our
understood, and to see that their investment > Production of the Annual Report.
efforts were focussed exclusively on dairy
is being used effectively in this regard. > Effective reporting to funding partners,
farmers and farmer influencers with the aim
Similarly, our key funding partners must see including the Australian Government, as
of increasing the level of awareness of DAs
tangible value and the accomplishment of required under the Statutory Funding
role, the range of levy investments
agreed goals, in order to continue co- Agreement (SFA).
undertaken and the benefits associated with
investing in DA programs.
these investments. The scope will now
Objective: This program aims to build and widen to incorporate formal
protect DAs corporate profile and reputation communications with all key stakeholder
among our key stakeholders, and to groups including Department of Agriculture,
improve farmer satisfaction with DA and its Fisheries and Forestry (DAFF) and the State
management of levy funds. To do this the Departments of Primary Industries, given
focus is on: their significant contributions to a range of
> Raising awareness of the role of DA. industry investments. The key focus areas
towards the end of the 3 year period will be
> Raising awareness of levy investment
the next Levy Poll. Upcoming issues from a
priorities and the value and benefits
communications view point are:
delivered through DA and levy
investments (including tools and > Continued consolidation of our
resources to support their businesses). information outputs to deliver greater
message cut-through and information
> Ensure key stakeholders are engaged and
retention.
feel that they are heard and valued.
> Achieving message cut-through in a
Approach: Given the number and diversity highly congested information
of our audiences, there is no single activity environment.
that can adequately address DAs corporate > Greater on ground visibility and presence
communication requirements a for DA.
multidimensional but integrated approach > Continued improvements on brand
will be adopted. This approach will attribution.
recognise the information overload
> A strong focus on engagement with
experienced by all our audiences, farmers in
stakeholders.
particular, and the divergences in
information requirements across our target > The adoption of digital technologies to
audiences. This program utilises a range of deliver training, education and extension.
communication channels including media,
Supply Chain: DA recognises that industry Triple Bottom Line Reporting: The DA Remit: By functional outcome (see
success is dependent upon profitability allocation of expenditure over the next three section 1.4), more than half of expenditure
within each level of the supply chain. years is divided across the three categories is devoted to R&D and the extension
Approximately half of expenditure is directed of Triple Bottom Line reporting: economic, thereof. Despite the importance of export
to pre-farmgate investments, with environmental and social responsibility. The markets to the industry, DA spends only 4%
processing and consumer level receiving allocation of 60% of DAs investment under on trade policy as it acts in a supporting role
16% and 7% respectively. the Economic category is in line with DAs only, to the large dairy export companies.
allocation across Strategic Priorities. SP1
accounts for 59% of DAs investment. SP3
contains most of DAs investment over the
next three years, in social responsibility.
13
1 7 1
12
3
2 2
10 11
3
9 6
4 3
5 1
8 2 4
7 6
5
Figure 36: DA investment across the Figure 37: Expenditure by Triple Figure 38: DA investment by remit 2012-13
dairy supply chain Bottom Line
Each DA project is evaluated for planned For DA the average risk adjusted planned risk management is dealt with in later
future benefit to industry and the risk BCR (after taking into account POS at the sections.
associated with achieving that future project level) for the current portfolio is 3.7
As would be expected, the greatest planned
benefit. This enables DA to create an at the project investment level. Due to
returns are in the on-farm and post-farm
assessment of the consolidated planned average funding leverage of 1:1.8 (via
margin improvement projects. SP2 and
benefit of all current investments. The Government funds and other sources), the
SP3 projects are more difficult to
following table describes: external project average BCR on levy payer investment is
economically value but are a strategically
expenditure, benefit cost ratio (BCR), estimated to be 5.6.
important part of a balanced investment
average probability of success (POS) and
Probability of success at the program level strategy as described earlier.
funding leverage across the strategic
varies from 40% for heavily R&D oriented
priorities and programs.
programs to 100% for service provision
programs. The issue of risk appetite and
2013/14 -
% of Average Funding
Strategic Objective Strategic Program 2015/16 BCR
Total POS Leverage
Expenditure $
SP1 - Increasing farm profitability & competitiveness 67,611,299 59.3% 4.2 56% 2.1
Farm Margin Improvement Alignment & Integration 11,322,654 9.9% 4.3 70% 5.5
Market Support & Insights International Market Support 5,085,550 4.5% 2.8 74% 1.1
SP2 - Protecting and promoting our industry 22,786,762 20.0% 3.5 72% 1.1
Industry Protection Australian Industry Support 3,047,500 2.7% 3.1 75% 1.0
SP3 - Grow capability & skills 20,586,352 18.0% 4.2 59% 1.8
Capability Development Attracting & Retaining People 7,402,026 6.5% 2.6 74% 2.2
6.3.1 Risk - Return Spread the current portfolio at strategic program projects with strong potential commercial
level. gains and simultaneously manage project
With a range of stakeholders and limited risk with acceptable limits.
funds available, maintaining a balanced SP1 is focused on economic returns to the
investment portfolio is an important new farmer and, hence, the risk-return chart (see The predominance of programs in the low
objective for DA. The implementation of our Figure 40) is informative of DAs planned risk-low return quadrant reflects the fact
bespoke project/investment management performance. The chart shows a good that DA funds many programs that are
system has provided the wherewithal to spread of projects with much of the SP1 economically difficult to value (e.g. capability
view the portfolio against various expenditure in the acceptable high return/ building, industry promotional activity) and
dimensions (planned returns, risk, funding medium risk region (Manufacturing Margin that not all returns can be measured in
leverage) and this has resulted in project Improvement, Feedbase & Animal Nutrition, dollar values. Projects that characterise our
investment changes. However, DA is only and Animal Performance). DA is funding activities in SP2 Promoting and Protecting
at the beginning of this analysis process R&D that is inherently risky and it is DAs our Reputation tend to have lower net
and it will take some time before the remit to address important H3 development present values (NPVs), but are strategically
organisation can truly claim to have an ideal areas that are beyond the risk profile of important to ensuring the long-term viability
spread and balance of project expenditure. individual organisations in the industry. The of the industry in that they target reputation,
The following chart provides a snapshot of objective will be to maximise investment in integrity and demand.
2 7 Industry promotion
700
8 Industry repuation management
600
9 Workforce strategy, planning & action
100 4 8 SP1
7 13 5
11 12
- 9 6 14 SP2
SP3
0 20 40 60 80 100
High risk/Low return Low risk/Low return DA supporting
Weighted of average probability of success (%)
Figure 42: Risk and Return Expenditure Distribution Figure 43: Expenditure by Risk
Assessment
7 8
5 4
4 6
5
1
4
1
1
3
3
3 2
2
2
1 An environmentally
1 NR1: An environmentally 1 Productivity and adding value (46%)
sustainable Australia (47%)
sustainable Australia (34%) 2 Supply chain & markets (23%)
2 Promoting & maintaining
2 Promoting & sustaining 3 Natural resource management (6%) good health (3%)
good health (14%)
4 Climate variability & climate 3 Frontier technologies for building
3 Frontier technologies for change (7%) and transforming Australian
building & transforming 5 Biosecurity (2%) industries (40%)
Australian industries (33%)
6 Innovation skills (11%) 4 Safeguarding Australia (9%)
4 Safeguarding Australia (14%)
7 Technology (2%) 5 Other (1%)
5 Other (5%)
8 Other (3%)
Figure 44: Expenditure by National Figure 45: Expenditure by Rural Research Figure 46: Collaborative expenditure by
Research Priorities and Development Priority National Research Priority
DAs funding principally comes from farmer In framing its budgets, DA seeks to balance DAs income and planned expenditure for
levies and government matching funds for planned program outlays with expected this strategic plan.
eligible RD&E expenditure. Other income income so as to maintain a prudent level of
Investment levels will be maintained at
sources include industry and external reserves. The Board reviews the required
$59-62 million per annum over the planned
co-contributions to specific projects, minimum level of reserves annually, taking
period to maximise available funds while
interest earnings and royalties. Total annual into account the contractual commitments
reducing reserves towards the minimum
receipts in the forecast period are in the of the organisation and the potential funding
level.
range $54-56 million. required supporting the industry in the event
of a catastrophic event. Figure 48 presents
63 DA Operational Strategy
7.1.1 Delivery and Overhead Costs Overheads:
> Increased employee costs due to new IT
Delivery (DA labour costs related to project
Corporate Services Manager, Corporate
delivery) and general overhead costs will
Planning Manager, staff training and
increase by 5% ($967k) when compared
on-cost increases.
with the 2012/13 budget due to:
> Accommodation: Additional office space
Delivery: at Southbank.
> Increase in Extension staff during 2012/13 > Depreciation increase: Replacement of
with flow through costs into 2013/14. aging IT infrastructure.
> Addition of 3 Workforce Planning and > More travel costs associated with
Action - Regional Coordinators during additional extension staff.
2013/14. > Decrease in on-costs due to payroll tax
> Addition of personnel into Biotech and exemption.
Animal Health programs. > Decrease in Levy Collection costs due to
DAFF/LRS cost sharing revision.
$ $ $ $ %
Employees, on-costs and agency staff 14,248,667 15,096,238 16,164,067 1,067,829 7%
Office Accommodation, IT and Depreciation 1,749,608 1,634,956 2,154,020 519,064 32%
Telephone, Media and Comms 1,007,017 1,279,975 1,053,014 (226,961) -18%
Travel/Accommodation 561,996 585,000 758,132 173,132 30%
Finance , Insurance and Legal 938,782 894,580 648,205 (246,375) -28%
Stationery etc 380,426 411,408 381,010 (30,398) -7%
Contractors/Consultants 910,244 645,104 376,272 (268,832) -42%
Research & Data - 130,000 120,000 (10,000) -8%
Project Expense 71,668 37,800 27,550 (10,250) -27%
Grand Total 19,868,408 20,715,061 21,682,269 967,208 5%
65 DA Operational Strategy
Minimum Reserve Level
Total Income
Total Expenditure
Closing Reserves
70,000
60,000
Planned Reserves ($000s)
50,000
40,000
30,000
20,000
10,000
10/11 11/12 12/13 13/14 14/15 15/16
$ $ $
Contracted
Uncontracted
45
40
35
30
25
$m
20
15
10
0
03/14 14/15 15/16
7.2.1 About Dairy Australias People 7.2.2 Organisation Structure with ADF/ADPF/ADIC on their strategic
policy priorities. The groups
DAs people have a dedication and passion DA has an investment management
investments address the export
for the dairy industry. Their expertise and role, where Program Managers oversee
commitment mean that DA can offer a element of SP1. (Increasing farm
a range of projects governed by
broad range of services across the whole profitability and competitiveness) and
investment contracts, typically
dairy supply chain. The organisation SP2. (Protecting and promoting our
undertaken by resources external to
employs around 100 people and industry).
the organisation.
approximately 12% of staff has been with Industry Promotion and Product
the organisation (and its predecessors) for These Program Managers report to one
Innovation aims to increase
more than ten years. Many of the of six Business Group General
community and dairy farmer confidence
employees bring to the organisation Managers. Investment projects may
in the dairy industry and its products
extensive farm, manufacturing and scientific consist of full or partial funding
and invest in processor innovation
research experience. A significant number responsibility for external organisations,
have tertiary qualifications in a range of
activities (including responsibility for
as described in Figure 54. Some
business and industry-related functions and DIAL) for the benefit of the Australian
Business Groups also have external
post-graduate qualifications such as dairy industry. The groups marketing
advisory bodies that assist in direction
doctorates and MBAs. and communications focus, addresses
and industry integration.
SP2. (Protecting and promoting our
DA recognises the value of harmonious Recent re-organisation of DA has industry) and, is organised around three
working conditions ensuring a safe and fair resulted in the following structure which target markets: 1. Consumer, 2.
workplace, as well as choice and is anticipated to remain stable over the Influencers, and 3. Partnerships and
opportunity for all its employees. The
forecast period. The Executive Farming Communities. Under SP2, the
Companys practices support a diverse
Leadership Team (ELT) of the group is also responsible for investment
team, providing a flexible environment that
organisation comprises the CEO and in dairy health and nutrition research
aligns with the business. DA continues to
attract and retain an adaptive and high- the Business Group Leaders marked * and industry communication thereof.
performing workforce that is able to meet in Figure 54.
This group also addresses the
current and future needs. The responsibility of each of the manufacturing element of SP 1
Business Groups is as follows: (Increasing farm profitability and
competitiveness) through its investment
Farm Productivity and Delivery in the processor industry central R&D
coordinates research development and organisation (DIAL).
extension that focus on farm
productivity and profits to address SP1. Industry People and Capability
(Increasing farm profitability) and SP3. sponsors vocational education and
(Grow capability and skills) including training for farming and manufacturing
projects related to: within the dairy industry. The
> Business management investment focus of this group is to
> Feed availability and consumption address SP3 (Grow skills and
> Herd size and breeding capability), in particular:
> Resource Management. > Workforce strategy, Planning and
Action and
This group is also responsible for DA > Attracting and Retaining people to/in
funding of RDPs and the Dairy Futures the industry.
CRC.
The NCDEA, which delivers vocational
Trade and Industry Strategy aims to education and training for and with the
enhance and sustain the Australian Australian dairy industry, is one of the
dairy industrys profitability. It works groups key investments in this area.
with industry stakeholders to facilitate
favourable international market Sustainability is an independent group
environments for Australian dairy with the responsibility of coordinating
exports and provides high level key stakeholders to develop and
technical support to industry and implement the dairy industrys
government on emerging trade and sustainability framework. This includes
industry issues. The group also establishing a sustainability report
coordinates the policy hub which which will assist dairy farming and
integrates policy work undertaken manufacturing reduce dairys
across all DA business groups to environmental impact and remain in
enhance DAs liaison and coordination business for the long term.
67 DA Operational Strategy
Business Operations provides the
financial, HR and administrative Managing Director
backbone to DA. It is responsible for
ensuring that DAs business
performance is effective and that the
organisation has optimum capability,
thereby delivering the best possible Business Group General Managers
service to stakeholders. The groups
functions are:
> Governance, compliance and risk
management
> Accounting & Finance Strategic Program Managers
> Legal Support
> Human Resource Management
> Corporate Communications
> Strategy & Planning
> Information Technology Systems and Project Leaders
Processes
> Performance Management and
Evaluation. Figure 53: DA Reporting Structure
Ian Halliday
Managing Director
General Managers/
Business Groups
Isabel MacNeill*
Chris Murphy* Charles McElhone* Shane Hellwege Ross Joblin*
Industry Promotion Helen Dornom
Farm Productivity Trade & Industry Industry People & Business
& Product Sustainability
and Delivery Strategy Capability Operations
Innovation
Partial or full funding
of external bodies
Regional
Development Dairy Innovation National Centre for
Programs (RDP) Australia Limited Dairy Education
(DIAL) Australia (NCDEA)
Dairy Futures CRC
69 DA Operational Strategy
7.3.2 Board This allows the Boards composition to be 7.3.2.2 Role of the Board
reviewed annually to ensure that it continues
7.3.2.1 Board Composition to have the skills and experience necessary The Board is responsible for guiding and
to meet the challenges facing the Company monitoring the Company on behalf of its
At 30 June 2012, the Board comprised
and industry. Candidates for election are members, to whom the Board is
eight non-executive Directors (including the
nominated by a Dairy Industry Board accountable. The roles and responsibilities
Chair) plus the Managing Director. The
Selection Committee (assisted by a of the Board are set out in detail in the
Boards size and composition enables it to
Pre-Selection Committee which identifies Board Charter. These include ensuring that
make timely decisions with input from
candidates with milk-producer skills) appropriate policies, procedures and
Directors who have a variety of skills and
comprising representatives from the two systems are in place to manage risk and
perspectives. The skills, experience and
Group B members. In addition, Group A ensure high standards of accountability,
expertise of each Director in office at the
members with the necessary skills and level ethical conduct and legal compliance. DA
date of this report are set out in more detail
of Group A member support are able to recognises that an effective Board is crucial
in the Directors Report. The Board
lodge nominations for Board positions. to achieving Company and industry
recognises that the relevant skills and
objectives. Accordingly, DA has structured
experience requirements for Directors
its Board to ensure that the Board has the
might, at times, lead to a potential conflict
skills and experience necessary to enable it
of interest for a Director. Directors provide a
to deal with current and emerging dairy
standing declaration of interests and also
industry issues, and is able to effectively
provide notice when a new office or interest
and independently review management
is acquired. A policy exists for dealing with
performance and decisions.
conflicts of interest.
Under the Board Charter, the Board
The Constitution provides for three-year
conducts an annual review to evaluate its
terms for non executive Directors. At each
performance and identify areas for
AGM the Companys Group A members
improvement, with each third review being
elect Directors to fill Board vacancies
facilitated by an expert external consultant.
created when Directors retire by rotation.
Max Roberts
Chairman
Geoffrey Akers Wendy Craik Bruce Donnison John McKillop Alan Grant
Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive
Director Director Director Director Director
71 DA Operational Strategy
7.3.4 Risk Management
DA recognises the importance of effective
risk management in order to ensure
awareness of the breadth and depth of
uncertainties that may affect DAs ability to
deliver objectives. Accordingly, risk
management activities, are considered as
an integral part of DAs management
practices. The three areas critical to DAs
ability to deliver relate to Funding,
Governance and Operations and
Performance. Figure 56 presents the
objectives and high level mitigation strategy
for these three critical areas.
The scope of DAs corporate DA operates and continues to develop a Performance management and evaluation is
communications efforts will widen to web based interface (via the DA website) to a central DA function which informs
incorporate formal communications with all allow the industry to access central strategy, investment, implementation and
key stakeholder groups including DAFF and information. Behind this DA maintains review. It is also fundamental to
State Departments of Primary Industries, finance and accounting system (including demonstrating value to the Board, industry
given their significant contributions to a HR and payroll modules), Customer and Government.
range of industry investments. The Relationship Management (CRM) and
Via its accounting and program
Corporate Communications team supports project management systems. The web
management system, DA tracks milestone
the work of all business units with emphasis interface provides a method to integrate
performance for each project/investment.
on: access to these systems.
Key performance indicators (KPIs relating to
> The corporate brand (not the industry Over the preceding two years, DA has Strategic Objectives) are maintained for
brand i.e. promotion initiatives around the implemented a new project management each Strategic Program and are reviewed
dairy category or industry reputation - system based upon a best practice annually. At a high level, the balance of the
these are covered in SP2 investments). process for project selection and control. investment portfolio can be reviewed via
> Key stakeholder audiences including This has enabled the organisation to better risk-return or expenditure allocation charts
internal stakeholders. define and manage the breadth of activities available directly from the project
> Both DAs corporate communication undertaken. The system also helps ensure management system.
needs (dissemination of corporate DA activities are conducted with appropriate
messages around DAs role, levy rigour and transparency to deliver value for In 2011 DA initiated an independent review
investments/associated benefits and money and achieve intended outcomes. DA of the performance of DA which
progress tracking) and DAs essential will continue to refine the processes and recommended strengthening performance
farmer knowledge needs (program tools to support staff utilising the project monitoring and reporting with a particular
communications to facilitate on farm management system. emphasis on:
practice change). >F ewer performance measures linked to
Understanding and engaging effectively with DAs Strategic Plan, Annual Operating
dairy farmers (and other stakeholders) is Plan (AOP) and planning hierarchy
core to DAs business success. Recent elements.
farmer surveys indicate that this area can be >A suite of user tested and targeted
improved by adopting a more customer- information products which report
centric approach. To bring the necessary performance internally and externally.
focus and priority to meeting this challenge,
>R epeatable, cost effective business
a new role of Program Manager Customer
systems to generate the required
Information Services and Systems has been
performance information products in a
created to focus strategically on the
timely, on-going and adaptable manner.
systems, processes and technologies that
will enhance data capture, management DA has now implemented these
and delivery both within DA and within the recommendations and is currently analysing
industry. and establishing improvements to the
performance management and evaluation
function, identifying enhancements to the
Project and KPI Management System
(PKMS), and identifying benefits of
harmonising performance and evaluation
with other RDCs.
Attachment C contains the KPIs for the
current financial for the year ending 30 June
2013.
73 DA Operational Strategy
References
1. ABARES (2012), Agricultural commodity statistics 2012, Australian Bureau of Statistics and Resource Economics and Sciences,
December, Canberra and Dairy NZ (2012), New Zealand Dairy Statistics 2011-12, Dairy NZ, Hamilton, Retrieved from http://www.
dairynz.co.nz/Publications/NZDairyStats/2011-12/
2. ABARES (2013), AGSURF database, Retrieved from http://abares.win.hostaway.net.au/ame/agsurf/agsurf.asp
3. Dairy Australia (2012a), Australian Dairy Industry In Focus 2012
4. Dairy Australia (2013a)
5. Ibid
6. ABARES (2013), AGSURF database
7. ABARES (2012), Agricultural commodity statistics 2012 and Dairy Australia (2011), InCalf Fertility Data Project 2011, Retrieved from
http://www.dairyaustralia.com.au/Animals-feed-and-environment/Fertility/InCalf-resources-and-other-tools/InCalf-Research.aspx
8. Dairy Australia (2012a), Australian Dairy Industry In Focus 2012
9. Dairy Australia (2013b), National Dairy Farmer Survey
10. Dairy Australia (2012a), Australian Dairy Industry In Focus 2012
11. Ibid
12. Reserve Bank of Australia (2013) Retrieved from http://www.rba.gov.au/statistics/tables/index.html#exchange_rates and ABARES
(2012), Agricultural commodity statistics 2012
13. IMF (2013), World Economic Outlook April 2013, International Monetary Fund, Washington DC, 2013 Retrieved from http://www.imf.
org/external/pubs/ft/weo/2013/01/index.htm
14. Dairy Australia (2012a), Australian Dairy Industry In Focus 2012
15. Dairy Australia (2012b), Horizon 2020: Future scenarios for the Australian Dairy Industry, Final Report to the Project Board from the
Working Group, December 2012
16. Dairy Australia (2013b)
Other references utilised in the plan
> Dairy Australia (2012c), Dairy Australia Annual Report 2011/12, Dairy Australia Limited, Melbourne, http://www.dairyaustralia.com.au/
Industry-overview/About-Dairy-Australia/Publications-2.aspx
> Dairy Australia (2013), Dairy 2013 Situation and Outlook, Dairy Australia Limited, Melbourne, http://www.dairyaustralia.com.au/Industry-
overview/About-Dairy-Australia/Publications-2.aspx
> Constitution of Dairy Australia Limited, http://www.dairyaustralia.com.au/Industry-overview/About-Dairy-Australia/Publications-2.aspx
> Statutory Funding Deed (2007)
> Dairy Australia Board Charter
> GHD (2011), Dairy Australia Review of Performance 2006-07 to 2010-11
> Australian Government (2012), Rural Research and Development Policy Statement, Department of Agriculture Fisheries and Forestry,
Canberra
> Commonwealth of Australia (2012), Australia in the Asian Century: White Paper October 2012, Department of the Prime Minister and
Cabinet, Canberra
> National Health and Medical Research Council (2013), Australian Dietary Guidelines, Canberra: National Health and Medical Research
Council, Retrieved from http://www.nhmrc.gov.au/guidelines/publications/n55
> Commonwealth of Australia (2012), Water Act 2007: Basin Plan, Murray-Darling Basin Authority, November 2012, Retrieved from http://
www.mdba.gov.au/what-we-do/basin-plan
> 1 May 2012, Letter from the Minister for Agriculture, Fisheries and Forestry to the Chairman of DA
> DPIV/Dairy Australia (2012), Dairy Industry Farm Monitor Project, Annual Report 2011/12
> Dairy Australia (2012d), Enhancing livelihoods, improving wellbeing, reducing environmental impact: A strategic framework for keeping the
Australian dairy industry in business for the long term, Dairy Australia Limited, Melbourne
> DAFF (2013), National Food Plan, Our food future, Department of Agriculture, Fisheries and Forestry
75 References
Attachments
The following industry SWOT analysis summarises the key high level issues facing the industry and the strategic response from DA within
its own (pre-competitive) remit:
77 Attachment A
Industry SWOT Analysis DA Strategy
Strengths Weaknesses Strategic Response Strategic Program/s
Human Resources > Lineage > Ability to attract >U
nderstand industry HR > Workforce Strategy,
> Knowledge base personnel needs Planning & Action
> Resilience > Management capability >E
nhance skills and > Attracting and Retaining
> Turnover capabilities People
Technology/ R&D > Central planning > Fragmented >E
ncourage RO > Animal Performance
National RD&E Dairy > Lack of genuine collaboration (CRC)
Moving Forward collaboration (CSIRO & >F
ocused investment on > Manufacturing Margin
> Strong R&D base Pre Universities) extension/technology Improvement (DIAL)
& post farm transfer
> RO capability
> Technology transfer of >H
eavy investment > Extension & Change
R&D to farm in extension and Management
technology transfer
> Genetics: Herd > Herd fertility >F
arm R&D and > Animal Performance
improvement > Importing genetics extension activity
productivity increasing
Product > Product history & > Fats, Lactose >H &N research programs > Industry Reputation
reputation Health intolerance > Industry influencer
& nutrition product program
advantage
> Product quality > Not differentiated from > Manufacturing Margin
quality control, strong NZ Improvement (DIAL)
regulatory & compliance
79 Attachment A
Industry SWOT Analysis DA Strategy
Threats Opportunities Strategic Response Strategic Program/s
Regulatory > Dietary guidelines > Expanded position >H
&N R&D that > Industry Reputation
loss of dairys position of Dairy within the demonstrates value of
guidelines dairy, management of
influencers
>E
xpanded guidelines:
Aged care elderly dairy
consumption
Environmental/ > Climate change > Benchmarking energy >R
esources Management >R
esource management
Natural reduction in availability and water usage efficiency improvement >S
ustainability Reporting
Resources of suitable land for > Water efficient pastures schemes >A
ustralian Industry
dairy > Carbon credits sale to >S
ustainability definition & Support
> Carbon tax (processor Government monitoring
only) > More efficient use of
> Nitrogen usage/runoff fertilizers
> Regulatory constraints
on natural resource
use water availability
> Natural disasters >B
etter preparation for >B
usiness Operations
increased frequency disasters to mitigate >A
nimal Welfare
> Bio-security/Animal negative outcomes programs
disease
Product > Dairy slowly losing its > Protein intensive > Promotion to maintain/ >P ost Farm Margin
position as a dietary products/muscle re-establish dairy as a Improvement
staple building critical element of diet: > Industry Reputation
> Non-dairy substitutes: > Gut health: Pro/pre- Legendairy
Soy, margarine biotic products > New product support
programs
Technical > New technology > On-farm and processor > Assess new >A nimal Performance:
platforms for automation technologies Precision Framing
producers or > Provide farmer with Technologies
processors makes knowledge and adoption > Extension
current infrastructure assistance
non-competitive
81 Attachment B
SP1 - Increasing farm profitability & competitiveness 3 Year Planned Expenditure
2013/14 2014/15 2015/16 Total
Post farm Manufactur- P185 Dairy Innovation Australia 3,150,000 3,100,000 3,100,000 9,350,000
margin ing Demand Limited (DIAL)
improvement & Margin
P211 Improving Manufacturing 115,000 375,000 364,000 854,000
Improvement
Efficiencies
P180 New Product Opportunities with 25,000 - - 25,000
Oral Health Benefits
P182 New Product Opportunities with 190,000 150,000 65,000 405,000
Gut Health Benefits
P184 Improving the Management of 255,000 305,000 365,000 925,000
High Value Product
Opportunities
Total for Strategic Priority 23,423,756 22,914,949 21,272,594 67,611,299
83 Attachment B
SP3 - Grow capability & skills 3 Year Planned Expenditure
DA - Supporting Activity
85 Attachment C
SP1 Increasing farm profitability & competitiveness
Farm Margin Feedbase & Improved extension of feedbase knowledge Increased farmer participation in 10% >
Improvement Animal feedbase extension programs (e.g. 2012/13
Nutrition Feeding Pastures for Profit).
Improved extension of feedbase knowledge Establishment of pilot regional Sites
feedbase demonstration sites in three established
dairy regions.
Improved nutritional management of transition Proportion of Australian farmers that > 70%
cows practice transition cow feeding.
Increased industry focus on home grown feed Dairy businesses that have an > 2012/13
consumption estimate of annual home grown feed
consumption, tonnes of dry matter
consumed per 100mm of rainfall or
irrigation.
Increased use of improved pasture genetics Strategy for the development of an Strategy
Australian pasture variety evaluation established
and selection system (Forage Value
Index) for perennial ryegrass.
Resource Man- 60% of Australian dairy farmers demonstrate 3 Fert$mart pilots conducted and two 100 farmers/
agement industry nutrient management good practice nitrogen/feedbase demonstration sites advisors
by 2018. established
Improved knowledge about the role of soil Research initiative to identify the role Achieved
micro-organisms in facilitating nutrient of soil micro-organisms in facilitating
availability in Australian dairy soils. nutrient availability under low and high
fertiliser regimes implemented
Nitrogen loss pathways across a range of One new strategy to maximise Achieved
Australian soil types and environmental nitrogen use efficiency identified and
conditions quantified and new strategies to quantified.
maximise nitrogen use efficiency identified by
2017.
Quantified, practical and profitable strategies Modelling of extreme events for three Achieved
to mitigate increased climate risk and green- dairy regions completed
house gas emissions available for a range of
Australian dairy farming systems and
environments by 2017.
Reduced energy use per litre/milk produced by 900 energy assessments conducted 900
Australian dairy farmers on Australian dairy farms assessments
Water productivity Economic and management benefits Fast flow
of faster flow irrigation quantified guidelines
87 Attachment C
SP2 Protecting and promoting our industry
Industry Industry Proportion of Balanced Mums who > 30%
Promotion Promotion recall the Legendairy campaign
(prompted)
To develop awareness and impact of the Increase the percentage of Balanced >64%
Legendairy campaign and its messages Mums who agree I trust the dairy
industry
To develop awareness and impact of the A decrease in the percentage of < 32%
Legendairy campaign and its messages Balanced Mums who agree Im
concerned dairy foods will increase
my weight
To develop awareness and impact of the Increase the percentage of consumers >39%
Legendairy campaign and its messages 50+ reporting they felt positively about
dairy foods and the industry after
talking to their health professional
Increase the % of consumers who > 76%
agree the dairy industry produces
high quality products
To shift attitudes of young singles and couples Maintain the number of physically 23%
on dairy and weight active 18 to 34 year olds who believe
dairy foods help the body recover
after exercise
Sustainability Dairy industry stakeholders demonstrate their Farming sector support for the > 50%
Reporting sustainability credentials against the industry Sustainability Framework farmers
Framework
Number of companies in the > 90%
manufacturing sector that support the
Sustainability Framework
No additional imposts of sustainability Major Customers accept the dairy > 70%
requirements on dairy companies by industrys sustainability credentials as
customers/external stakeholders evidenced by the industrys
Sustainability Report
Industry Australian The development and promotion of evidence- Policy and regulatory decisions
Protection Industry based strategic policy positions, to improve favourable to the Australian dairy
Support profitability and improve the industrys industry.
performance and reputation. Achievement of
positive policy outcomes. Minimize the risk
of adverse decisions undermining profitability
and ongoing industry sustainability. Improved
public and political perception of the industry
as the significant economic power, a good
environmental steward and a source of safe
and nutritious food.
Industry Increase confidence in Australian dairy foods % GPs who agree consumption of > 48%
Reputation and the Australian dairy industry dairy foods is not associated with
Management weight change in adults
89 Attachment C
SP3 Growing capability & skills
Capability Workforce Dairy Industry People Development Council Number of meetings held 5
Development Strategy, is operational
Planning &
Strategic Workforce Action activity occurring Workforce Action regional plans developed 2
Action
regionally
Sustainable processes that have been Processes in place Achieved
adopted across RDPs, Manufacturing and
other Service Providers are in place and
active within 2 years
Workforce development in the dairy services Technical Resource Manuals developed for 2
sector is supported milk machine testers
DA Supporting Activity
DA Communica- Increase farmer awareness of where levies TBA
Operations tions are invested
Increased interest and understanding in Increased participation in research round 40% of staff
stakeholder tracking from staff. ups attend
Internal stakeholder feedback Positive feedback, use of analysis and Positive
data in development and assessment of feedback
programs from staff
Use of industry data Board, ELT and managers access and 100%
utilise data from industry databases awareness,
80% usage