But he didn’t want to talk about market prospects there as he had glowingly the previous year immediately after the co-op was the first Australian company to open an office in Dubai.
Instead he enthused about prospects for greater sales to Russia, saying that there had been a 10-fold increase in inquiry from that country over the past six to 12 months.
It was looking outwards for milk supply because of ongoing tensions with its European neighbours, and a drop of 6% in its own production.
Now Australia finds itself firmly enmeshed in those tensions. Russia has announced a year-long ban on imports of food from the United States, European Union countries, Canada, Norway, and very much last but not least, our trans-Tasman neighbours.
The wails of protest were quick to come with Australian Dairy Farmers’ president Noel Campbell describing it as “unnecessary and unfair”.
Australia exported 22,000 tonnes of dairy products, mostly butter, to Russia which was worth A$112 million in the past year.
Campbell said that in the early 2000s Australian dairy industry deregulation saw farmers leave the land. Droughts, the global financial crisis, and the high Australian dollar also took their toll.
“All the while our New Zealand cousins saw dairy exports charge forward in leaps and bounds,” he said.
Asian and Middle Eastern-based consumers were more than capable of making up for the bad news from Russia and he pointed in particular to hopes that Australia could conclude a free-trade agreement with China by the end of this year.
With the Australian Minister for Trade already describing this move as a dairy deal he said a successful outcome, building on what NZ had achieved with China several years ago, was the industry’s number one priority.
Significantly scaling up of production would be needed, reversing the three billion litre drop in milk flows since 2000, with a more developed investment landscape being needed, using more channels of capital raising and a greater variety of equity arrangements.
It will be interesting to see
if any of the overseas investment interest in NZ dairy farms is diverted across the Tasman, but the Russian trade ban may be one factor acting against it.
Dairy Australia is hosting the inaugural Dairy Farm Investment Forum in Melbourne on September 15 to share more information about regulatory frameworks and where new money would be spent onfarm.
It will be interesting to see if any of the overseas investment interest in NZ dairy farms is diverted across the Tasman, but the Russian trade ban may be one factor acting against it.
Even if this is the case and more cheese is sought from NZ, as appears to be Russia’s aim, it’s not all coming up roses.
The NZ dairy industry could well suffer if now unwanted product, because of its country of origin, ends up dumped on alternative markets which are still open and highly contested.
This is very unwelcome news at a time when the latest GlobalDairyTrade auction is showing just a small sign of correction. The sudden availability of more product from thwarted sellers may mean that customers review their purchasing plans.
They could also seek to renegotiate prices or hold off buying in an attempt to drive prices down in the knowledge that many more sources of supply may suddenly become available.
All of which will leave NZ and Australian dairy farmers and companies wondering just what the next six months will bring.
