The study identifies market design and trade access as the main reasons for Australia’s flagging dairy industry, which has flat lined in terms of exports since the early 2000s while New Zealand’s dairy exports have accelerated. In terms of market design, NZ’s Dairy Industry Restructuring Act (DIRA) is held as an example of a purposeful redesign of market regulations and the incentives that companies face. Australian dairy processing plants are said to lack scale and face higher costs due to the more fragmented nature of the Australian dairy industry.
The study asserts that subsidies and industry assistance programs are not enough, and that a deeper structural redesign is necessary to unlock Australia’s potential. The failed takeover attempt of Warrnambool Cheese & Butter earlier this year by Australia’s largest co-operative Murray Goldburn highlights the competition laws in place, and complications in safeguarding consumer interests while also targeting higher production efficiency.
Trade access is another issue highlighted by the report. Import tariffs have been calculated to cost Australian dairy farmers A$36c/kg MS more than New Zealand farmers face.
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