Australian Dairy Industry Analysis - Example

The paper "Australian Dairy Industry Analysis" is a wonderful example of a report on management. The dairy industry is one of the major rural industries in Australia. Since the first dairy cattle were brought to Australia back in 1788, dairy farming has steadily developed through importing and local breeding. Over the past few decades, the dairy industry has undergone substantial restructuring and development. This in particularly due to the phasing out of government regulation and support in an environment of radical change in the world of dairy product markets (Pwc, 2011). The efficiency of this industry has been promoted as a result of the restructuring and the processing and distribution of dairy products have been significantly rationalized. Under the Australian and New Zealand Standard Industrial Classification (ANZSIC) list, dairy farming is classified under the agriculture category under code 0160.

The aim of this analysis is to critically analyze the performance of the dairy industry in Australia and determine the forces that drive the demand and supply in the industry. The analysis will also examine the key challenges faced by the industry throughout the several different stages of its production and supply chains including milk production, processing, exporting, and retailing together with its advantages and the future that the industry may hold. The recommendations of this analysis will enable the stakeholders and future players in the industry to devise ways of establishing and maintaining a competitive advantage.

Today, Although Australia is a small milk producer accounting for only 2% of milk production in the world; its milk production level exceeds the domestic requirement which makes it a significant exporter. In fact, Australia is the third-largest dairy product exporter after New Zealand and the European Union. It has a 10% share of the world dairy export which accounts for about 50% of its local production. Australia’s major export destinations include China, Singapore, Philippines, Japan, and Indonesia (Dairy Australia, 2010). The concentration of Australia dairy export products in the Asian market owes to its geographical proximity and limited competition from other major players.

The dairy industry in Australia is highly concentrated in the south-east part of the country with Victoria State ranking as the highest dairy producer. The industry was significantly affected by the deregulation of 2001 which saw great rationalization in various sectors. The dairy industry produces a wide range of products which include fresh milk, yoghurt, milk powder, cheese, and butter. The Australian dairy industry is pasture-based and heavily reliant upon the availability of water. It is currently faced by great uncertainty over water policy. In sum, the dairy industry has faced a significant number of challenges including drought, financial crisis, and deregulation. However, the industry has remained vigilant and demonstrated an exceptional ability to adapt to challenges and difficult situations through the use of collective action. The policy environment which plays a very crucial role in allowing the adaptation of the industry and further development remains a critical element for the success of the industry.

Industry Analysis

Dairy farming is an industry that is well established across the temperate and most subtropical areas of Australia. Being one of the leading rural industries, it provides direct employment to more than 40,000 people. Despite most of the milk production occurring in the south-east states especially at the coastal zones which experience high rainfall, all the other state have dairy industries that supply fresh milk to the neighboring towns and cities. The inland regions however rely majorly on irrigated dairying. Most of the inland dairy farms are located in New South Wales, Victoria Murray, and Darling Basin (Dairy Australia, 2010). Milk production systems are different throughout these areas due to different market requirements, climatic conditions, and the cost of inputs. These inputs include irrigation water, land, and feed grains.

There are two major production systems that are used throughout the country. These systems are mainly based on climatic conditions. The most common which is practiced in many parts is the seasonal production whereby cows are scheduled to calve during the peak period of availability of green pastures by delaying the insemination so as to fit in the timetable. Nearly two-thirds of the Australian dairy farms use this system and it is most prominent in South Australia, Tasmania, and Victoria (Davidson, 2002). The other production system is the one that is commonly referred to as all-year-round production. Calving is usually spread throughout the year under this system. This ensures a stable milk production all around the tear. The production system is more prevalent in regions that supply mostly fresh milk for domestic use.