Dairy Australia boss David Nation on profits, growth and how milk is marketed

"I have a problem with pinning a target on the industry," Dr Nation said.

"My really strong perspective on this is that when the industry is confident and profitable, it will grow.

"In the absence of confidence and having sufficient profit, both on-farm and in the entire supply chain, growth is not a conversation that is a reasonable conversation."

In an interview with Stock & Land, Dr Nation said outcomes of the Australian Dairy Plan (ADP) workshops would set the agenda for Dairy Australia.

"I always had great faith in the importance of getting out and engaging and listening to as many farmers and as many parts of the dairy supply chain as possible," he said.

"We've always said that the Dairy Plan drives Dairy Australia's next strategic plan."

High among the top 10 objectives formulated by the ADP was "a significant increase in marketing and promotion to ensure the community values dairy products, the dairy industry and dairy farmers".

It is a sensitive issue for Dairy Australia, which wound back marketing spend after its quirky 2016 advertisements featuring Deb Poole, the water slide tester, and high-profile sponsorships came under fire.

"Dairy Australia decided to pause the last campaign, better study the market and the role of marketing promotion for the dairy industry," Dr Nation said.

"We asked which parts of the Australian community we really need to be focused on and addressing.

"We decided it is the people who have a real influencer role.

"That led us to launch a new campaign in April this year called Dairy Matters, which is active in a whole range of media channels, including TV, cinema and digital.

"From our early survey work, consumers are responding positively to it and we're getting lots of positive feedback from farmers that from their sense, it is hitting the mark as well."

Dr Nation said the timing of the Dairy Matters launch in April meant its true impact had not been felt at the time of many of the Dairy Plan workshops.

"Some people might not have seen the campaign in May or June when the regional engagement happened but that doesn't diminish people saying we want the right sized marketing campaign," he said.

"We're going to respond to the Dairy Plan, we're going to have a bigger industry conversation about what is the right size and we're open to increasing that."

The role different members of the supply chain played in marketing and promotion also needed to be reassessed.

"We should look at it openly to say, 'What is the right-sized investment for all parts of the dairy industry to make on more marketing and promotion?'," Dr Nation said.

"That could mean more investment directly from Dairy Australia, from a farmer levy perspective, it could mean more from from other parts of the supply chain."

Dairy Australia managing director David Nation said it estimated $125 million was spent on the marketing and promotion of branded dairy products in the last two years.

"Our challenge is to get the right balance of how much marketing promotion needs to be non-branded, talking about the whole industry, dealing with the issues that farmers have and the value that the industry creates," Dr Nation said.

While he said he was comfortable with the known challenges identified by the Dairy Plan, the "known unknowns" also had to be considered.

"What I spend time thinking about from an industry perspective is when you have a year like the year we've just had and are still going through, it's still difficult for a lot of farmers, what is the genuine recovery time from that experience?" he said.

"You don't just bounce straight back out of it."

The recovery of the dairy industry would hinge on how readily profitability could be returned.

"We know costs have gone up," he said.

"We know that we really have to work hard on what our profit drivers are and how we can have a profitable margin as dairy businesses.

"The big unknown really is how effective can we be if we're really aggressive on what we can do to lift profit margins on farm?

"What is the scope in that space and how quickly can we do it?

"Because that's the turnaround story."