Western Australia's dairy farmers have welcomed a move by processor Brownes Dairy to re-introduce manufacturing of cheddar cheese using local fresh milk at its South West plant for the first time in 14 years.
Brownes started supplying its new cheddar lines to selected supermarkets in WA and nationally in August, pitching it against imported cheddar and some boutique local cheddar brands.
It is estimated the company's latest move could use about 3 per cent - or nine million litres - of the 337 million litres of milk produced annually by WA's 145 dairy farmers, who are mostly concentrated in the south west and south coast regions.
WA Farmers Dairy Section vice president Ian Noakes, who farms near Margaret River, welcomed the move by Brownes to provide another market for the state's milk.
"It will be especially valuable in spring, when we have a big flush in production and traditionally there have not been enough markets to take it all," he said.
"If it can find a new home in cheese products, then that is a good outcome."
Mr Noakes said he would not necessarily expect Brownes to pay its dairy farmer suppliers any more for milk going into value-added cheese product, but it would give producers more confidence in finding markets during the spring months.
He said, in WA in most years, there tended to be about a 20 cent per litre discount in spring milk prices compared to summer prices due to much higher supply being available.
The highly seasonal nature of milk production and imbalances in availability is a key issue for WA's dairy sector.
Shortages are typical
over the summer months and then there tends to be surplus of supply from late autumn and into winter and spring.
At the same time, monthly milk consumption in the WA market is typically flat and has not grown significantly in recent years.
The state's dairy sector has higher supply chain costs than other Australian states, mostly due to a wider geographic spread of farming operations and much smaller scale of production.
And it is more expensive to freight fresh milk to port for export, so marketing has focused on meeting domestic fresh milk demand.
Brownes is WA's oldest dairy company and has about 47 fresh milk dairy farmer suppliers.
It is understood that it has extended its contracts with these farmers for the next three to five years, or is in the process of doing so.
Brownes processes about 37 per cent of WA's milk production, with Harvey Fresh (acquired by Parmalat in 2012) taking about 39 per cent and Lion Nathan about 18 per cent.
The company expects to manufacture its new cheddar cheese year-round, but production will be highest in the September to December months when there is ample fresh milk supply.
Brownes chief executive officer Tony Girgis said the company had a long history of making cheese in WA dating back to the 1930s, but had stopped selling cheddar into supermarkets in 2006.
He said investments in the past few years at its Creamery in Bruswick Junction, about 150 kilometres south of Perth, meant it would use old-style cheddaring techniques - including long and short maturation at low temperatures - and employ an extra 10 staff.
The Creamery improvements were made as part of a $10 million injection into Brownes Dairy in 2017 and a further suite of developments more recently.
Mr Girgis said WA currently imported about 15,000 tonnes of cheddar cheese - and 50,000 tonnes of cheese in total - each year, mainly from interstate and New Zealand.
He said he was confident the new locally-made products - including cheddar cheese, mature cheddar and vintage reserve cheddar - could fill some of this demand in WA and nationally, with little surplus remaining.
This meant the marketing focus was on meeting domestic - not export - demand. Although, there have been hints that Brownes could seek to sell into South East Asia, including China, in future.
Mr Girgis said now was an ideal time to release a new cheese product to capitalise on consumer trends towards home-grown, locally-manufactured products from trusted companies as a result of the COVID-19 pandemic.
The plans by Brownes to divert excess milk produced during the spring flush into premium cheddar were laid down several years ago.
Its stocks of vintage cheddar and light vintage cheddar - with 25 per cent less fat - have been aging at its Brunswick Junction plant for 24 months.
It's mature cheddar has aged for 12 months.
Also stored at Brunswick Junction, but not available until later this year, is a vintage heritage reserve cheddar, which is being aged for up to 36 months.
According to Natalie Sarich-Dayton, who is Brownes' national marketing and sales director, the vintage and mature cheddar is available now via Brownes' unique 'Milko' home-delivery service to some Perth suburbs.
After disappearing decades ago, free milk home-delivery was reintroduced by the company earlier this year to help city households self-isolating because of COVID-19.
This proved so popular it required six food vans driven by Brownes' sales and marketing staff to deliver a range of dairy products ordered online - and the service is continuing.
Ms Sarich-Dayton said Brownes had cut back on cheddar production in the mid-2000s because it became uneconomic to cut and wrap the 20 kilogram 'bricks' in which cheese is made.
"This product could not compete in retail markets with those from much larger volume producers in the eastern states and New Zealand," she said.
According to Ms Sarich-Dayton, a gradual increase in the wholesale price of cheese during the past three years had now made it feasible for Brownes to re-enter the retail cheddar market at the top end.
"We've been very selective with the type of product we produce," she said.
Ms Sarich-Dayton said the company would also be investing in equipment to process the unwanted whey from cheesemaking.
