Dairy processors generate $15.7 billion in revenue

Dairy industry's contribution to Australian economy revealed in latest report

Dairy
Brownes Dairy CEO, Natalie Sarich-Dayton.

Brownes Dairy CEO, Natalie Sarich-Dayton.

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First comprehensive review of Australian dairy processing industry's economic and broader contribution to Australian economy.

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Australian dairy processors generated $15.7 billion in revenue, contributed $12.4 billion to Australian Gross Domestic Product, and employed nearly $6.1 billion in capital in 2019-20, making the industry a significant contributor to Australia, particularly regional Australia according to a new report released today.

The report, 'Economic and broader contribution of the Australian dairy processing industry' commissioned by the Australian Dairy Products Federation (ADPF) and produced by Deloitte Access Economics, has for the first time provided an analysis of the industry's contribution to the economy, employment and diversity, regional Australia, transport, exports, environment and sustainability, and investment in capital as well as research and development.

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ADPF president Grant Crothers said the report had provided the first singularly focused comprehensive positioning of the dairy processing industry regarding its economic contribution and value more broadly across Australia.

"With no barriers to import competition, the Australian dairy processing industry relies on being globally competitive and generated $15.7 billion in revenue in 2019/20," Mr Crothers said.

"It will surprise many that most of dairy processing's contribution is indirect, accounting for $9.3 billion in value-added contributions out of the $12.4 billion total.

"The remaining $3.1 billion is direct value-added within dairy processing itself.

"This means that for every dollar of value-added in dairy processing, the industry supports $3 of value-added elsewhere in the economy."

ADPF president Grant Crothers.

ADPF president Grant Crothers.

Mr Crothers said it was not just the industry's economic contribution covered in the report released today.

"The dairy processing industry is making significant progress when it comes to corporate social responsibility, sustainability and the environment," he said.

"Energy use and emissions intensity have reduced by 24.5 per cent and 23.5pc respectively in the last three years."

In terms of employment, the dairy processing industry contributes a total of 70,158 Full Time Equivalent (FTE) jobs to Australian employment.

Of these, 29pc are direct employees within dairy processing (20,394 FTE).

"The dairy processing industry also supports a further 49,764 FTE employees in other parts of the Australian economy meaning that for every job in dairy processing, the industry supports 2.4 indirect positions in aligned industries that are symbiotic to milk processing, such as raw milk and other ingredients, transport and utilities," Mr Crothers said.

"Labour shortages have been an issue across all sectors of agriculture with dairy processors experiencing similar challenges.

"The report clearly shows that unlike in primary production, nearly a quarter of the dairy processing sector's workforce was categorised as being in the two highest skilled categories of jobs.

"This underlines the careers available for technical and highly skilled workers in dairy processing with many being in regional Australia."

The report shows that 56.5pc of Australia's direct dairy processing workforce is located in regional areas, and notably in Tasmania 95.9pc of all direct employees are in regional areas, along with 61.6pc in NSW and 55.5pc in Victoria.

ADPF executive director Janine Waller.

ADPF executive director Janine Waller.

ADPF executive director Janine Waller added that the future for the dairy processing industry was assured, with an average of $383 million invested in capital expenditure by dairy processors annually between 2017/18 and 19/20.

"Capital investment signals growth and drives innovation across the whole supply chain," she said.

The report shows that as a share of total food manufacturing capital investment, dairy processing accounted for an average of 15pc, although in 2019-20 it reached 18.3pc.

"When this is combined with around $6.1 billion in employed capital, and dairy processing's investment of around $12 million a year in research and development activities, the industry is innovating to support growth and competitiveness," Ms Waller said.

"Australia's dairy industry is sustained by dairy farmers and processors who operate side-by-side predominantly in regional communities.

"ADPF shares the National Farmers' Federation, and now the federal government endorsed goal, of making agriculture a $100 billion industry by 2030.

"The dairy processing industry continues to provide consumers with an abundance of choice when it comes to nutritious dairy products that are also being produced in a sustainable way and in support of regional Australia."

Agility and innovation key to business success for Brownes Dairy

The report's findings are reflected in Western Australia's Brownes Dairy, with growth and development central to the business' success.

Established in 1886, Brownes Dairy is Australia's oldest dairy company, purchasing milk from more than 50 dairy farmers in the state's south-west and employing nearly 300 Australians to produce and deliver fresh and quality products to consumers.

Despite the pressures and market challenges experienced during the COVID-19 pandemic, Brownes Dairy were able to pivot their business endeavours and drive growth initiatives amid an otherwise plunging food services sector.

They were quick to adapt their business model, reintroducing the traditional milk delivery service to help maintain supply to consumers and job security to their team in the midst of uncertainty.

Brownes Dairy CEO, Natalie Sarich-Dayton, said that when panic buying spilled over from long life to the fresh category, the shelves quickly emptied and retail orders more than doubled.

"When we saw and heard that there was a strong demand from the public, we immediately wanted to step up and help keep our communities stay safe by bringing milk direct to their homes," she said.

"This is where Brownes Dairy 'Milko' was reborn.

"Within seven days we had built an online platform to allow the community to shop for their milk directly from the dairy and have it delivered to people's homes.

"In fact, we were one of the first companies to launch home delivery service during the lockdown and the response was so significant that it has now become a core and profitable part of our business."

Though labour shortages quickly become a key area of concern across all sectors of agriculture and many Australian dairy processing businesses, Brownes Dairy were able to maintain staff through their rapid and adaptive business evolution.

"Witnessing the stark impacts of COVID-19 on employment across the sector, it became a top priority for our business to ensure that all our employees, from farmers to drivers, were able to keep their jobs, and Milko was critical in achieving that," Ms Sarich-Dayton said.

Brownes Dairy continue to find themselves at the forefront of growth and development, being internationally recognised for launching Australia's first plant-based carton and making proactive strides to improve sustainability credentials.

"We started using sugarcane instead of plastics to line our cartons to reduce our carbon footprint," Ms Sarich-Dayton said.

This has enabled us to continue with a recyclable product, and we are now looking at how to launch an even further reduced weight carton that will build on this and minimise environmental impacts.

"Listening to our consumers and making sure we're aligned with their expectations and key priorities has and will continue to allow us to deliver great products and sustainably grow our business for years to come."

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