Dairy Australia budget deficits hot topic at annual general meeting

The organisation recorded a $5 million loss in 2022/23, chair James Mann told the annual general meeting at Moama, NSW, on November 28.

DA had invested more funds to help dairy farmers manage short-term impacts, such as attracting more people to the industry.

But its income had reduced as lower milk production meant it received less levy income.

Mr Mann said DA planned a modest deficit this year, drawing on the reserves built up over time.

"We are looking to keep available reserves of around $14 million," he said.

"This gives us the ability to respond to critical issues and events."

DA firmly believed that funds above the reserves "should be working for levy payers and doing good RD&E".

Leongatha, Vic, dairy farmer Bernhard Lubitz asked about the future of DA programs in light of the declining milk pool and need to reduce budget deficits.

DA managing director Dr David Nation said the organisation had always planned to run a deficit last year and this year.

"This is a challenging time for Dairy Australia - it's a volume-based levy," he said.

"We need to get to a more balanced budget as we go forwards.

"So over time we will need to find savings in the business."

DA would need to stop some programs, as it had always done, but would be unable to start some new programs.

"Will we continue to deliver extension? Absolutely, absolutely we will, at the same levels we do now," Dr Nation said.

Tatura, Vic, dairy farmer Tony McCarthy asked why the industry was losing milk production at a time when it had never been more profitable and did DA see a way for the industry to get back to 10 billion litres of production and be more vibrant and positive.

Dr Nation said DA had just completed a study, in conjunction with Australian Dairy Farmers, the Australian Dairy Products Federation and Gardiner Foundation, looking at Australia's milk production trajectory.

"The question you pose is the question on most people's minds," he said.

"We see a strong opportunity to get back to 8-9 billion litres."

But that would take really positive government policy.

"The challenge in all of this is there is a viable global market," he said.

"We have to survive commodity cycles, but what we keep being told, and what our people in markets see, is there is a growing global market for dairy.

"We need to support new entrants and policy changes to support new growth."

The annual report revealed levy income was down by $2.1 million or 6.7 per cent to $28.7 million in 2022/23.

But DA had attracted more government-matching income by switching the focus of its expenditure.

The annual report revealed about 80pc of DA's expenditure was directed towards activity that qualified as research and development - up from 65pc the previous year.

Government-matching income totalled $25.7 million in 2022/23, up from $22.6 million the previous year.

Mr Mann said he was pleased to deliver his first in-person chair's address, after three years of virtual meetings.

"It's great to stand here in front of you today and say it's been a good year to be a dairy farmer - in fact, probably last year was a great year to be a dairy farmer," he said.

Many dairy farms were making big investments in their businesses.

"It's been fantastic to see and absolutely underlies we did have a good year as an industry last year," he said.

Although 86 per cent of farmers expected to make a profit this year, milk production was down.

This was due in part to tough seasonal conditions in the past 12 months in some regions - but also to people retiring from the industry.

"And while we lament the lack of milk, and we should do, it was also great to see farmers be able to get out of the industry on their terms at a high," he said.

Dr Nation said DA celebrated 20 years of business this year.

He reflected on the achievements in that time.

These included a complete turnaround in cow fertility, improved feed management, better transition cow management, genomics and the development of a portfolio of people management programs.

"Some of the most important work we do is off-farm, investing in activities that really do shape the dairy industry," Dr Nation said.

"It's less visible and less well understood, but I think it encapsulates some of the best things we do in the dairy industry when we work together.

"We are in a valuable position as an industry - where there is a high level of trust in dairy products and the way we farm - that spans customers in Australia as well as overseas."

Dr Nation said sustainability was an important focus for DA, backed by the Dairy Sustainability Framework.

"Sustainability is the topic that milk buyers want to talk about and governments want to talk about - and this is true everywhere I've travelled," he said.

The Australian dairy industry needed to retain its competitiveness.

"We have to focus on what it takes to be successful in a country that has the greatest climate variability of all major global dairy players - as well as large exposure to market changes," Dr Nation said.

"We have to take every opportunity to harness innovation and improve the biology of farming, the technology of farming and the management of farming."

Dr Nation said investing and working together through Dairy Australia enabled farmers to achieve things that individually they couldn't do alone.

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