Select a particular sector of the Australian food Industry and identify and evaluate the competitive Challenges and Opportunities facing that particular Sector.
Animal husbandry is one of the most potential and promising sectors in Australia. Among the animal husbandry, dairy sector is one of most promising sectors in Australia. Currently Australia is the third largest dairy exporter in the world (Douphrate et al. 2013). However, there are various challenges being faced by this industry in the recent time which is adversely affecting their potentiality. Overcoming these challenges will help to grab the huge opportunities that are being estimated for the Australian dairy industry.
This report will discuss about the challenges and opportunities being faced by the dairy industry in Australia. In addition, various research and literature will be discussed for the analyzing and interpreting the current position of this industry.
Review of Australian dairy industry
According to the research done by Price water Coopers (PWC), more than 50 percent of the total dairy production in Australia is being exported (PWC.com 2017). Moreover, the dairy industry in Australia constitute of milk, yoghurt, butter and cheese. Thus, diversified customer requirement is being met by this industry. Victoria is the Australian state with the largest production of the dairy products. However, after the deregulation of the dairy industry in 2001, domestic producers faced the threat of survival due to the entry of various international firms. According to Dairy Industry Australia, various challenges are being faced by this industry in the recent time. Due to the reason of seasonal fluctuations and price, it is being estimated that the national milk production will be decreased by about 7.5 percent (Dairyaustralia.com.au 2017). According to Nettle, Brightling, and Hope (2013), there is an urgent need of innovation in the Australian dairy industry to cope up with the challenges being faced by them. Moreover, the global dairy industry is going through extensive innovation and Australian diary is no exception (Robinson 2012).
Analysis of the current business scenario
The current scenario of the dairy industry in Australia is not up to the mark. The estimated dairy production in this financial year will be the lowest in the last 21 years. It is being estimated that Australia will produce 8.8 billion lr. Of milk which is quite low compared to the average trend of dairy production in Australia. Key reason being concluded is the lower market demand and unfavorable weather condition (Long 2017). Victoria, the largest diary producing state in Australia has incurred the major reduction of the production by about 18 percent. However, in the recent time, it is also been seen that the market demand for the dairy products is rising. The market demand for dairy products got increased by about 2.4 percent in the last year. Thus, opportunities are there to tap. However, the internal issues in the dairy industry are reducing the potentiality of this industry.
However, despite these challenges, it is been seen that the dairy farmers are optimistic about the future potential. According to them, the production will increase gradually in the next three years. Regarding to the dairy industry of Australia, it is been calculated that approximately more than 26000 people are being involved with this industry directly and indirectly (Legendairy.com.au 2017). The total and average milk consumption level of the customers is also increasing with average milk consumption per consumer per year is 105 litre. The export potential of the industry is also increasing with the increase in the market size overseas. Currently, the export of dairy products constitute of $ 3 billion (Abs.gov.au 2017). Majority of the dairy products are being exported to China and Japan.
Challenges for the dairy industry
One of the key challenges that is being identifies is the climatic change. Recent fluctuations in the climate in the Australian regions are posing threat to the dairy industry. The generation of the food stock for the animals is facing obstacles due to the climatic change.
Deregulation of the diary industry caused entry of different global organizations. this caused threat to the domestic suppliers due to the reason that the global firms are offering at much lower prices due to economies of scale.
Lack of innovation in the Australian dairy industry is further reducing their competitiveness. Compared to the global industry standard, the dairy industry of Australia is trailing behind in terms of latest technology and innovation. This is reducing the effectiveness and productivity of the industry.
More than 50 percent of the dairy products are being exported. Thus, fluctuations in the global market will have adverse effect on the domestic dairy industry.
Opportunities for the dairy industry
The export market of the Australian dairy industry is increasing. The global diary market is witnessing a positive demand for the dairy products and being the third largest exporter of dairy in the world, the potentiality of the Australian dairy industry is increasing.
Initiation of latest technologies and innovation is increasing the effectiveness of the dairy industry. It is also providing them the required competitiveness to tap the opportunities in the global market.
The domestic demand for the dairy products is increasing in the Australian market.
The price for the milk is projected to get increased in the following years, which will help the producers to have more revenue.
Dairy industry of Australia is becoming more organized which will help them to compete in the global and domestic market more effectively.
Having discussed the market scenario of the dairy industry in Australia, it can be concluded that they are having huge opportunities in the domestic as well as global market. The industry is going through an extensive change in terms of innovation and technologies. Thus, the productivity and effectiveness of the industry is going to increase in future. However, there are various challenges that are being faced by the industry which need to be overcome. It is been analyzed that the dairy market in Australia is already generating a huge revenue from the market. Few challenges that are being faced by the industry are restricting their growth rate which is being projected to get solved in the following years. Thus, overcoming the challenges and initiation of latest technologies and innovation will help them to tap the extended opportunities in the market
Abs.gov.au. (2017). Year Book Australia, 2004. [online] Available at: https://www.abs.gov.au/Ausstats/[email protected]/0/B006A83A9127B0F5CA256DEA00053965?Open [Accessed 24 Aug. 2017].
Dairyaustralia.com.au. (2017). Situation and Outlook 2017. [online] Available at: https://www.dairyaustralia.com.au/industry/dairy-situation-and-outlook/situation-and-outlook-2017 [Accessed 24 Aug. 2017].
Douphrate, D.I., Hagevoort, G.R., Nonnenmann, M.W., Lunner Kolstrup, C., Reynolds, S.J., Jakob, M. and Kinsel, M., 2013. The dairy industry: a brief description of production practices, trends, and farm characteristics around the world. Journal of agromedicine, 18(3), pp.187-197.
Legendairy.com.au. (2017). Dairy Industry Statistics & Information | Legendairy. [online] Available at: https://www.legendairy.com.au/dairy-farming/our-industry/industry-stats [Accessed 24 Aug. 2017].
Long, W. (2017). Australian milk production lowest in 21 years. [online] ABC Rural. Available at: https://www.abc.net.au/news/rural/2017-02-22/australian-milk-production-lowest-in-21-years/8292426 [Accessed 24 Aug. 2017].
Nettle, R., Brightling, P. and Hope, A., 2013. How programme teams progress agricultural innovation in the Australian dairy industry. The Journal of Agricultural Education and Extension, 19(3), pp.271-290.
PWC.com.au, (2017). [online] Available at: https://www.pwc.com.au/industry/agribusiness/assets/australian-dairy-industry-nov11.pdf [Accessed 24 Aug. 2017].
Robinson, R.K., 2012. Modern Dairy Technology: Volume 2 Advances in Milk Products.