Bega Cheese: WTO Regulations' Impact On Australian Food Processing Industry (Essay).

• Bega Cheese is an Australian diversified branded foods company and involved in manufacturing different types of dairy foods.
• Investment and investment activities include investment in property, plant and equipment, intangible assets, and acquisition of subsidiaries.
• Financing and financing activities include proceeds from borrowings and issue of shares, repayment of borrowings, principal elements of lease payments and payment of dividend.
• General purpose financial statements have been prepared as per the Australian Accounting Standards and the Corporations Act 2001. These statements complies with IFRS as issued by the IASB (2021 Annual Report 2022).

1. Bega Cheese operates in the Australian dairy industry which is Australia’s third largest rural industry with a gross value of $4 billion (Dairy in Australia 2022).
2. The Australian dairy industry has strong relation with the developing markets which leads to export growth.
3. The industry supply chain includes pre-production, production of fresh milk and processing and distribution (The Australian Dairy Industry 2022).
4. The major players are Bega Cheese, Saputo Dairy Australia Pty Ltd, Fonterra Co-operative Group Limited and Lactalis Australia Pty Ltd.
5. Saputo Dairy Australia Pty Ltd has the highest market share followed by Bega Cheese, Fonterra Co-operative Group Limited and Lactalis Australia Pty Ltd
6. Critical success factors are sourcing appropriate labour, carbon and water, and international demand.
7. Major threats include input prices, climate change and protectionism in competitor markets (The Australian Dairy Industry 2022).

• The regulatory environment of Bega Cheese requires the company to comply with certain key legislation and regulations, such as Dairy Act 2000, Food Act 1984, Code of Practice for Dairy Food Safety, Australia New Zealand Food Standard Code, and many others. In addition, Bega Cheese complies with other regulatory standards to ensure ethical and responsible practice, reduction of water and energy intensity, and others (Legislation and regulations 2022).
• Applicable financial reporting framework requires Bega Cheese to comply with Australian Accounting Standards, Corporations Act 2001 and IFRSs as issued by the IASB. The company operates under the policies of the Australian Government. Under legal framework, the company needs to comply with data protection laws, health and safety norms, environmental laws, intellectual property laws and others.

PEST Analysis:

P – Bega Cheese is affected by the increased pressure on Government of Australia to comply with World Trade Organization’s regulations on food processing industry.

E – The company takes advantage of the Australian economy’s growth in the last two decades due to globalization and increased utilization of local resources.

S – High education level in Australia helps the company in hiring qualified and skilled employees and workers.

T – The use of latest technology helps the company in lowering its cost of production.

Porter’s Five Forces

Threat of new entrants is low because of difficulties in achieving economic of scale.

Bargaining power of suppliers is low because of large number of suppliers compared to buyers.

Bargaining power of buyers is low because of a few firm to choose from.

The availability of few substitutes of the dairy products makes the threat to substitutes low.

Rivalry among existing firms is low because of very few firms operate in this industry.

Strong competition for milk supply and increase in firm gate milk prices affect Bega Cheese (2021 Annual Report 2022).

References

awe.gov.au. 2022. Dairy in Australia. [online] Available at: <https://www.awe.gov.au/agriculture-land/farm-food-drought/meat-wool-dairy/dairy#industry-information> [Accessed 25 January 2022].

Begacheese.com.au. 2022. 2021 Annual Report. [online] Available at: <https://www.begacheese.com.au/wp-content/uploads/2021/10/Bega-Cheese-Ltd-Annual-Report-2021-Interactive.pdf> [Accessed 25 January 2022].

Dairysafe.vic.gov.au. 2022. Legislation and regulations. [online] Available at: <https://www.dairysafe.vic.gov.au/privacy-policy?catid=24&id=68:legislation-and-regulations> [Accessed 25 January 2022].

pwc.com.au. 2022. The Australian Dairy Industry. [online] Available at: <https://www.pwc.com.au/industry/agribusiness/assets/australian-dairy-industry-nov11.pdf> [Accessed 25 January 2022].