The Australian dairy industry must grab every opportunity it can to stay globally competitive.
While demand for dairy products continues to rise around the world, Australia’s share of the global dairy trade has slumped from 16 per cent in the 1990s to just 6pc today.
Added to that, the number of dairy farms in Australia over the same period has declined from 15,000 to just over 5000.
Australian dairy farmers are increasingly under pressure to reduce costs while they continue to produce high-quality, nutritious milk enjoyed by families around the world.
Of course, the biggest challenges start outside the farmgate.
In 2018 the Australian Competition and Consumer Commission (ACCC) found there was a power imbalance between farmers and processors.
This power imbalance, along with uncertain world market prices, discount supermarket milk and processor margins, has impacted farmgate pricing.
Initiatives that have been implemented to help resolve this bargaining imbalance include a mandatory code of practice, milk trading platform, and standard industry contracts.
But aside from this, the Australian dairy industry must also continue to adapt and embrace technology if it is to stay competitive.
Blockchain technology is already successfully used by dairy producers overseas, and Australian Dairy Farmers (ADF) has been contracted by the Federal Government to develop a real time dairy payment system and supply chain information sharing capacity using this technology.
Blockchain and distributed ledger is a decentralised, peer-to-peer network. It gives each farmer and processor their own ‘node’, keeping information secure and private.
When a farmer sells milk, supply chain events are recorded on the shared ledger and linked to the contract.
Both the farmer and the processor can see this instantly.
The ledger keeps a record of contracts, milk that’s been ordered and delivered, milk quality testing results, payments etc.
Only the farmer and the processor can add information to their shared ledger so they each know both see the full history of their shared business relationship.
This information cannot be adjusted or changed without the knowledge of the other, although regulators can view information to monitor the industry but can’t change the ledgers.
Payment is made between bank accounts as normal, with receipts automatically recorded and linked to the contract.
And smart contracts can be included to eliminate payment delays.
Competitors cannot see each other’s commercially sensitive contracts or contacts.
The transparency of shared information using Blockchain technology empowers our dairy farmers.
Blockchain technology will reduce costs to compete more aggressively in local and global markets.
It will also allow greater knowledge of what happens to a farmer’s milk once it leaves their farm.
It will provide consumers with trusted information about where their milk comes from.
And it will provide access to reliable information to improve efficiencies along the dairy supply chain.
Blockchain, and other new and emerging technologies, will be integral to helping improve the profitability and confidence of our dairy industry, two key objectives of the Australian Dairy Plan.
Our dairy industry will be well placed to play our role in contributing to the National Farmers’ Federation’s (NFF) target for the value of Agricultural production to exceed $100 billion by 2030.