Western Australia’s largest milk producer plans to triple supply over the next three years, despite the domestic market already struggling with an oversupply and uncertainty surrounding future contracts of some dairy farmers. By: Anthony Pancia
Lactanz Dairies had been in receivership since 2013 after accruing debts of $21 million, before being purchased for close to $30 million by Melbourne-based Australian Agribusiness Group (AAG) and a consortium of European investors in June last year.
AAG executive chairman Marcus Elgin told the ABC the company was eyeing an increase of “270-odd per cent” from its current base of about 15-20 million litres of milk from its 4,500 cows per year.
Mr Elgin said to reach that, the company would further invest in “more cows, more production per cow and significant investment in environmental sustainability, and the tools to make dairy farming more efficient and profitable”.
“We bought into this as a transformational opportunity,” he said.
“When we are thinking of transformational opportunities, we are not thinking of the immediate situation, we are looking at the future and the potential to make it better over time.”
Smaller producers concerned about supply plans
The WA dairy industry has again come to the attention of the Australian Competition and Consumer Commission (ACCC) after it was revealed contracts issued by milk processor Brownes contained clauses that would have penalised farmers for under-supplying milk.
Industry members met at the recent WA Farmers dairy farmers’ conference to discuss the viability of the domestic industry expanding after a turbulent 12 months and international oversupply of dairy products.
Mr Elgin said he understood concerns the proposal for the increase in production may put in place for smaller milk producers.
“Sure we are bigger and we have an impact on supply, but what we are doing with our processing partner is growing the size of the pie,” Mr Elgin said.
“Everyone else can be part of that growth. Our growth is going to require that they grow and that growth will produce opportunities for lots of other people as well.”
WA Farmers dairy section president Michael Partridge welcomed news of the proposal.
“If they keep in line with what their processor [Harvey Fresh] need, then there’ll be no issues,” he said.