Dairy co-operatives need to step away from simply marketing milk and consider manufacturing products for the export market, said Jay Waldvogel from Dairy Farmers of America.
Speaking at the First Milk conference in Llanelli, Wales, yesterday, Mr Waldvogel said: “A traditional milk marketing co-op is going to die if all it wants to do is simply market milk; we need to put some more depth into our co-ops and going forward we have to fit the products we make to the market.”
Around the world, co-operatives were now choosing to work more closely with their producers and engage with consumers. Export offered a good opportunity for co-operatives and was a key driver for American farmers, he said.
“Globalisation is bringing in a lot of things we have never seen before. We predict a lot of unpredictability ahead and we have to build our businesses to prepare for that.”
Infant nutrition products were becoming increasingly important in Asia and companies such as Nestlé and Fonterra had invested a lot of time and money in taking these products to new markets such as China.
“Hundreds and thousands of cows from Australia and New Zealand are going to China. These farms are only there on the basis of food security rather than anything else,” said Mr Waldvogel.
He said China had 22% of the world’s population, 7% of the world’s farmable land and 3% of the world’s water. “They are always going to need the imports.”
Three tips for export markets:
1. Understand what your customers want. You have to go out to those countries and spend time there to understand what it is they are interested in (infant nutrition in China).
2. Get close to your customers – you are going to win by keeping that supply chain tight.
3. Go in with your eyes wide open – it’s not all good and you have to be prepared for the ups and the downs.