Overseas partners key to ANZ dairy success

By Boyd Champness

THE best way for Australian and New Zealand dairy companies to get around unscrupulous trade barriers is to forge partnerships with overseas companies, according to a recent report.

A four-month study of the Australasian dairy industry by the international PA Consulting Group has found both countries would be better off forging alliances with European and Japanese dairy companies than rely on the elimination of trade barriers to lift export sales.

Dairy markets throughout the world remain relatively closed, with only 5% of the international dairy market traded internationally.

PA Consulting Group argues the only means of gaining access to the remaining 95% of “in-house” dairy markets is through overseas investments and alliances.

According to the report, which was published in The Weekly Times, farmers are routinely fed the argument that the elimination of trade barriers could improve export prices by as much as 80% – but there is little evidence that Europe, the USA and Japan are doing much on this front.

“In light of the political difficulties resulting from the recent collapse of the world trade talks in Seattle, it is difficult to see further significant trade liberalisation in the near term,” the PA Group reported.

“In fact, governments (EU and Japan) are increasingly having to consider a much broader range of issues – consumer unwillingness to accept genetically modified foods … animal welfare and global food security.

“A possible consequence of these issues is that governments may be encouraged and indeed find it easier to increase non-tariff barriers.”

Rather than wasting time, energy and money fighting these tariffs head on, the PA Consulting Group recommends dairy companies merge and acquire or form joint-ventures with dairy companies in other countries

“There are clear investment opportunities in countries such as Germany, France and South America where milk production is high, and the dairy industry is fragmented,” the consultants reported.

“This window, however, will not remain open for long, since other major dairy companies are targeting these countries.”

See more