Strategic Plan 13-16 - Web

Strategic
Plan
2013/14 - 2015/16
Dairy at a Glance
National Dairy Herd (end 2012/13 forecast) 1.61 million cows
Average Herd Size 240 cows
Milk Annual Production 9,350 million litres
Average Annual Milk Production Per Cow 5,818 litres
Dairy - Australias 3rd Largest Rural Industry $4 billion value at farmgate
$9 billion at wholesale & export pricing
Australian Per Capita Consumption Drinking milk 106 litres
Cheese 13 kgs
Dairy Industry Workforce Direct employment of 45,000
Milk Utilisation Cheese 34 per cent Major Markets For Australian Australia 2,825,700 t
SMP/butter 28 per cent Dairy Products (Tonnes) (incl. 2,385,000 of drinking milk)
Drinking milk 25 per cent Japan 115,000 t
WMP 11 per cent Greater China 109,000 t
Casein/butter 1 per cent Singapore 90,000 t
Other 1 per cent Indonesia 48,000 t
Malaysia 47,000 t
Dairy 38% of milk production is Production Of Main Milk Powders 371,000 t
- Major Export Industry exported Commodities (tonnes) Cheese 340,000 t
Value = $2.76 billion Butter (CBE) 120,000 t
7 per cent of world dairy trade
5th largest exporter
Glossary
Acronym Description Acronym Description
ABV Australian Breeding Values NCDEA National Centre for Dairy Education Australia
ADF Australian Dairy Farmers NFF National Farmers Federation
ADIC Australian Dairy Industry Council NGO Non Government Organisation
ADPF Australian Dairy Products Federation NPV Net Present Value
AOP Annual Operating Plan NRM National Resource Management
BCR Benefit Cost Ratio OH&S Occupational Health and Safety
BMCC Bulk Milk Cell Counts PAG Policy Advisory Group
CRC Cooperative Research Centre PKMS Project and KPI Management System
CSIRO Commonwealth Scientific & Industrial Research Organisation POS Probability of success
DA Dairy Australia R&D Research and Development
DAFF Department of Agriculture, Fisheries and Forestry RD&E Research, Development and Extension
DIAL Dairy Innovation Australia Ltd RDC Research and Development Corporation
DM Dry matter RDP Regional Development Program
FBM Farm Business Management RO Research Organisation
FTA Free Trade Agreement SDFO State Dairy Farmer Organisation
GGF Geoffrey Gardiner Foundation SMP Skim Milk Powder
H1 Horizon 1 SP1 Strategic Priority 1
HR Human Resources SFA Statutory Funding Agreement
H&N Health & Nutrition TRG Trade Reference Group
ITC Information, Technology & Communications UHT Ultra High Temperature
KPI Key Performance Indicator VET Vocational Education and Training
LRS Levies Revenue Service WMP Whole Milk Powder
1 Dairy at a Glance/Glossary
Managing Directors It is my pleasure to present Dairy Australias
Foreword Strategic Plan for the period 2013/14 to
2015/16. Dairy Australia remains committed
to its vision of delivering the worlds best
services in order to grow an internationally
competitive, innovative and sustainable dairy
industry.
The 2012/13 season has challenged the This Strategic Plan focuses on building the
Australian dairy industry, as lower farm gate foundations to support resilience and
prices have combined with increased input growth. Our priorities are clear and concise:
costs, and difficult seasonal conditions in making farm businesses more profitable
key dairying regions have seriously tested and competitive; protecting and promoting
the resilience of farm businesses and our industry, and growing skills and
families. These conditions have constrained capability.
production, which will finish at
I am excited by the opportunities the future
approximately 9.3 billion litres, a little lower
holds and have every confidence that we
than 2011/12. As the season draws to a
will achieve meaningful outcomes through
close, tightening international supplies are
ongoing collaboration across the industry
seeing a rapid increase in commodity
and through the implementation of this
prices. This combined with a weakening
Strategic Plan.
Australian dollar should translate to higher
farm gate price during 2013/14.
Our industry remains in a favourable
position. Our opportunities include the
increased demand from Asia for dairy
produce, product innovations and the
achievement of greater production Ian Halliday
efficiencies. Managing Director
Like any industry, however, we will not be
without challenges. These are likely to
include currency volatility, rises in input
costs, protection offered to competitor
exporters, animal and food activism,
changes in consumer preferences and the
ongoing demand for a skilled workforce.
Dairy Australia 201316 Strategic Plan 2

Contents

Dairy At A Glance 1 5.3 SP3: Grow and Capability 49
5.3.1 Overview 49
Glossary 1 5.3.2 Capability Development 51
5.3.3 Workplace Strategy, Planning and Coordination 51
Managing Directors Forward 2 5.4 DA Supporting Activity 52
5.4.1 DA Operations 52
1 Executive Summary 4

2 Introduction 10 6 Expenditure Allocations & Returns 54
2.1 Purpose 11 6.1 Alternate Views of Expenditure Allocation 55
2.2 Context: Supporting Policy and Studies 12 6.2 Planned Returns 56
2.3 Context: Industry Support Structure 13 6.3 Project Portfolio Balance 57
6.3.1 Risk Return Spread 57
2.4 Context: Role of Dairy Australia 13
6.3.2 Time Horizon 58
2.5 Vision and Mission 14 6.3.3 Risk Profile 58
3 Industry Context / Trends / Outlook 16 6.4 Government R&D Priorities 59
3.1 Overview 17 6.5 Collaborative Expenditure 59
3.2 Domestic Environment 19
3.2.1 Commercial Environment 20 7 DA Operational Strategy 62
3.2.2 Farm Operation & Profitability 20 7.1 Budget Planning 63
3.2.3 People 22 7.1.1 Delivery and Overhead Costs 64
3.2.4 Other Key Issues 22 7.1.2 Planned Reserves 65
3.3 International Markets 24 7.1.3 Dynamic Budget/Funding Flexibility 65
3.4 Key Issues 28 7.2 Organisation Structure & People 67
7.2.1 About Dairy Australias People 67
4 DA Strategy 30 7.2.2 Organisation Structure 67
4.1 Overview 31 7.3 Governance, Compliance and Risk Management 69
4.2 Investment Strategy 33 7.3.1 Governance Framework 69
4.3 Investment Structure and Allocation 33 7.3.2 Board 70
4.4 Expenditure and Allocation 35
7.3.3 Governance and Compliance Reporting 71

7.3.4 Risk Management 72
5 Detailed Initiatives 38
7.4 Corporate Communication 73
5.1 SP1: Increasing Farm Profitability and Competitiveness 39
7.5 IT, Systems & Processes 73
5.1.1 Overview 39
7.6 Performance Management and Evaluation 73
5.1.2 Farm Margin Improvement 40
5.1.3 Manufacturing Margin Improvement 42 References 74
5.1.4 Market Support and Insights 43
5.2 SP2: Protecting and Promoting our Industry 45
Attachments 76
5.2.1 Overview 45
A SWOT Analysis/Strategy Response 77
5.2.2 Industry Promotion 48
B Project Listing 81
5.2.3 Industry Protection 48
C Strategic Program Key Performance Indications 85

3 Section title
1 Executive
Summary
The Australian dairy industry is facing a Role / Constraints: Scope / Objective:
range of challenges at both local and DAs role is to fund and manage pre- DA receives almost $34 million annually
international levels. Dairy Australia competitive activities that are important to from levy payers and $19 million in
(DA) is in the process of making the future of the dairy industry but would not matching research and development funds
directional and project level changes to occur effectively or efficiently if the market from the Australian Government. State
its program of work to best support the was left to its own resources. These are Governments, universities, research
long term sustainability of the industry. typically in the areas of R&D, extension, organisations and other dairy support
This document outlines the strategy for capability, trade and regulatory support, organisations, contribute approximately a
investment over the years 2013/14 to central data collection and pre-competitive further $30 million to DA funded projects.
2015/16. promotion. As such, it is the objective of DA to
responsibly invest these funds in a way that

best addresses stakeholder needs and
supports the future sustainability of the
industry.
Strategic Issues:
The key current and longer term issues
facing the industry are as follows:
High dollar and

global instability
resulting in increased
commodity pricing Lack
pressure & volatility of investment
in processing
Increasing herd infrastructure over
productivity offset by the last decade has
declining fertility and undermined Australias
animal health/ milk quality
cost competitiveness
issues
globally, especially
Global with regard to
Economics NZ
Industry
Farm
under-
performance
investment
Increases in farm input Leverage of large

costs including the costs retailers dominates supply
Market chain and impacts milk
of fuel, fertiliser, purchased Input costs
concentration pricing
feeds and electricity Dairy
Dairy
Supply
Supply Chain
Chain
Access to Emerging
technology social trends
Social/regulatory
Access to and pressures in the
availability of new Decline in areas of health, ethical
technologies including Climate and environmental, are
service
genomics, automation, change emerging that are not
funding
ITC generally positive to
dairy
Generally less
favourable climate for A decline in capacity
dairy farming in some of services to dairy
geographical areas; farmers, including a
access to water in winding back of state
irrigation zones government-based
extension services

Investment Strategy:
DAs strategy addresses the key on-going
and emerging issues facing the industry that
are within DAs remit. While the current
program of work remains appropriate in
general, DA will make changes to internal
structures and investment priorities to better
address these emerging issues, especially
those identified by the Horizon 2020 study.
While farm profitability remains the highest
priority, the revised strategy places an
increased emphasis on the issues of
sustainability and reputation
management as part of the industrys
licence to operate. The objective will be
to impact existing negative industry
sentiment, improve farmer confidence and
encourage investment in both financial and
human capital. The Legendairy
promotional program is a new and
important element of this approach with the
target audience including dairy farmers,
consumers and the key influencers of our
society.
In this regard, Sustainability is the key
harmonising theme improved profit,
environmental and social outcomes are at
the core of strategy for a successful
industry. The approach is to have a
cohesive strategy that places the right level
of investment/effort into each of these
areas. The following diagram summarises
the new strategy as focused on 3 Strategic
Priorities:
5 Executive Summary
Key Drivers
Domestic Dairy Landscape Global Dairy Landscape
201316 Strategy
Farm profitability impacted by: Demand for dairy products in

>>increasing input costs and increasing but competitiveness
seasonal variability impacted by:
>>managing volatility in milk price >>strong Australian dollar
>>greater complexity in farming systems >>global volatility
>>increasing public scrutiny on farmers >>adverse trade arrangements
% of Project Expenditure
59% 20% 18% 3% DA

supporting
Strategic Priority
SP1. SP2. SP3.

Profitable & Competitive Dairy Farms Protect & Promote our Industry Grow Capability & Skills
Investment Focus
1. Farm
margin improvement 1. Demand enhancement 1. Workforce planning and action
>>Animal performance and fertility >>Promoting the benefits of dairy >>Providing the dairy industry
>>Feedbase and nutrient use efficiency to consumers with the people it needs
>>Resource management 2. Encourage a positive 2. Skills and knowledge
>>Farm business management industry culture >>Supporting training and education
2. Post-farm margin improvement 3. Industry reputation management
3. Career pathways development
>>Processor productivity >>Maintaining dairys licence to operate
4. Leadership
and innovation 4. Risk management
>>Development of industry leaders
3. Access to profitable >>Identify, monitor and help manage
international markets issues impacting the industry 5. Extension
4. Providing market information >>Contribution to industry policy >>Transfer of technology, skills and
and insights 5. Understand, measure and resources to farmers
>>Supporting industry decision making support industry sustainability
Investment Theme
Industry Sustainability
Reducing
Enhancing livelihoods Improving wellbeing environmental
impact
Reducing
Creating industry Supporting Investing in Ensuring health Maximising Caring for our
environmental
prosperity communities dairy people and safety nutrition animals
footprint

Funding Allocation: In total, DA is
budgeting to spend $181 million over the 3 4
year period with expenditure anticipated to 3
exceed income during this period, which will
drive reserves towards approved minimum
levels by end of the 2015/16.
The $114 million of available project
investment funds over 3 years has been
2
structured against three strategic priorities
with a clear focus on SP1 (Increasing farm
profitability and competitiveness) with 59% 1
of the 3 year expenditure, driven by the
direct needs of dairy farmers. The SP2
activities of protect and promote (risk
management and demand encouragement)
account for approximately 20% of spend Dairy Australias
and SP3 (growing capability and skills) with Investment Strategy
18%. Project expenditure directed towards
DAs communication with stakeholders and 1 Strategic Priority 1 (59%)
its statutory requirements accounts for 3%. 2 Strategic Priority 2 (20%)
This distribution of funds is seen as a
responsible balance between short-medium 3 Strategic Priority 3 (18%)
term stakeholder objectives and longer term 4 Dairy Australia (3%)
sustainability issues.
The following table summarises the
changes and focus of investment:
DA Strategy
SP1: Increasing farm profitability SP2: Protecting and SP3: Growing capability
and competitiveness promoting our industry and skills
> Continue to invest in innovation and > Invest more into Legendairy activities >C
ontinue to invest in activities that build
productivity improvement at farm and to foster a positive culture within the industry capability (farm, processor, R&D)
processor level to support improved industry and positive community and help maintain or attract people to the
industry profitability and long term sentiment towards the industry to protect industry.
sustainability, with a strong emphasis on dairys licence to operate. >R
amp-up of leadership educational
extension activities to drive adoption. > The Dairy Industry Sustainability initiatives.
> Continue to support activities that assist Framework reporting will provide >M
aintain and build extension services,
in maintaining or improving access to transparent credible evidence to support despite reductions in co-funding, to fully
international markets. the Legendairy key messages. capitalise on investment in other program
> Continue to provide a central source > Define the health and nutrition benefits areas.
of useful information to help support of dairy consumption and communicate
decision making about future direction. these messages to consumers and key
community influencers.
7 Executive Summary
9
Introduction
2.1 Purpose 11
2.2 Context: Supporting Policy and Studies 12
2.3 Context: Industry Support Structure 13
2.4 Context: Role of Dairy Australia 13
2.5 Vision and Mission 14


2.1
Purpose
This Strategic Plan covers the financial

periods 2013/14 to 2015/16. In the past,
DA has produced a rolling five year strategic
plan and financial forecast but following an
external review (GHD, October 2011), DA
has now moved to a three year planning
cycle as recommended. This will allow
more agile responses to immediate and
medium term investment priorities. Having
a more focussed strategic planning period
will also drive a more balanced portfolio of
investments. DA will continue to scan the
external operating environment for longer
term macro-trends and events that present
both challenges and opportunities for the
industry.
The Strategic Plan is the primary document
in a suite of documents that describe DAs
strategic direction and annual activities (see
Figure 1). It deliberately contains sufficient
detail to be self contained and form the
basis for the other documents.
DA has reviewed its strategic priorities
against achievements to date, the operating
environment, the priorities of government
and the needs of industry. This plan
focuses on three enduring strategic
priorities:
> SP1. To help dairy farmers become more
profitable and competitive.
> SP2. To protect and promote our industry.
> SP3. To grow skills and capability.
DA continues to engage in a wide breadth
of activities across the supply chain,
including natural resource management,
climate change, international trade and
market development, policy and regulatory
analysis and issues management. In
particular, sustainability - in its fullest
definition - is a key focus for the
organisation. Whether it is enhancing
DA Strategic Plan
livelihoods, improving wellbeing or reducing
2013/14 15/16
our environmental impact, the tenets of
sustainability are drivers of DAs investment
activities. Sustainability is a vital component
of realising our strategic objectives. All of
DAs investment decisions are designed to
contribute towards the growth of an
internationally competitive, innovative and
Summary Presentation
sustainable dairy industry.
Annual Operating Plan

(AOP) 2013/14
Summary Document
Strategic Program
Summaries
2013/14 Project Listing
2013/14
Figure 1: Strategic Planning Documentation
11 Introduction
2.2
Context: Support Policies
and Studies
The Strategic Plan draws upon a range of

resources and consultations to inform the
operating environment and establish
industry priorities. These resources include:
> Horizon 2020
> Situation and Outlook
> Stakeholder tracking
> Dairy Moving Forward (Guide much of our
SP1 farm related programs)
> Rural Research and Development Policy
Statement
> Australia in the Asian Century
> Australian Dietary Guidelines
> National Food Plan
> Murray Darling Basin Plan
> Industry organisations: Australian Dairy
Farmers (ADF), Australian Dairy Industry
Council (ADIC), Australian Dairy Products
Federation (ADPF), Regional Development
Programs (RDP), the National Farmers
Federation (NFF)
> Correspondence from the Minister for
Agriculture, Fisheries and Forestry to DA.
Of these, the Horizon 2020 study has been
specifically aimed to assist in raising the
sights above short term issues which have
affected industry priorities in recent years.
Undertaken by a working group that
included a range of industry stakeholders
including farmers, the Horizon 2020 work
highlighted the need for the industry to
actively position itself for the challenges and
opportunities of the future, and identified
areas for industry investment and
collaboration.
DA Strategy
Horizon 2020
Stakeholder Tracking Dairy Moving Forward Sustainability Framework
National Primary
Industries Research,
Situation & Outlook Australia in the National Dietary Australian Dietary Murray Darling
Development and
In Focus Asian Century Guidelines Guidelines Basin Plan
Extension
Framework
ADIC ADIC ADPF RDPs NFF
Rural Research and Development Policy Statement
Figure 2: Supporting Policies, Documents and Studies

2.3 2.4
Context: Industry Support Context: Role of Dairy
Structure Australia
DA is one of a number of organisations that DA is constituted under the Dairy Industry

support the dairy industry and it is important Service Reform Act 2003, and is the
that these organisations work in concert. national services body for dairy farmers and
The industry vision cannot be achieved in the industry. The remit of the organisation is
isolation and DA is committed to working to fund and manage central pre-competitive
closely with organisations such as ADF, activities that are important to the future of
State Dairy Farmer Organisations (SDFOs), the industry but would not occur effectively
ADPF, the Geoffrey Gardiner Foundation or efficiently if the market was left to its
(GGF), the RDPs, as well as other Research own resources. This would typically be in
and Development Corporations (RDC). the areas of RD&E, capability, trade and
regulatory support and pre-competitive
As such, formal consultation about strategic
promotion. In essence, DAs role is to help
priorities and on-going communication with
farmers adapt to a changing operating
regard to the strategic plan has been
environment, and achieve a profitable,
undertaken, including:
sustainable dairy industry. This includes:
> ADF and farmer representative
> Supporting productivity initiatives and
attendance at DAs Strategy Forum in
facilitating innovation on farm to improve
October 2012
profitability.
> ADF National Council review of draft
> Gaining market intelligence and analysis
Strategic Plan in April 2013
to help farmers prepare and plan for the
> Regular liaising with ADF and ADPF future.
> Feedback from the RDPs and larger > Creating and maintaining access to
supplier programs. preferred high value export markets.
> Facilitating innovation across the
supply chain to improve efficiency and
profitability.
> Encouraging consumption of dairy
products through protecting and
promoting our industry and implementing
health and nutrition programs.
> Protecting the reputation of the dairy
industry and encouraging demand for its
products.
Figure 3: Diagram of support organisations in the dairy industry
13 Introduction
2.5
Vision & Mission
The Australian Dairy

Industrys vision:
Grow an internationally
competitive, innovative and
sustainable dairy industry
Dairy Australias Vision:
To deliver the worlds best
services towards achieving the
industry vision
Dairy Australias Mission:
To develop and drive industry
services and innovation for the
ultimate benefit of levy payers

15
The Industry:
Context / Trends /
Outlook
3.1 Overview 17
3.2 Domestic Environment 19
3.3 International Markets 24
3.4 Key Issues 28

3.1
Overview
The dairy industry continues to be one of 3.1.1 Growth Expectations 3.1.2 Profitability and Pricing
Australias major rural industries. Based on
a farmgate value of production approaching Strong growth characterised the dairy Increasing levels of market and margin
$4.0 billion in 2011/12 (approximately $9.1 industry through the 1990s, but that growth volatility of the industry (see Figure 5) in the
billion at wholesale & export pricing), it ranks has stalled in the last decade. In the last five to six years has served to
third behind the beef and wheat industries. meantime, our major export competitor undermine confidence in the outlook for
It is estimated that approximately 45,000 New Zealand, has expanded significantly many farmers who are seeking reliable
people are directly employed on dairy farms (see Figure 4). returns on which to build a longer term
and by dairy companies within Australia. future. Australian dairy farmers operate in a
The industry has experienced a slow
Related transport and distribution activities, deregulated and open market and have
recovery from drought with rains returning in
and research and development projects, done so for over a decade with the only
recent years replenishing storages and
represent further employment associated government involvement being
restoring irrigation levels. Milk production
with the industry. Dairy is also one of administration of food standards and safety
growth in 2011/12 of 4% was the strongest
Australias leading rural industries in terms assurance systems. Consequently,
in a decade, but 2012/13 will see
of adding value through further downstream international markets and prices are the
approximately a 2% reduction due to dry
processing. Much of this processing occurs major factors determining the price received
conditions in SE Australia.
close to farming areas, thereby generating by farmers for their milk.
significant economic activity and The outlook for 2013/14 is for modest
At an average of just over US$40 per 100kg
employment in rural and regional Australia. production growth to between 9.4 and 9.6
of milk in 2012, Australian dairy farmers
billion litres, based on surveyed herd growth
generally received a price comparable to
intentions, cow condition and assuming
many of the major producing countries (see
normal seasonal conditions offset limited
Figure 6).
fodder reserves. Southern exporting regions
should lead growth given positive global While farmers experienced approximately a
prices. Production in domestic supply 10% drop in farmgate pricing in 2012/13,
regions is likely to be flat in response to the projections for 2013/14 suggest strong
market signals and uncertainty around opening milk prices (up 15-20%) which may
supply contracts. be tempered later in the year due to export
competitive pressures.
Based on production intentions for
three-year growth recorded in the 2013 Australias competitive position has changed
National Dairy Farmer Survey and assuming over recent years. Farm cost structures
reasonable seasonal conditions and prices, have increased in response to the need to
milk production could range between 9.8 adapt to drier conditions, with rain fed
and 10.2 billion litres by 2015/16. pastures contributing a lower proportion of
the total feed available. Despite the
increased rainfall in the last couple of
seasons, farm cost structures have not
returned to those of a decade ago for a
range of reasons. At the processor level,
lack of volume growth has resulted in a lack
of infrastructure expenditure leading to little
or no productivity gains. Consequently,
Australias share of international trade has
trended lower as local milk production has
contracted over the past decade.
Reversing this trend is now a major focus of
DAs strategy.
The following domestic and international
trends, opportunities and challenges will
shape the Australian dairy industry and the
investment environment for DA during the
three-year period of this Strategic Plan.
17 The Industry: Context / Trends / Outlooks

25
20
New Zealand
15
ML (000)
Australia
10
0
9495 9697 9899 0001 0203 0405 0607 0809 1011 1213 (p = projection)
Figure 4: Milk production - Australia and New Zealand1
300
250
Earnings
Business Net Worth
200
1991 = 100
150
100
50
0
81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11
Figure 5: Annual change in dairy farm performance, Australia2
90
80
70
60
Canada US
USD/100kg
50
40 EU-25 EU-27
30
New Zealand
20
Australia
10
0
03 04 05 06 07 08 09 10 11 12 13 (p)
Figure 6: International Farmgate Milk Prices3

3.2
Domestic Environment
Regional challenges remain, especially powders) and farmgate pricing is much between industry co-operatives and a major
where drinking milk is the focus: more closely linked to the international retailer may lead to changes for the drinking
Significant differences exist between the commodity prices. There has been a trend milk supply market, with new processing
industrys geographic regions (see Figure 7) towards consolidation of manufacturing in capacity intended in Melbourne and Sydney.
from both a natural resource and economic SE Australia which is unlikely to be reversed. The touted price premium may provide
perspective. The only significant new investment in more dairy farms with improved profitability
capacity that has occurred in recent times is and longer term financial certainty but this is
The WA, QLD and northern NSW regions are in Tasmania, with $250 million invested by a yet to be proven.
closely tied to the fresh drinking milk market number of companies resulting in a 40%
(see Figure 8), with a requirement for more In any case, addressing the diversity of
increase in processing capacity in that
expensive year round supply systems on needs across Australias dairy regions is one
State. Murray Goulburn Cooperative is set
farms. Retailer strategies (as described later) of the key challenges in delivering
to invest as part of its move into the fresh
have direct impact on farmgate pricing. appropriate research, development and
milk market and is also expanding its UHT
extension services. DA cannot always
capability to meet increasing Asian demand.
In other regions there is volume adopt a one-size-fits-all approach when
manufacturing capacity (cheese and The recently announced arrangements considering RD&E investment.
Figure 7: Dairy Regions in Australia
100
80
Per cent
60
40
Drinking Milk
20 Manufactured product
Exports
0
00 12 00 12 00 12 00 12 00 12 00 12
QLD NSW VIC SA WA TAS
Figure 8: Use of milk by region and source4
19 The
Section
Industry:
title Context / Trends / Outlooks
3.2.1 Commercial Environment 3.2.2 Farm Operation and the past 20 years. Continued productivity
Profitability gains are needed in the production of home
Pressure on white milk pricing: Over the grown feeds and in the conversion of these
past 5 years, branded milk has increased in The profitability of many dairy farm resources and bought-in supplements, into
price by an average of 1% annually. businesses is again under pressure: milk protein and fat to maintain this
Simultaneously, private label milk has fallen Post drought profitability (see Figure 10) has advantage. Estimated home grown feed
towards the $1/L mark (-4% average been undermined by rising farm input costs consumption per hectare is still low
reduction) and farmgate prices have (fuel, fertiliser, purchased feeds and compared to potential pasture yields. There
suffered a similar decline (-4%). electricity) and the squeeze on farmgate has not been a significant change in
milk price. Currently, farm profitability is average pasture or forage consumption
The strategies of the major retailers reflect
highly variable with a range between -3% over the past decade and there is
the value-seeking behaviour of Australian
and 17%. considerable opportunity for the majority of
consumers who are still spending cautiously
despite recent interest rate cuts. The $1/L Volatility in income has resulted in many dairy dairy farmers to improve profit from their
strategy of a major retailer is a loss leader farmers taking a year-to-year perspective on existing pastures, forages and supplements.
approach aimed at improving market share farm financial performance rather than wealth Effective natural resource management
in a highly concentrated but competitive creation over the longer term. is increasingly important: The efficient
food market. use of resources and energy is an
International competitiveness is important for
The recent strategies of the major retailers all dairy farmers regardless of whether they increasing issue for Australian dairy farmers
will help support on-going low priced house supply a domestic or export orientated both in terms of cost control and to meet
brands. These strategies will inevitably market as no Australian market or geography community expectations for environmental
damage the sales of branded milk to the is protected from high-quality, lower-cost performance. The sustainability of nutrient
benefit of house brands, and enhance the competitors. A positive future for the use, particularly nitrogen, is expected to
power of the retailers in the local milk supply Australian dairy industry involves achieving escalate based on experiences in overseas
chain. DA has limited ability to impact on-farm business success while operating dairy industries. Climate change provides
retailer strategies but it can help improve internationally competitive farm systems. added uncertainty for dairy farmers and an
farm profitability via investment in the additional risk which erodes profitability.
development of new and higher margin Australian feedbase competitiveness has Managing climate variability is, and always
products and on-going productivity eroded: Low cost production of home has been, part of managing a dairy farm
improvements on farm and within the grown pastures and forages has and the best preparation for an uncertainty
processor sector. underpinned the competitive advantage of is a comprehensive risk management plan.
Australian dairy farmers in global milk Improved on-farm efficiency is vital for farm
production. However, feed costs comprise profitability and managing climate
the largest proportion of on-farm variable challenges.
costs, and have increased significantly over
Total Branded Milk

Total Private Label Milk
Farm gate prices
2.5
2.0
1.5
$ per litre
1.0
0.5
0.0
0708 0809 0910 1011 1112 1213(p)
Figure 9: Trends in milk retail pricing5
175
150
125
100
75
50
$ 000s
25
(25)
(50) Farm business prot
(75) Farm cash income
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13(p)
Figure 10: Australian dairy farm financial performance6

The genetics industry is evolving: place is rapidly evolving. Australia is a small approximately 1% per year over the decade
Genetic improvement is a critical source of artificial breeding market on a global scale, 2000-2009.
cumulative productivity gain in the representing about 8% of the US domestic
The control of mastitis and lowering of
Australian dairy industry (see Figure 11) and semen market. On the global front, there
somatic cell counts continue to be raised as
has contributed up to one-third of have been a number of commercial and
important issues by dairy farmers and milk
productivity gains over the past two technological developments of
processors as improved management of
decades. However, fertility has declined consequence for the Australian dairy
this disease has direct and obvious financial
over the same period. Developing highly industry, including:
and milk quality benefits. Other animal
profitable and sustainable dairy cattle is a > Development of the Grasslands Alliance health issues such as lameness, heat
clear priority. Actual gains from genetic a joint venture between CRV Western stress, Bovine Johnes Disease and
improvement have fallen short due to: Europe (Netherlands, Belgium, Germany, Pestivirus continue to be relevant to the
> Fragmented industry structure. France), CRV Ambreed (New Zealand) Australian dairy industry, but vary in their
> A shortage of high quality data in key and National Cattle Breeding Centre importance over time and between regions.
priority areas and from key sources. (Ireland). On-farm management of these animal
> A lack of integration of genetics with other > Emerging technologies, e.g. genome health issues, and emerging diseases such
elements of the production system. editing, gene sequencing. as Theileria and Mycoplasmal infections, will
> Emerging product development e.g. continue to be supported by DA through
These shortfalls can be addressed by DA
closed nucleus breeding programs (self ensuring farmers have access to practical
programs. The environment in which bull
contained genetic pool). management advice. Similarly, on-farm
selection and breeding decisions are made
> Emerging product differentiation, e.g. change in relation to animal welfare will
has changed markedly in the past decade,
proprietary traits that could be used continue to be supported by DA to promote
and the introduction of genomics and
competitively in the market. industry recommended practices for priority
genomic breeding values has added an
It is DAs role to monitor these animal welfare issues - tail docking, bobby
additional dimension to this changing
developments and assist in technology calf welfare, disbudding, calf management,
environment. There remains a need to
transfer to the Australian industry in a timely induction, lameness and downer cattle.
further investigate support for:
> Increasing the use of Artificial Insemination fashion.
> Herd recording Managing animal welfare issues is an
> Progeny testing and Australian Breeding on-going requirement: Although there has
Values (ABV) been variation between breeds and
> Addressing obstacles to these countries, dairy cow fertility has declined
practices o n-farm. globally since around 1980. DAs InCalf Data
Project (2011) showed that the Australian
The artificial breeding industry is undergoing
6-week in-calf rate decreased by
significant global change and this market
5,800 60%
6 week in-calf rates
Milk yield per cow (L) 58%
5,600
Average annual milk yield per cow (L)
56%
5,400 54%
6 week in-calf rates
52%
5,200
50%
5,000
48%
4,800 46%
44%
4,600
42%
4,400 40%
00 01 02 03 04 05 06 07 08 09
Figure 11: Average Output per Cow and Fertility7

3.2.3 People 3.2.4 Other Key Issues Relevant policy issues must be risk-
managed: There are a range of policy
Skill requirements are changing: The Innovation in processing remains areas with the potential to impact
industry has been experiencing important: As in the farm sector, the milk operations and costs of Australian dairy
consolidation for some time (see Figure 12) processing sector is undergoing continuing producers (animal health and welfare,
and on-farm skills are changing to meet the rationalisation. Initially, this resulted in bio-security, food safety, environment,
demands of larger, more commercially improved factory capacity, larger operations climate change, natural disaster relief,
oriented farming. and economies of scale. However, over the
genetically modified foods, health & nutrition
last decade, milk supply constraints have
Larger farm scale has meant that many & labelling, labour, trade policy, R&D,
resulted in under-investment in technology
farms now employ people other than family. infrastructure, fuel & energy, taxation, etc).
and scale in Australian dairy factories
Turnover is relatively high in the industry and The key areas of government policy
resulting in reduced unit cost
many dairy businesses report that they have affecting the dairy industry have been in the
competitiveness when compared to New
difficulty in attracting and retaining skilled areas of water reform and carbon pricing:
Zealand and other international competitors.
people, and that this is a constraint to > Water Reform: A draft Murray Darling
On-going investment in manufacturing
business growth and wealth creation. Basin Plan was delivered in late 2012 and
productivity via Dairy Innovation Australia
Investing in programs and activities that will affect water availability and
Ltd (DIAL), will be an element of DAs
attract, retain and develop people in the affordability, particularly for farmers in
strategy to improve industry profitability.
dairy industry is vital to its success. shared irrigation districts. This represents
Ownership: Farmer-owned co-operatives a significant but not insurmountable
Farmer confidence is a critical issue:
account for one third of Australias milk productivity challenge if dairy farmers are
The combination of market conditions has
production and it is unlikely that foreign to maintain and grow their production in
led to a general decline in farmer confidence
ownership at the processor level will
over the last 2 years (see Figure 13). these regions. DA has a key role to
increase during the next few years.
Nonetheless, farmers on average have provide information and findings that
However, it is anticipated that foreign
longer term growth intentions. Part of DAs support robust and well informed debate
ownership (especially Asian) at farm level
role is to help foster a more positive culture on this issue.
may increase over the forecast period.
in the industry to underpin future growth.
14,000 300
No. of registered dairy farms
Average herd size
12,000
250
10,000
200
No. of farms
No. of cows
8,000
150
6,000
100
4,000
50
2,000
0 0
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 (p)
Figure 12: No. of farms and average herd size8
90 300
% positive about future
Investment intentions next 12M
80
Production intentions more in 3Y 250
70
200
60
Per cent
150
50
100
40
50
30
20 0
05 06 07 08 09 10 11 12 13
Figure 13: Trends in Farmer Confidence9

> Carbon Tax: This new tax was For extension to be effective it must be well
implemented in mid-2012 and directly coordinated, and partnering amongst
impacts larger dairy companies. While providers (public, private, collective and
agriculture is not covered by the tax, VET) is critical to achieving the impact that
farmers are being affected through higher is required. Increasingly the challenge for
electricity costs. Milk companies with extension is to be responsive to the
limited ability to pass on costs are likely to opportunities of individual dairy farmers, but
pass back the carbon price to farmers. also to be clear in its role in driving and
enabling change to focus on and meet clear
Funding partnerships are changing:
outcomes and targets.
State government-based extension services
have been winding down over the past Under the National Primary Industry
decade and this decline is now Research, Development & Extension
accelerating. Individual States are at Framework, the outcomes of Dairy Moving
different stages on this continuum but the Forward provide DA with a guide to
South Australian government has already effective investment across RD&E.
completely exited provision of dairy Collaboration with research organisations
extension services. At the same time, locally and internationally also provides DA
extension roles and responsibilities within with the ability to stretch its funding as far
the public, private, collective (levy) and as possible. Nevertheless, this reduction in
vocational education and training (VET) available State Government funding means
sectors are changing. DA foreshadows a that DA must shoulder greater funding
growing impact of the private and VET contribution to extension if the same level of
sectors on the extension and change services is to be provided. During the
management agenda in Australia and forecast period it is likely that DA may be
investment must be aligned and supportive forced to further prioritise investment in this
of this emerging change. area.

3.3
International Markets
While Australia accounts for only 2% of the

worlds milk production, it is a significant 9
exporter of dairy products. With export 78 1
value of $2.76 billion (7% of global exports),
6
Australia ranks fifth behind New Zealand,
the European Union (EU) as a bloc, the 5
United States (US) and Belarus. Over
recent years Australia has exported 40-45% 2
of its milk production, the lowest proportion
since the mid-1990s, due to the reduced 4
availability of product over these years.
Australias export markets are
concentrated in Asia, which represented
3
74% of the total Australian dairy export
value in 2011/12. Japan is the single most
important dairy export market for Australia, Export sales by region
accounting for 19% of exports by value,
1 Japan (19%)
followed by China (14%), Singapore (9%),
Indonesia and Malaysia (6%). This 2 China (14%)
concentration of Australian dairy exports to
3 South East Asia (30%)
Asia is both a function of Australias close
proximity to Asian markets and the extent to 4 Other Asia (11%)
which Australia is excluded from other
export markets through direct and indirect 5 Middle East (12%)
trade barriers. Asian markets have 6 Americas (4%)
considerable potential for dairy consumption
growth as economies and diets become 7 Europe (2%)
more westernised and Australian dairy 8 Africa (2%)
companies have proven track records in
supplying these markets over a number of 9 Other (6%)
decades. The Middle East and the
Americas are also becoming increasingly
Figure 15: Export Sales by Region11
important markets for many Australian
exporters.
Sth East Asia Other Asia Europe Middle East Africa Americas Other Total
$m $m $m $m $m $m $m $m
Butter/AMF 71 47 23 29 10 15 5 201
Cheese 104 534 11 54 18 9 18 749
Milk 42 48 0 5 1 0 17 113
SMP 238 137 3 77 7 3 9 474
WMP* 133 154 2 109 16 39 9 461
Other ** 228 296 18 72 2 38 104 758
Total 816 1,216 57 347 54 105 162 2,757
Figure 15: Australian dairy exports by product by region 2011/1210

* Also includes infant powder
** Includes consumer products such as icecream, custards etc and mixtures but excludes industrial/ingredients usage.

Exchanges rate position is improving: SMP
Substantial appreciation in the AUD
WMP
exchange rate over the last decade has
damaged export competitiveness, impacted AUD/USD
1.20 230
export volumes, returns to exporters and
subsequently returns to producers (see 210
Figure 16). The slowdown in the mining 1.00
sector and reserve bank monetary policy is 190
now putting downward pressure on the 170

0.80
dollar, which should have benefits for
150
exporters.
AUD
0.60 130
kt
Nevertheless, Australian dairy industrys
long-term growth and profitability is linked 110
closely to its status as a world competitive 0.40
90
producer and productivity gains must
remain a key focus across the supply chain. 70
0.20
In a small open economy policy responses
50
are limited so it is even more important the
dairy industry actively pursues wide-ranging 0.00
improvements in productivity. 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
EU issues not yet impacting SE Asia:

Figure16: AUD/USD and Australian powder exports12
While global economic uncertainty remains
an important factor determining the demand
for dairy products in the short to medium 2012
term, key emerging markets have so far
been relatively unaffected by the global 2013
economic slowdown (see Figure 17). With 2014p

a slightly improved economic outlook, 8
demand from these regions is expected to
remain strong into the foreseeable future. 7
Commodity prices: International 6

commodity prices have improved
significantly since late 2012 driven by tight 5
global supply and accentuated by drought
Per cent
on the North Island of New Zealand. With 4

Australian product sold forward into the
3
global market, the full impact of these prices
was not fully reflected in 2012/13.
2
However, these prices will influence where
markets open in the 2013/14 season. 1
Depending on weather patterns, the
window of opportunity in which Australian 0
dairy exports can recapture a significant Asia Developing Asia ASEAN Europe
global market share without a negative
impact on market pricing could be available
Figure 17: Actual and projected GDP in Asia and Europe13
at least until late 2013 assuming New
Zealands milk production recovers with a
strong season peak.
Demand projected to exceed supply: 6
Demand for dairy products will continue to
grow with the expanding middle class in
developing economies, changes in diet and 5
increasing urbanisation, together with a
rising global population. A large portion of
4
this growth is occurring on Australias
doorstep ranging in an arc from the Indian
USD/t
sub-continent to North Asia. This provides 3

a significant opportunity for Australian dairy
producers.
2
Cheddar
WMP
1
SMP
Butter
0
Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13
Figure 18: Surveyed spot prices of Australian exporters ($US/t)14

In the second to last column in Figure 19, 70,000
Unmet demand represents the estimated
gap between projected global dairy demand 60,000
and supply by 2021 (Horizon 2020). The
expectation is that supply of dairy products 50,000
will be unable to keep up with demand over
ML milk equivalent
the next decade. 40,000
Australia will be one of a range of dairy
exporters (EU, US and New Zealand) that 30,000
will be competing for this additional
demand. While Australia is geographically 20,000
well positioned, price will be a key driver as
the Asian market has low capacity to pay a 10,000
premium.
0
While Australias geographic positioning
(freight time and cost) and counter- 2011 EU NZ + AUS US Other Latin trio Unmet 2021
seasonality to the northern hemisphere

offers some strategic advantage, it is likely Figure 19: Estimate of Future Export Demand15
that export success will relate more closely
to:
> Product quality Infant powder SMP
> Green credentials
Whey powder WMP
> Production flexibility
> Product specific differences. Export returns ($/L)
7.0 0.9
Commodity and value-added products:
World milk powder demand grew on 6.0
average by 6% over the last 5 years with 0.7
whole milk powder and skim powder 5.0
growing at around 4.4% and 9.9%
respectively. Over this period Australian 0.5
4.0
dairy export returns grew on average by
$/L
ML
only 1.7% annually. While growth in the

3.0
demand for dairy commodities is expected 0.3
to outstrip supply, realisable returns appear
to be low. Hence, Australian exporters 2.0
should also pursue product quality 0.1

advantages or specialised products to 1.0
preserve and improve average margins.
0.0 -0.1
Not a level playing field: Dairy is one of
03 04 05 06 07 08 09 10 11 12 13p
the most protected industry sectors globally
with high tariffs and quotas and/or non-tariff
barriers to trade. There is also the issue of Figure 20: Growth in global powder demand and Australian dairy export returns16
subsidisation of competitors exports by
government programs. Such protection of
dairy markets has become even more
entrenched on the back of global food
security concerns that have escalated since
the global food price spike of 2007/08.
Food price inflation is expected to continue
to push up the price of food for the
foreseeable future. EU and US policy
reforms will also play a role in shaping future
dairy trade flows as the removal of EU
production quotas and the likely
development of a new US Farm Bill signal a
new type of engagement with the
international market. DAs role is to monitor
and understand the consequences of global
market changes and assist the industry to
protect or enhance market access.

Bilateral trade agreements between New technology needed to reduce costs: Maintaining relevance in the international
countries: In the absence of any Over the last decade, milk supply marketplace: Australias share of exports
multilateral trade deal through the World constraints have resulted in under- has fallen over the last decade and the
Trade Organisation on the horizon, many investment in technology and scale in international markets are beginning to
countries have now turned towards bilateral Australian dairy factories as a result question Australias relevance as a global
and regional trade agreements as the next Australia is less competitive compared with exporter. This has raised the importance of
best alternative. These deals have left processors in New Zealand, the US and the Australian dairy industry providing
Australias dairy exporters at a significant Europe. With regard to on-farm assurances to our global customers that DA
competitive disadvantage in key Asian productivity, the Australian dairy industry will continue to play a vital and ongoing role
markets. Korea has already completed has made a significant long-term investment in delivering safe, nutritious, consistent and
bilateral trade agreements with two of our in the Dairy Futures CRC which is sustainably produced dairy products to the
biggest competitors (the US & EU) and this developing important technologies to world market.
has left Australias dairy exporters at a enhance the productivity of cows and dairy
significant competitive disadvantage in that pastures.
market. Similarly, the NZ-China FTA has
Environmental: The impetus for food
given New Zealand, one of Australias
enterprises to implement sustainable
largest competitors in dairy products trade,
practices is emerging due to pressure from
preferential market access in China.
both the wider community and major food
Nevertheless, Australia is currently engaged corporations and retailers. Sustainability is
in nine FTA negotiations: five bilateral FTA no longer merely a marketing proposition or
negotiations, with China, Japan, Republic of an element of corporate social responsibility,
Korea (ROK), India and Indonesia; and four but a way of doing business. It has
regional FTA negotiations: the Trans-Pacific become a strategic approach to extract
Partnership Agreement (TPP), the Gulf business value through risk management &
Cooperation Council (GCC), the Pacific resource efficiency. The strongest pressure
Trade and Economic Agreement (PACER in this regard is being applied by activist
Plus), and the Regional Comprehensive non government organisations (NGOs) on
Economic Partnership Agreement (RCEP). issues regarding animal rights and
environmental impact. The outcomes
sought in these areas affect public opinion
(and product consumption) and regulation
of business practices (which may reduce
flexibility and efficiency).
27 Section title Context / Trends / Outlooks

The Industry:
3.4
Key Issues
The findings from the Horizon 2020 study > Australian dairy industrys competitors it is an important risk management
effectively summarise the key issues facing are moving quickly to galvanise their strategy for progressive industry players.
the industry: positions - shoring up effective trade >C
ultural change required: The current
> The changing world economic order is alliances and integrated business models culture of the Australian dairy industry
driving rising demand for food to take advantage of growing markets. In provides limited support or opportunities
commodities in the developing world. many cases this is being actively to celebrate success, with most attention
While incomes will rise in these markets, supported by governments pursuing trade focused on those who are struggling with
affordability will be the key to maintaining agreements and facilitating strategic the challenges of market and climate
the role of dairy in addressing the investments and market development. volatility. This is reducing the overall
nutritional needs of a significant > Dairys licence to operate and sell is confidence of the farm sector in profitably
proportion of the population. being rapidly shaped by rising community supplying growing dairy markets and
> The expanding world market for dairy expectations including positive animal limits the attractiveness of the industry for
products and ingredients provides welfare, environmental and social investment of both financial and human
significant opportunities for the Australian outcomes. Building trust with capital.
industry. While the market for dairy communities, customers and consumers >O
ngoing innovation is critical to future
products will continue to grow, increasing will be more important in the future. This prosperity: Milk supply constraints over
climatic variability and pressures on will require the general community having the past decade have contributed to an
natural resources is likely to constrain a greater connectedness with the industry under-investment in technology and scale
supply expansion. and product, backed with credible in Australias dairy factories and this has
> The tight balance between supply and evidence. Industry leadership in hurt cost-competitiveness. It is imperative
demand from large producing/exporting agricultural sectors worldwide is that the industry develops and leverages
and importing regions will mean struggling to keep ahead of rapidly its ability to be flexible and agile, and
commodity prices will continue to be changing agendas and influencers. seeks opportunities to service high value
volatile. This, added to wider sources of > Sustainability incorporating improved markets rather than seeking to compete
uncertainty and instability from currency profit, environmental and social outcomes on price alone.
fluctuations, means input markets will is at the core of strategy for successful
A SWOT analysis has also been undertaken
continue to impact industry returns and multinational food companies and dairy
as part of this review of the operating
farm incomes. Management within farmers, as a focus on efficient resource
environment and as an input to strategy.
uncertainty has become a new skill use and positive and transparent
The detail of the SWOT and its implications
requirement. practices. This is not a marketing fad or a
for DAs strategic direction can be found in
source of differentiation for higher prices
Attachment A.

29
DA Strategy
4.1 Overview 31
4.2 Investment Strategy 33
4.3 Investment Structure and Allocation 33
4.4 Expenditure and Allocation 35

4.1
Overview
DAs strategy addresses the key on-going > The ultimate high level objective is the export market environment for Australian
and emerging issues facing the industry that long-term sustainability of the industry. dairy products, prevention of access
are within DAs remit. While the current Sustainability is a complex concept with erosion in key markets, and promoting
program of work remains appropriate in many components on-going industry awareness and active buyer preference
general, DA will make changes to internal profitability, food safety and security, for Australian dairy products.
structures and investment priorities to better animal welfare and ethical production, >C ontinue to provide a central source of
address these emerging issues, especially responsible use of natural resources, useful information to help DA and
those identified by Horizon 2020. environmental footprint (carbon, energy, industry stakeholders understand their
water, biodiversity etc). As the central industry and make informed decisions.
While farm profitability remains the highest
investment manager, DA must responsibly >M aintain support of planning and
priority, the revised strategy places an
allocate funds across this spectrum within education programs that support the
increased emphasis on the issues of
a long-term (10 year) view of the industry. on-going availability of skilled personnel to
sustainability and reputation
Strategically, DA will also provide the industry.
management as part of the industrys
investment into other key areas that >U nderstanding our stakeholders: DA
licence to operate. The objective will be
support the long-term sustainability of the will invest in systems to enable improved
to impact existing negative industry
industry, namely risk management, stakeholder feedback on the value of its
sentiment, improve farmer confidence and
capability building and reputation customer/stakeholder facing programs.
encourage investment in both financial and
management.
human capital. The Legendairy >E ffective use of funds: In a funding
> Building trust with community environment that is tightening, it has
promotional program (see Section 4.2) is a
underpins sustainability: A key strategy become increasingly important that DA
new and important element of this approach
in winning ongoing respect and uses its funds as effectively as possible.
with the target audience including dairy
confidence from consumers, customers Under the National Primary Industry
farmers, consumers and the key influencers
and community will be establishing Research, Development & Extension
of our society.
effective emotional connections to Framework, the outcomes of Dairy
The focus of DAs investment over the maintain dairys right to produce and sell. Moving Forward provide DA with a guide
coming 3 years will be as follows: DA will invest more into industry to effective investment across RD&E.
> Focus on farm profitability: As it has promotion (LegendairyTM) activities to Collaboration with research organisations
done since inception, DA will continue to foster a positive culture within the industry locally and internationally also provides
place most of its focus and investment and positive community sentiment DA with the ability to stretch its funding as
(59%, see Section 4.1) into projects that towards the industry to protect dairys far as possible.
directly have the potential to improve the licence to operate. This includes The Horizon 2020 study developed a
general prosperity of the industry, in defining the health and nutrition benefits number of strategic imperatives for the
particular on-farm. DA will continue to of dairy consumption and communicating industry. Where appropriate, DA has
invest in innovation and productivity these messages to key community responded to the recommendations in this
improvement at farm and processor level influencers. plan, the detail of which can be found in
to support improved industry profitability > DA will continue to support activities Section 4:
and long-term sustainability, with a strong that assist in maintaining or improving
emphasis on extension activities to drive access to international markets including
adoption. securing a more favourable and profitable
31 DA Strategy
Outcome for What to do differently What will support this Relevant DA
industry Strategic Programs
Improved Farm > Develop effective > Develop new tools and > Animal Performance
Profitability processes to focus on supported decision- > Farm Business Management
whole of farm business making > Feedbase & Animal Nutrition
outcomes over time > Partnership delivery > Attracting & Retaining People
> Facilitate R&D joint of R&D Re-engineer > Extension & Change
ventures on farm knowledge systems and Management
engagement > Sustainability Reporting
> Target delivery of
programs for effective
investment
We attract > Support a profitable > Sustain and widen > Farm Business Management
investment and growth agenda in dialogue on the future > Manufacturing Margin
good people response to an > Support the segment of Improvement
expanding dairy market the farm sector in the > Attracting & Retaining People
> Create roadmaps to industry intent on > Workforce Strategy, Planning
wealth, including entry growing wealth & Action
pathways
> Celebrate success on > Showcasing successful > Industry Promotion
farm on wealth creation, operators, targeting
sustainable practices effectively for uptake by
and innovation others
Australian Dairy > Adopt a front-foot > Celebrate success, > Industry Promotion
exceeds community approach to support with simple > Industry Reputation
and consumer sustainability based on rationale Management
expectations the industrys framework > Stronger emotional > Sustainability Reporting
> Build industry esteem connect, not evidence
from within with positive overload
image management
> Re-engineer advocacy >C

lear areas of focus, > Australian Industry Support
(resource, position, improved ability to > Industry Reputation
influence) to improve prioritise Management
effectiveness >C
ollaborate cross-industry
> Improve, clarify to improve effectiveness of
leadership pathways agricultures lobby
We are competitive > Improve the commercial >D

evelop a clear > Manufacturing Margin
in markets of choice relevance of industrys value proposition for Improvement
collective processing collaborative efforts post-
innovation capabilities farmgate
> Improve market signals > Improve effectiveness of > International Market Support
and mutual understanding market information > Knowledge & Insights
along the value chain
> Build a cohesive business >D
evelop comprehensive > Knowledge & Insights
case based on dairys database and regional > International Market Support
contribution to effectively economic contributions
engage Government in >E
nsure commercial
achieving beneficial trade support for trade agendas
outcomes
Figure 21: Horizon 2020 Outcomes Linked to DA Strategic Programs

4.2 4.3
Investment Strategy Investment Structure and
Allocation
A key harmonising theme of DAs revised To simplify and better target the investment >R
educing the number of Strategic
strategy for the period 2013/14 - 15/16 is model, the number of Strategic Priorities Programs from 25 to 17.
Sustainability which derives from work on (SPs) has been reduced from 4 to 3 (see >R
educing the number of projects from 98
the Dairy Industry Sustainability Framework Figure 23), their definitions narrowed and to 69.
reinforced by the findings of the Horizon objectives defined. >O
nly allocating projects to a single
2020 study. The approach is to have a Strategic Program rather than splitting
Achieving the outcomes within these
cohesive strategy that places an appropriate projects between 2 or more Strategic
Strategic Priorities will help build a platform
level of investment/effort across three Programs.
for the dairy industrys return to profitable
strategic priorities (SPs):
and sustainable growth. Furthermore, the Strategic Programs consist of a range of
> SP1 - Increasing farm profitability & key focus under SP2 (Protecting and projects which are individually proposed and
competitiveness: Supporting local and Promoting our Industry) has become approved. The full list of projects can be
international competitiveness to improve Legendairy which is described in detail in found in Attachment A. Each of these
farm profit performance. Section 4.4. These three Strategic Priorities Strategic Program areas is discussed in
> SP2 - Protecting and promoting our are broken down into Strategic Objectives detail in Sections 4.3 onwards.
industry: Promoting the benefits of dairy and Strategic Programs of work that
products and managing industry generally match with the critical issues
reputational and culture issues. facing the industry as discussed earlier.
> SP3 - Grow capability & skills: Ensuring Further simplification of the investment
the industrys human resources have the model has occurred via:
skills to be productive and that there is an
adequate supply of quality people.
Strategic Priority Strategic Objective Strategic Program

SP1 - Increasing farm profitability Farm Margin Improvement Animal Performance
and competitiveness
Feedbase & Animal Nutrition
Resource Management
Farm Business Management
Alignment and Integration
Manufacturing Margin Improvement Manufacturing Margin Improvement
Market Support & Insights International Market Support

Knowledge & Insights
SP2 - Protecting and promoting our Industry Promotion Industry Promotion
industry
Sustainability Reporting
Industry Protection Australian Industry Support
Industry Reputation Management
SP3 - Grow capability and skills Capability Development Attracting & Retaining People
Extension & Change Management
Workforce Planning & Co-ordination Workforce Strategy, Planning & Action
DA - Supporting Activity DA Operations Communications
Statutory Requirements
Figure 23: Investment Structure: Strategic Priorities & Programs
33 DA Strategy
Key Drivers
Domestic Dairy Landscape Global Dairy Landscape
201316 Strategy
Farm profitability impacted by: Demand for dairy products in

>>increasing input costs and increasing but competitiveness
seasonal variability impacted by:
>>managing volatility in milk price >>strong Australian dollar
>>greater complexity in farming systems >>global volatility
>>increasing public scrutiny on farmers >>adverse trade arrangements
% of Project Expenditure
59% 20% 18% 3% DA

supporting
Strategic Priority
SP1. SP2. SP3.

Profitable & Competitive Dairy Farms Protect & Promote our Industry Grow Capability & Skills
Investment Focus
1. Farm
margin improvement 1. Demand enhancement 1. Workforce planning and action
>>Animal performance and fertility >>Promoting the benefits of dairy >>Providing the dairy industry
>>Feedbase and nutrient use efficiency to consumers with the people it needs
>>Resource management 2. Encourage a positive 2. Skills and knowledge
>>Farm business management industry culture >>Supporting training and education
2. Post-farm margin improvement 3. Industry reputation management
3. Career pathways development
>>Processor productivity >>Maintaining dairys licence to operate
4. Leadership
and innovation 4. Risk management
>>Development of industry leaders
3. Access to profitable >>Identify, monitor and help manage
international markets issues impacting the industry 5. Extension
4. Providing market information >>Contribution to industry policy >>Transfer of technology, skills and
and insights 5. Understand, measure and resources to farmers
>>Supporting industry decision making support industry sustainability
Investment Theme
Industry Sustainability
Reducing
Enhancing livelihoods Improving wellbeing environmental
impact
Reducing
Creating industry Supporting Investing in Ensuring health Maximising Caring for our
environmental
prosperity communities dairy people and safety nutrition animals
footprint
Figure 22: Summary of the DA Strategy

4.4
Expenditure and Allocation
Total expenditure over the 3 years of the

plan is expected to be $181 million (see
Figure 24). The $114 million available for
project investment has been structured
against the 3 priorities with a clear focus on
SP1 (Increasing farm profitability and
competitiveness) with 59% of the 3 year
expenditure, driven by the direct needs of
dairy farmers.
The SP2 activities of protect and promote
(risk management and demand
encouragement) account for close to 20%
of spend and SP3 (growing capability and
skills) 18%. 3% of project expenditure is
directed towards DAs communication with
stakeholders and its statutory requirements.
This distribution of funds is seen as a
responsible balance between short-medium
term stakeholder objectives and longer term 4
3
sustainability issues.
DA supporting Delivery and overheads
SP1 SP2 SP3

70,000 2
60,000
1
50,000
40,000
$000s
30,000 Dairy Australias

Investment Strategy
20,000
1 Strategic Priority 1 (59%)
10,000
2 Strategic Priority 2 (20%)
0 3 Strategic Priority 3 (18%)
2013/14 2014/15 2015/16
Budget AOP Budget Budget 4 Dairy Australia (3%)
Figure 25: Forecast & 3 Year Plan Expenditure Figure 26: Three year project expenditure
by Strategic Priority
3 Year Plan
2012/13
$000s 2013/14 2014/15 2015/16 3 Year
Forecast
Budget AOP Budget Budget Plan Total
DA Supporting 1,087 1,323 1,025 775 3,123

SP1 22,222 23,424 22,915 21,273 67,611
SP2 6,909 8,391 7,354 7,042 22,787
SP3 5,863 7,403 6,622 6,561 20,586
Project Total 36,081 40,540 37,916 35,651 114,107
Delivery + Overheads 19,215 21,682 22,224 22,780 66,687
Total Expenditure 55,296 62,222 60,141 58,430 180,793
Figure 24: Forecast and Planned 3 Year Expenditure
35 DA Strategy
37
Detailed Initiatives
5.1 SP1: Increasing Farm Profitability and Competitiveness 39

5.2 SP2: Protecting and Promoting our Industry 45
5.3 SP3: Grow Capability and Skills 49
5.4 DA Supporting Activity 52

5.1
SP1: Increasing Farm
Profitability & Competitiveness
This section describes DAs strategic 5.1.1 Overview A positive future for the Australian dairy
direction over the planned 3 years based industry involves achieving on-farm
upon Strategic Priorities to Strategic Improved farm profitability is DAs top business success while operating
Program level. The projects and key Strategic Priority (59% of planned internationally competitive farm systems.
performance indicators (KPIs) for each expenditure - $67.6 million over 3 years) As can be seen in the allocation of funding,
Strategic Program can be found in with a range of pre-competitive programs of investments and activities to support
Attachments B and C respectively. work to support this goal. DAs role in increasing farm profitability are critical to
enhancing the industry competitive achieving this outcome. The dairy industry
advantage is comprised of the following is an integrated supply chain subject to
strategic elements: variability in markets, climate and input
> Farm margin improvement ($46.5m): availability. It is important that the industry
Supporting productivity on-farm to has access to the latest knowledge and
protect and improve profitability across analysis on which to base its decisions and
varied production systems. the best technology, practices and systems
> Manufacturing margin improvement to enhance its ability to grasp opportunities
($11.6m): Facilitate innovation across the and meet future challenges.
supply chain to improve efficiency and
profitability.
> Market support and insights: ($9.5m)
- Create and maintain access to preferred
export markets.
- Gain market intelligence and conduct
analysis to help farmers and others
prepare and plan for the future.
Strategic Program
Objective Animal Performance
Feedbase and Animal Nutrition
Farm - Margin
Resource Management
Improvement
Farm Business Management
Alignment and Integration
Priority
Manufacturing
SP1 Margin Manufacturing Margin Improvement
Improvement
Market Support International Market Support

& Insights Knowledge & Insights
Figure 27: SP1 Investment Structure
39 Detailed Initiatives
5.1.2 Farm Margin Improvement the opportunities facing the industry and costs. This has the dual benefit of improving
being constrained by a number of confidence and a positive farm business
Objectives: challenges. Farm profitability is highly culture with an emphasis on creating
> Support programs, activities and variable across farming regions and wealth; as well as increasing the
information that contribute to increased between farms. For example in 2011/12, international competitiveness of the
farm profitability, competitiveness and return on assets across Victorian farms Australian feedbase (including reducing the
greater control of input costs. varied from -3% to 17%. Production costs costs of production per unit of forage). It is
> Deliver coordinated capability building for on many farms have grown as input costs also vital, people in the industry have the
farmers and their advisers in key areas have increased and changes to farm skills required to competently perform their
that underpin farm margin improvement. production systems have been roles and that there is rapid and widespread
> Invest in research and development, implemented. Imperatives for productivity adoption of best practice and technology
including international collaborations, to gains remain, driven by needs to improve through innovative extension and change
address knowledge gaps in key areas, both profitability and resource use efficiency. methods.
and to ultimately improve farm
performance. The challenges and opportunities that will Direction & Targets: DAs strategic
need to be addressed to underpin future response is to fund initiatives in the following
Focus of Investment: The farm sector of growth in production and productivity of the areas to support the viability of dairy farming
the Australian dairy industry is delicately Australian dairy industry include increasing enterprises and establish the foundations
balanced between growing in response to farm profitability and greater control of input for growth:

Strategic Objective: Farm Margin Improvement
Strategic Program $ Strategic Direction 2013/14 - 15/16 Targets
% of $
Animal Performance $14.5m > Extending and increasing the use and > Lift reproductive performance by 1% per
12.7% reliability of ABVs to existing and new traits year as measured by median 6 week in calf
> Expand the animal data captured and rate (from 50% to 55%)
aggregated for genetic evaluation and on- > 100% of annual average herd BMCC below
farm decision making 400,000 cells/ml and 85% of BMCC below
> New approaches to selecting sexed semen 250,000 cells/ml
based on prospective technologies > Genetic merit of national herd to improve by
> On-farm change programs to improve herd $10 per cow per year
fertility and reproductive performance
> On-farm change programs to control of
mastitis and lower cell counts
> Global research and development
collaborations to improve herd fertility and
reproductive performance and to control of
mastitis and lower cell counts
Feedbase & Animal $14.0m > Improve the profitable utilisation and > Increase pasture consumption to 1 t
Nutrition 12.3% integration of both purchased feed sources DM/100ml rainfall or irrigation on 50% of
and home-grown feeds dairy farms
> Support for pre-commercialisation and
commercialisation of pasture and forages to
improve route to market and adoption
> Develop forage cultivar evaluation and
reporting mechanisms
> Address poor performing pastures including
through reseeding and renovation
> A reduction in expenditure in RD&E
associated with transition cow diets and
management
> No further investment in developing
or accessing grains with nutritive
characteristics to optimise nutrient use from
grazed pastures or supplementary forages
> A reduction in emphasis on more
sophisticated analysis and testing of forages
and supplements
Resource Management $5.1m > Increased nitrogen use efficiency in a whole >M
ore than 60% of dairy farmers are using
4.5% farm context, including improved efficiency nutrient management plans to achieve high
in feed production and in the animal resource use efficiency
resulting in reduced nitrogen losses.
> A reduced focus on mitigation strategies to
reduce greenhouse gas emissions and a
shift to adaptation support
Farm Business $1.6m > Deliver coordinated farm business >M
ore than 50% of farmers fully understand
Management 1.4% management capability building for farmers their financial position through appropriate
and their advisers tools and processes
> Expand the farm financial and performance
data captured to support industry and on-
farm decision making
Alignment & Integration $11.3m > Effective adoption of DA sponsored > Large supplier satisfaction that they have a
9.9% technology and innovation to improve levy say in their levy investment is > 5.5/10
payer profitability > More than 80% Farmer awareness of RDPs
> To ensure investment in RD&E is being levy funded
coordinated to avoid duplication and > More than 90% Farmer awareness of RDPs
maximise collaboration > Farmer satisfaction with RDP events is more
> Assist industry programs to set strategy than 6.5/10
and priorities and develop a framework for
delivery of priorities within the DA role
Figure 28: Investment priorities for farm margin improvement 2013/14 - 15/16
The functional areas above are supported by Alignment & Integration. This investment provides support for RDPs and Dairy Moving
Forward - key industry programs that contribute to priority setting, collaboration, capability building and delivery of programs.
5.1.3 Manufacturing Margin > To improve margins for dairy DA will assist in the transfer of DIAL
Improvement manufacturers by targeting new product developed intellectual property into
and process opportunities. Australian manufacturing sites through
When compared to global markets, the streamed funding for this purpose in
Australian dairy manufacturing sector Investment Focus: DAs ongoing strategy
conjunction with company members
comprises small to medium sized is to utilise Dairy Innovation Australia Ltd
co-investment. Improving their technology
processors. This lack of scale reinforces (DIAL) as the pathway for processing
transfer capability will be an important focus
the need for a central mechanism for oriented investment. DIAL membership
for DIAL.
collaboration in the area of innovation and includes all major processors. This
technology development. DAs role is to structure enables leverage of DA levy payer The underpinning new products strategy
ensure that the overall strategic direction of funding contributions by a factor of 4:1. focuses on isolating synergistic components
central pre-competitive research and During 2013/14 DIAL will review its model of to enhance benefits and command greater
innovation is relevant to the industrys needs operations to better reflect DA and levy value. The strategy has deliberately moved
across all time horizons. payer expectation that provides DA with away from isolating minor individual
greater say over the direction of DIAL components to fractions containing multiple
Milk contains many components that have expenditure. components, which typically also reduces
health and nutritional benefits. Isolating the cost to manufacture and is a more
these components into new products offers There are five potential future projects to be
natural fit with a functional food offering.
considered to the value of $1.1m in this
the opportunity for higher product margins,
Strategic Program for 2012/13 relating to There is a planned scaling back in the
but involves increased risk (both technically
cheese yield, high solids evaporation, smart number of projects in this area to 2. The
and commercially) for manufacturers. DAs
dewatering and benchmarking of waste. continuing projects are New Product
support can help reduce the barriers facing
The key focus of DIAL investment is opportunities with gut health benefits and
dairy companies to make the most of these
development and transfer of technologies to Improving the industry uptake of high
opportunities.
deliver value added products, smarter margin products. This provides a focus on
Objectives: manufacturing processes and build the largest functional food market category
> To accelerate the delivery of an innovative, knowledge and innovative capability. Highly (gut health) in which dairy is already well
internationally competitive, profitable and leveraged investment in 2013 will allow core credentialed. The other project area aims to
sustainable Australian dairy manufacturing technologies in cheese manufacture, improve the uptake of such opportunities by
industry. process efficiency, new product formulation industry.
and shelf life extension to be developed and
> To provide Australian manufacturing with
delivered through established capability.
a strong integrated R&D capability that
contributes to global competitiveness.
Strategic Objective: Manufacturing Margin Improvement

% of $
Manufacturing Margin $11.6m > Accelerated delivery of an innovative, > More than $150million increase in 3 year
Improvement 10.1% internationally competitive, profitable and project portfolio planned economic value to
sustainable Australian dairy manufacturing industry
industry > More than 70% of DAs technology transfer
> To provide dairy manufacturing with a strong projects delivering a commercial return
integrated R&D capability that contributes to > The ratio of DIALs total membership revenue
global competitiveness and the total value of DIALs research
> Focus new product investment on Gut activities > 1.1
Health and industry uptake > More than 50% of new ideas and innovation
outcomes presented by DIAL converted into
company specific development projects
> More than 3 initiatives in DAs New Product
area in which Australian dairy manufacturers
are directly involved.
Figure 29: Strategic Direction Priorities for Milk Processing Oriented Activity

5.1.4 Market Support and Insights
A summary of the strategic direction and
targets at the strategic program level is as
follows:
Strategic Objective: Manufacturing Margin Improvement

% of $
International Market $5.1m > Secured more favourable and profitable > Dairy positions incorporated into all finalised
Support 4.5% export market environment for Australian bilateral and regional trade agreements
dairy products > More than 50% of major exporters support
> Prevention of access erosion of marketing initiatives undertaken
opportunities and conditions in key markets > TRG/ADF PAG signoff of program
> Foster a close awareness and active buyer objectives/planned outcomes
preference for Australian dairy products
Knowledge & Insights $4.4m > Information that is useful to stakeholders in > Service rating for overall services is > 7/10
3.8% their business decision-making is collected, > Positive feedback, use of analysis and data
analysed and made available in development and assessment of
> Information provides insights which improve programs
strategic planning and program delivery for
DA
Figure 30: Market Support & Insights, Strategic Direction
5.1.4.1 International Market 5.1.4.2 Knowledge and Insights
Support
DA is uniquely placed to serve as a
Exports represent 40% of dairy production centralised collection point for data sourced
and are the key pathway for industry on a confidential basis from key
growth. Under this program, DA seeks to manufacturers and government sources.
maintain and enhance international market There is a need for provision of timely and
access for Australian exporters. credible information to all dairy industry
participants as well as stakeholders such as
Objectives:
government, banks and service providers,
> To secure a more favourable and
as a basis for decision-making and
profitable export market environment for
investment. However, the growth of
Australian dairy products through
information in print and online poses a
strategic trade policy reforms and
challenge for time-challenged dairy industry
agreements.
stakeholders in searching for relevant data
> To prevent the potential erosion of access and developing insights that are actionable
opportunities and conditions in key in their businesses. These programs
markets through the implementation of provide a centralised point for accumulated,
regulatory or policy changes. relevant knowledge for the industry.
> In key export markets, support higher
exporter returns by developing and Objective:
maintaining industry level platforms that > To collect, analyse and make available
generate a close awareness and active information that is useful to stakeholders
buyer preference for Australian dairy in their business decision-making.
products. > To provide information and develop
insights to improve strategic planning and
Focus of Investment: DA will support program delivery for DA.
government initiatives focused on trade
agreements with all relevant countries and Investment Focus: DA sources data
regions (within Asia: Japan, China, Korea, cost-effectively for industry by maintaining a
Indonesia, and India). This is critical to central database of international datasets
building long-term business partnerships that can be accessed by stakeholders. The
and defending existing commercial collected knowledge (that is developed from
positions. The global trading environment is these activities) is then used to facilitate DA
becoming more challenging through an and industry-level business planning and
escalation of behind-the-border measures prioritisation for the positioning of dairy in
and technical trade barriers. Increased use national and international debates on dairys
of such non-tariff barriers in priority markets economic, social and environmental
is affecting trade in agricultural goods contribution.
including dairy products. Therefore, in DA also coordinates stakeholder surveys to
negotiating these agreements, streamlining understand farmer demographics,
requirements and technical barriers is also sentiment, issues and intentions, evaluate
important. For example, when tariff rate issues addressed by programs and
quotas are used, the administration of these incorporate key challenges and issues into
quotas in Australia or in the importing strategic planning.
country can be costly and burdensome as
to undermine any competitive gains from The DA Library provides a central repository
having access to the quotas. for research reports, books and journals as
well as cost-effective access to online
Scope of effort: information which can be utilised by all
> Co-ordinate the development of industry industry stakeholders. The library provides a
positions/preferred approaches in key help desk, dealing with over 6,000 enquiries
trade negotiations; facilitate their each year.
presentation to, and adoption by, national
and international audiences. The knowledge that is developed from
> Provide direct technical support to these activities is also used to facilitate DA
government/industry negotiators in and industry-level business planning and
strategic trade negotiations and disputes prioritisation for the positioning of dairy in
that affect Australian dairys national and international debates on dairys
competitiveness or conditions of access economic, social and environmental
to preferred markets. contribution.
> Provide a policy/market access help desk
for industry (including assessment of the
commercial implications of policy and
market reforms in major producing
regions).
> Work closely with exporters to develop an
integrated suite of industry level marketing
activities that complement commercial
sales and improve the perceived value
and confidence that buyers attach to
Australian dairy.

5.2
SP2: Protecting and Promoting
our Industry
5.2.1 Overview new technology and social network Stakeholder confidence in the future of the
platforms; the growing influence of NGOs; industry is one important driver in ensuring it
Collaborative priorities for Australian industry rising scepticism of company ethics, survives and flourishes. This is a statement
promotion and protection include motives and practices; and, ongoing backed up by observations from the
contributing to an industry prioritising financial and economic volatility. There is Horizon 2020 study, which identified that a
exercise (endorsed by ADIC) and increased public scrutiny on ethical and key strategy in winning ongoing respect
implementing the Horizon 2020 sustainable production systems which and confidence from consumers, customers
recommendations and DA will work in means the Australian and global dairy and community will be establishing effective,
collaboration with ADF, ADPF and the wider industries need to develop effective emotional connections on key propositions.
industry in this regard. Horizon 2020 strategies to manage reputational issues. In response to the drivers of reputation and
outcomes have strongly indicated that a Public concerns and actions are enabled by industry integrity, DAs strategic response is
sustainable dairy industry is one that builds a voice that is spread rapidly through many comprised of 3 key elements, which form a
and maintains its reputation with the new digital and social media channels. The self re-enforcing system of influence that
community. As such, the focus and issues impacting the reputation of the strengthens relationships, enables policy,
activities under SP2 have been revised to industry include: drives demand and supports dairying
better address this objective. Investment in > Challenges to the food safety and security operations. These elements establish the
this priority will be $22.8 million (20% of systems. foundations upon which to integrate,
total expenditure) over the 3 years of the > Responsible use of natural resources. coordinate and monitor ongoing dairy
plan and is divided into 2 strategic reputation activity.
> Size of our environmental footprint.
objectives and 4 programs:
> Animal welfare and ethical production 1. Relationships: Stakeholder
> Industry promotion ($13.2m): Promoting
methods. communications which engage external
the benefits of dairy products to
stakeholders and build stronger
community and community influencers, Any measures to enhance the reputation
relationships.
and benchmarking industry sustainability. and integrity of the industry must include
2. Policy Support: Capacity-building
> Industry protection ($9.6m): Helping increasing commitment to national animal
activities which support the industrys
industry manage current and future risk health programs and bio-security
voice and influence policy development.
areas and helping to improve the preparedness. The challenge in doing this
reputation of the industry within the effectively is to avoid duplication and 3. Demand: Industry promotion which
community. excessive compliance burdens. showcases the benefits of industry and
Underpinning this changed landscape is the grows demand.
Recent changes in the reputational need for the dairy industry to maintain its
landscape are exerting pressures on social licence to operate - the implicit
organisational and industry reputations in consent of government and society to allow
Australia and abroad. These pressures companies and industries to carry out their
include changes in community and commercial activities with a minimum of
consumer expectations about how goods regulatory interference or opposition from
are produced; increasing scrutiny through local communities.
Objective Strategic Program
Industry Promotion
Priority Industry Promotion
Sustainability Reporting
SP2
Australian Industry Support

Industry Protection
Industry Reputation Management
A summary of objectives and targets across
the four Strategic Programs is as follows:

% of $
Industry Promotion Industry $11.8m > Development and implementation > Increase total population everyday
Promotion 10.3% of an integrated, focused and 3+ consumption of dairy foods from
disciplined program of marketing 28.7% to 32%
and communications strategy to > Increase the % consumers who
realise reputational improvements agree I trust the dairy industry
via Legendairy. from 66% to 70%
>R everse the downward trend in
farmer confidence about the future
of the dairy industry (66% in Feb
2012 to 56% in Aug 2012)
Sustainability $1.4m > Position dairy around three key >D
evelop targets for the industry
Reporting 1.2% sustainability objectives: Enhancing agreed Sustainability goals and
livelihoods; Improving wellbeing and objectives.
Reducing environmental impact >P
roduce the industrys first Progress
report on implementing the Dairy
Industrys Sustainability Strategic
Framework.
>D
evelop and implement action
plans to enable the agrees targets
to be met.
Industry Protection Australian $3.0m > Provided industry support in the >D evelopment and promotion of
Industry 2.7% areas of: evidence-based strategic policy
Support - Environmental and natural positions
resource management policies >A chievement of positive policy
and regulatory affairs. outcomes
- Policy areas of animal health & >M inimize the risk of adverse
welfare, financial management, decisions undermining profitability
infrastructure, workforce and > Improved public and political
education, and health and nutrition perception of the industry
Industry $6.6m > Maintain/ improve: >M
ore than 90% of industry key
Reputation 5.7% - Community sentiment towards contacts who find DAs issues
Management dairy management material important to
- Key opinion leaders/key their role
stakeholders positive attitude
towards dairy
- Supporting industry infrastructure
and policy resources
Figure 32: SP2 Summary of Strategic Direction

5.2.2 Industry Promotion a proactive approach where key audiences The story will be created from messages
receive a consistent message. DA will derived from the three pillars developed
5.2.2.1 Industry Promotion implement a revised consumer marketing from the Dairy Industry Sustainability
Objectives: This Strategic Program aims to and communications program via new Framework. This will ensure a long-term
increase community and dairy farmer projects leveraging the newly developed sustainable industry and will bring broad
confidence in the dairy industry and its Legendairy creative platform. benefit to the community.
products. The program is central to the > Enhancing livelihoods
This program will increase DAs capacity to
achievement of the Legendairy 2016 influence industry reputation through a > Improving wellbeing
objectives, which are to: program of marketing and communication > Reducing environmental impact
> Increase total population everyday 3+ initiatives that promote the industry and its The program will address the priority target
consumption of dairy foods from 28.7% products. The program was born out of the audience, i.e. mums of children aged 5-12
to 32%. desire to build the basis of a strong core years, and include three initiatives which will
> Increase the percentage of consumers story and facilitate its telling in an emotive deliver a highly visible mass media launch,
who agree I trust the dairy industry from and compelling way. an ongoing communication campaign and
66% to 70%. To deliver the story in the most impactful schools engagement activities. This will be
> Reverse the downward trend in farmer way, three key audiences were identified: supported by marketing and
confidence about the future of the dairy dairy farmers, consumers and the communications to young singles and
industry (66% in Feb 2012 to 56% in Aug influencers of our society societal shapers. couples using the fitness and physique
2012). These audiences are not seen as platform and to adults 50+ via two initiatives
> Develop a positive operating environment independent, but highly interlinked. targeting men and women.
for the Australian dairy industry. Therefore, the dairy story must be told
simultaneously to all three. This Strategic
Investment Focus: Actively telling the
Program captures the work targeting
story of the Australian dairy industry requires
farmers, farm communities and consumers.
roving Wellbeing
Imp
Farming
Consumer
Communities
l Impact
E n han
nt a
ci n
Societal Shapers
e
gL
nm
ive
ro
oo
En
li h
vi
ds g
in
Re d uc
Figure 33: Target Segments of the Promotional Campaign
5.2.2.2 Sustainability Reporting 5.2.3 Industry Protection 5.2.3.2 Industry Reputation
Objective: Sustainability reporting (often 5.2.3.1 Australian Industry Support Objective:
noted as Corporate Social Responsibility or > Maintain/improve community sentiment
Objective: To provide industry support in
ethical sourcing) is increasingly becoming a towards dairy.
the areas of:
requirement for the dairy industrys major
> Environmental and natural resource > Maintain/improve key opinion leaders/key
customers. While Asian markets are yet to
management policies (water, energy, stakeholders positive attitude towards
fully embrace this, it is happening in Europe
climate change, soil and biodiversity dairy.
and North America. The large multinationals
management, natural disaster relief, etc), > Supporting industry infrastructure and
like Unilever, Nestle, Danone and others all
and regulatory affairs. policy resources.
have requirements relating to sustainable/
ethical sourcing. In Australia, the major > Policy areas of financial management, > Maintain/build relevance of health and
supermarkets have Sustainability infrastructure, workforce and education, nutrition benefits of dairy to target
requirements. All aim to have reached and health and nutrition. segments.
specific goals by 2020. > Positively influence perceived benefits of
Investment focus: This program supports
dairy amongst key influencers of target
Investment Focus: This industry the dairy industrys development of strategic
segment.
framework will provide a solid platform that policy and drives the implementation of the
Investment Focus:
can be leveraged by individual dairy outcomes of policy change. Specific
initiatives and activities will support the dairy > Development and implementation of an
companies for their own sustainability plans,
industrys development of strategic policy integrated, focused and disciplined
while attempting to ensure dairy farmers are
positions and achieve outcomes that will program of marketing and
shielded from direct cost implications at the
improve profitability and improve the communications strategy to realise
individual farmer level. Smaller
industrys reputation as a safe food source reputational improvements via
manufacturers can also use the industry
and good environmental steward. This Legendairy.
strategic framework if they do not have their
own. The whole-of-industry approach will includes: > Engage, arm and mobilise the industrys
also build on work already underway across > Commissioning expert analysis to review greatest assets (farmers and their
the supply chain, not just levy funded/DA existing and proposed policies, and communities) with the messages, tools
activities. identify innovative policy solutions; and the confidence to tell the industry
preparing background briefings and other story.
The Sustainability Strategic Framework will communication materials to support > Market the dairy story to societal shapers:
enable the dairy industry to meet corporate policy positions. These are the influencers of our society
social responsibility agendas of the whether they are government, community
> Relationship management initiatives,
industrys major domestic and international or non-governmental organisations.
including attendance and presentations in
stakeholders in a way that does not add > Market the dairy story to consumers
government and stakeholder consultation
unnecessary cost burdens. The desired based on quality and health benefit
forums, conferences, public speaking,
outcomes of the framework are: messaging.
and support for industry representatives
> Whole of dairy supply chain is recognised attending meetings and other > Position Legendairy around three key
as sustainable. engagement opportunities. sustainability objectives: Enhancing
> Consumers and community trust in the > Co-investment with other RDCs and livelihoods; Improving wellbeing and
Australian dairy industry. research entities in reviewing the effects, Reducing environmental impact.
> Dairy industry maintains its right to costs and benefits of current and
produce - no additional sustainability proposed policy levers.
assurance measures required.
> Industry reputational promotion activities
> Australian dairy industry is actively sought and events, such as a Legendairy
out by customers as a preferred supplier picnic at Parliament House, Canberra;
of sustainable inputs/products. social media engagement; Legendairy
> Governments acknowledge dairy industry marketing initiatives.
as a leader in sustainable production
systems and seek to reduce regulatory
burdens and engage with the dairy
industry when developing policies
impacting the industrys sustainability.
> User friendly sustainability benchmarking
tools are established and add value to the
whole of chain sustainability work being
undertaken.
> DA drives towards consistency with the
wider global industry e.g. Sustainable
Agriculture Initiatives (SAI).

5.3
SP3: Growth and Capability
5.3.1 Overview Pressure on farm profitability makes it The other key element under this strategic
difficult for farmers to afford additional priority is extension, with the objective of
An important role of any central body is labour and many farmers are working longer effectively transferring the outcomes of farm
fostering the capability of the industrys hours as a result. Retention of farm workers based R&D to people on farm. The
human resources as people are critical to remains an issue and comes at a cost to a challenge of change management and
industry performance. There is little dairy dairy business. The estimated turnover rate extension for Australian dairy is magnified
specific education and training support for for the dairy industry is 35% (compared with by the diversity of dairy farm businesses,
the industry beyond those programs that 18.5% for all Australian organisations) and is which are geographically dispersed,
are sponsored by DA. Investment in this conservatively estimated to cost the dairy non-uniform and increasingly regionalised in
priority will be $20.6 million (18% of total industry $60m per annum. Local labour character.
expenditure) over the 3 years of the plan shortfalls are being supplemented by an
and is divided into the following strategic increase in overseas workers seeking
elements: employment in Australia. Dairy farmers
> Capability building ($19.9m): compete with other industries for skilled and
Educational programs and Extension semi-skilled labour and this is hindered by
activity focused on transfer of technology, the fact that the image of agriculture and
skills and capability to the farm. the dairy industry is still poor.
> Workforce Planning & Co-ordination
($0.7m): Research and planning to In response to the workforce issues and
ensure that the industry has the right mix trends that present challenges to the
of people and skills in the future. growing skills and capability, DA will pursue
The image and general regard of the dairy the following strategic activities in order to
industry is an issue when seeking to attract continue to develop the dairy industry
young or new entrants into the labour workforce:
market. School students are faced with a > Regional ownership and implementation
huge array of options dairy is just one of of workforce planning and action
the many and it is difficult to articulate a initiatives.
point of difference. Considerations such as > Measurement of impact resulting from
clear and attractive career path, type of job, training and development activities.
work life balance, remoteness, and wealth > Transition from awareness programs to
creation opportunities are not fully employment outcomes.
understood by those outside the industry > Understanding of effective business
and this acts a barrier to entering the transition mechanisms and the supporting
industry. skills and knowledge required.
Objective Strategic Program
Attracting & Retaining People

Capability
Priority Development Extension & Change Management
SP3
Workforce Planning
& Coordination Workforce Strategy Planning & Action
Almost 20% of DAs project expenditure is
directed towards capability focused projects
across the following 3 strategic programs:

% of $
Capability Development Attracting & $7.4m > Transition from awareness >R
egional careers co-ordinators in
Retaining 6.5% programs to employment outcomes place in 6 RDPs
People > Measurement of impact resulting >C
ows Create Careers delivered in
from training and development 275 schools
activities >D
eveloping dairy leaders program
> Understanding of effective business commenced
transition mechanisms and the >5
0% of industry leadership
supporting skills and knowledge participants are in industry roles
required within 2 years
> Coordinated engagement and >3
People in Dairy business retreats
connection with young dairy delivered annually
farmers that results in a greater
level of cross sectoral collaboration
and greater utilisation of existing
programs including: The People in
Dairy resources and NCDEA
programs
> The People in Dairy program will
shift in focus from resource
development to supporting regional
delivery and engagement activities
Extension & $12.5m > Dairy industry assumes greater ore than 25% farmer participation
>M
Change 11.0% responsibility for leading, managing in DA sponsored activity
Management and funding extension delivery to >1
00% of requests for technical input
dairy farmers into the future into NRM and climate change policy
responded to by DA
Workforce Planning Workforce $0.7m > Regional ownership and >2

Workforce Action regional plans
& Co-ordination Strategy, 0.6% implementation of workforce developed and implemented
Planning & planning and action initiatives
Action
Figure 35: SP3 Strategic Direction Summary

5.3.2 Capability Development 5.3.2.2 Extension and Change 5.3.3 Workplace Strategy, Planning
Management and Co-ordination
5.3.2.1 Attracting and Retaining
People Objective: Accelerate the on-farm Objective: To ensure the dairy industry has
adoption of beneficial R&D outcomes the appropriate supply of skilled and
Objective: This program provides and best-practice systems via greater capable people necessary to meet the
information, development support, tools farmer awareness of, and access to, new current and future demands of the industry.
and resources that dairy farmers, new technology and skills.
entrants, young farmer networks and The strategies and actions to achieve this
graduates can access to ensure that the Investment Focus: There will be an must be responsive to workforce trends at a
dairy industry is seen as an employer of increased focus and investment in farm broad industry level, but must be able to be
choice with clear pathways into the industry. change and extension during 2013/14 as implemented at a regional and farm level.
The program objectives are to: the resource required to provide regional Successful long-term sustainability will be
> Provide clearly visible national dairy coordination, including NRM coordination, achieved through the recognition of clear
careers pathways. extension delivery services, development and attractive career paths that provide
capability, and Farm Business Management long-term security for both individuals and
> Provide support for the National Centre
(FBM) capability is built to work towards enterprises.
for Dairy Education Australia (NCDEA) to
addressing industry needs and identified
operate nationally. Investment Focus: To achieve this
Dairy Moving Forward priorities.
> Provide support for the RDPs workforce objective the focus will be on a centrally
strategies. DAs leadership and investment in farm enabled strategy and support framework
> Implement targeted development change and extension and natural resource enabling a regionally delivered and
programs that provide opportunities for management is in direct response to implemented program. At the central level,
industry engagement. industry requirements and the continuing the workforce planning and action strategy
> Focus dairy learning and development decline in state government funding of will be developed and supported through
activities on industry outcomes. public extension delivery, which has seen a the Dairy Industry People Development
reduction in capacity within this sector. Council (DIPDC). This body has
> Align the interests of Young Dairy
responsibility for ensuring that the
Networks. Extension initiatives will be delivered by
immediate and the long-term skills and
Investment Focus: state agencies (e.g. DPIV) where there
capability requirements of the industry are
> NCDEA is sufficient capability, and alternative
well understood, and that appropriate
> Young Dairy Network Australia delivery options including RDPs, the private
strategies for addressing these needs are
sector, NCDEA, regional NRM agencies,
> Cows Create Careers developed and implemented. The DIPDC
commercial operators and collective
> Promotion of Dairy Career Pathways will sponsor and support appropriate
investments. The exact mode of delivery
> Scholarships. initiatives to implement the strategy.
will depend on the outcome required and
the area of change being addressed, for The approach adopted will be to ensure the
example, creating an improved culture, programs supported by the DIPDC are
implementing improved practices, resource regionally enabled. This means that the
use efficiency or building institutional main activity of each program is located
or individual capability. The DA regional within each dairy region and is supported
NRM coordinators and the regional NRM and connected with the local RDP. Local
reference groups will be responsible for data will be utilised to understand the real
integrating the delivery of industry and NRM demand for jobs, skills and capability within
agency resource management programs. the region and subsequent projects and
actions will be directly targeted at identified
gaps. Successful programs will be actively
shared between regions. This collective
and collaborative approach will ensure
maximum benefit is derived from the
initiatives.
Connection with existing initiatives such as
the People in Dairy, NCDEA and Regional
Innovation and Change Coordinators will be
strengthened in order to optimise the
outcomes from these investments.
5.4
DA Supporting Activity
5.4.1 DA Operations direct engagement, national and regional 5.4.1.2 Statutory Reporting
event sponsorships, on-line and a range of
5.4.1.1 Communications targeted resources. This program encompasses the statutory
obligations of the organisation:
For farmers to continue to support the levy
Strategic Direction: In the two years
system, they want their opinions and needs > Hosting of the Annual General Meeting.
leading up to the 2012 Dairy Levy Poll our
understood, and to see that their investment > Production of the Annual Report.
efforts were focussed exclusively on dairy
is being used effectively in this regard. > Effective reporting to funding partners,
farmers and farmer influencers with the aim
Similarly, our key funding partners must see including the Australian Government, as
of increasing the level of awareness of DAs
tangible value and the accomplishment of required under the Statutory Funding
role, the range of levy investments
agreed goals, in order to continue co- Agreement (SFA).
undertaken and the benefits associated with
investing in DA programs.
these investments. The scope will now
Objective: This program aims to build and widen to incorporate formal
protect DAs corporate profile and reputation communications with all key stakeholder
among our key stakeholders, and to groups including Department of Agriculture,
improve farmer satisfaction with DA and its Fisheries and Forestry (DAFF) and the State

management of levy funds. To do this the Departments of Primary Industries, given
focus is on: their significant contributions to a range of
> Raising awareness of the role of DA. industry investments. The key focus areas
towards the end of the 3 year period will be
> Raising awareness of levy investment
the next Levy Poll. Upcoming issues from a
priorities and the value and benefits
communications view point are:
delivered through DA and levy
investments (including tools and > Continued consolidation of our
resources to support their businesses). information outputs to deliver greater
message cut-through and information
> Ensure key stakeholders are engaged and
retention.
feel that they are heard and valued.
> Achieving message cut-through in a
Approach: Given the number and diversity highly congested information
of our audiences, there is no single activity environment.
that can adequately address DAs corporate > Greater on ground visibility and presence
communication requirements a for DA.
multidimensional but integrated approach > Continued improvements on brand
will be adopted. This approach will attribution.
recognise the information overload
> A strong focus on engagement with
experienced by all our audiences, farmers in
stakeholders.
particular, and the divergences in
information requirements across our target > The adoption of digital technologies to
audiences. This program utilises a range of deliver training, education and extension.
communication channels including media,

53
Expenditure
Allocations and
Returns
6.1 Alternate Views of Expenditure Allocation 55
6.2 Planned Returns 56
6.3 Project Portfolio Balance 57
6.4 Government R&D Priorities 59
6.5 Collaborative Expenditure 59

6.1
Alternate Views of
Expenditure Allocation
Supply Chain: DA recognises that industry Triple Bottom Line Reporting: The DA Remit: By functional outcome (see
success is dependent upon profitability allocation of expenditure over the next three section 1.4), more than half of expenditure
within each level of the supply chain. years is divided across the three categories is devoted to R&D and the extension
Approximately half of expenditure is directed of Triple Bottom Line reporting: economic, thereof. Despite the importance of export
to pre-farmgate investments, with environmental and social responsibility. The markets to the industry, DA spends only 4%
processing and consumer level receiving allocation of 60% of DAs investment under on trade policy as it acts in a supporting role
16% and 7% respectively. the Economic category is in line with DAs only, to the large dairy export companies.
allocation across Strategic Priorities. SP1
accounts for 59% of DAs investment. SP3
contains most of DAs investment over the
next three years, in social responsibility.
13
1 7 1
12
3
2 2
10 11
3
9 6
4 3
5 1
8 2 4
7 6
5
1 Feed Inputs (12.27%) 1 Central provision of information (10%)

1 Economic (60%)
2 Herd (9.34%) 2 Environmental (15%) 2 Industry capability (14%)
3 Land (4.54%) 3 Social (25%) 3 Regulatory policy (7%)
4 Milk Production (1.5%) 4 Trade policy (4%)
5 Water (0.81%) 5 Extension (24%)
6 Business Capability (23.5%) 6 R&D (32%)
7 Processing/Manufacturing (10.24%) 7 Precompetitive product
support (9%)
8 Consumers (10.38%)
9 Export Markets (4.33%)
10 Domestic Markets (0.13%)
11 Industry Capability (7.08%)
12 Industry Support (13.14%)
13 DA Services (2.74%)
Figure 36: DA investment across the Figure 37: Expenditure by Triple Figure 38: DA investment by remit 2012-13
dairy supply chain Bottom Line
55 Expenditure Allocations and Returns

6.2
Planned Returns
Each DA project is evaluated for planned For DA the average risk adjusted planned risk management is dealt with in later
future benefit to industry and the risk BCR (after taking into account POS at the sections.
associated with achieving that future project level) for the current portfolio is 3.7
As would be expected, the greatest planned
benefit. This enables DA to create an at the project investment level. Due to
returns are in the on-farm and post-farm
assessment of the consolidated planned average funding leverage of 1:1.8 (via
margin improvement projects. SP2 and
benefit of all current investments. The Government funds and other sources), the
SP3 projects are more difficult to
following table describes: external project average BCR on levy payer investment is
economically value but are a strategically
expenditure, benefit cost ratio (BCR), estimated to be 5.6.
important part of a balanced investment
average probability of success (POS) and
Probability of success at the program level strategy as described earlier.
funding leverage across the strategic
varies from 40% for heavily R&D oriented
priorities and programs.
programs to 100% for service provision
programs. The issue of risk appetite and
2013/14 -
% of Average Funding
Strategic Objective Strategic Program 2015/16 BCR
Total POS Leverage
Expenditure $
SP1 - Increasing farm profitability & competitiveness 67,611,299 59.3% 4.2 56% 2.1
Farm Margin Improvement Alignment & Integration 11,322,654 9.9% 4.3 70% 5.5
Animal Performance 14,547,856 12.7% 3.5 53% 1.2
Feedbase & Animal Nutrition 14,005,644 12.3% 5.0 41% 1.1
Farm Business Management 1,563,100 1.4% 3.0 75% 1.3
Resource Management 5,144,495 4.5% 3.3 65% 1.9
Market Support & Insights International Market Support 5,085,550 4.5% 2.8 74% 1.1
Knowledge & Insights 4,383,000 3.8% 3.9 77% 1.1
Manufacturing Margin Manufacturing Margin

11,559,000 10.1% 6.2 43% 2.0
Improvement Improvement
SP2 - Protecting and promoting our industry 22,786,762 20.0% 3.5 72% 1.1
Industry Promotion Industry Promotion 11,810,000 10.3% 4.0 70% 1.0
Sustainability Reporting 1,370,000 1.2% 2.2 77% 1.0
Industry Protection Australian Industry Support 3,047,500 2.7% 3.1 75% 1.0
Industry Reputation Management 6,559,262 5.7% 3.3 71% 1.3
SP3 - Grow capability & skills 20,586,352 18.0% 4.2 59% 1.8
Capability Development Attracting & Retaining People 7,402,026 6.5% 2.6 74% 2.2
Extension & Change

12,504,326 11.0% 5.4 50% 1.5
Management
Workforce Planning & Workforce Strategy, Planning &

680,000 0.6% 3.2 80% 1.0
Co-ordination Action
DA - Supporting Activity 3,122,500 2.7% 0.0 100% 1.0
DA Operations Communications 2,415,000 2.1% 0.0 100% 1.0
Statutory Requirements 707,500 0.6% 0.0 100% 1.0
Total 114,106,913 100.0% 3.7 61% 1.8
Figure 39: Expenditure and Evaluation Outcomes by Strategic Program

6.3
Project Portfolio Balance
6.3.1 Risk - Return Spread the current portfolio at strategic program projects with strong potential commercial
level. gains and simultaneously manage project
With a range of stakeholders and limited risk with acceptable limits.
funds available, maintaining a balanced SP1 is focused on economic returns to the
investment portfolio is an important new farmer and, hence, the risk-return chart (see The predominance of programs in the low
objective for DA. The implementation of our Figure 40) is informative of DAs planned risk-low return quadrant reflects the fact
bespoke project/investment management performance. The chart shows a good that DA funds many programs that are
system has provided the wherewithal to spread of projects with much of the SP1 economically difficult to value (e.g. capability
view the portfolio against various expenditure in the acceptable high return/ building, industry promotional activity) and
dimensions (planned returns, risk, funding medium risk region (Manufacturing Margin that not all returns can be measured in
leverage) and this has resulted in project Improvement, Feedbase & Animal Nutrition, dollar values. Projects that characterise our
investment changes. However, DA is only and Animal Performance). DA is funding activities in SP2 Promoting and Protecting
at the beginning of this analysis process R&D that is inherently risky and it is DAs our Reputation tend to have lower net
and it will take some time before the remit to address important H3 development present values (NPVs), but are strategically
organisation can truly claim to have an ideal areas that are beyond the risk profile of important to ensuring the long-term viability
spread and balance of project expenditure. individual organisations in the industry. The of the industry in that they target reputation,
The following chart provides a snapshot of objective will be to maximise investment in integrity and demand.
1 Manufacturing margin improvment

1200
High risk/High return Low risk/High return 2 Feedbase & animal nutrition
1100
1 3 Animal performance
1000 4 Alignment & integration
Present value of planned benet ($m)
900 5 Knowledge & insights
800 6 Farm business management
2 7 Industry promotion
700
8 Industry repuation management
600
9 Workforce strategy, planning & action
500 10 Extention and change management

11 Australian industry support
400
10 12 Sustainability reporting
300
13 Attract and retain
3
200 14 Statutory requirements/Communications
100 4 8 SP1
7 13 5
11 12
- 9 6 14 SP2
SP3
0 20 40 60 80 100
High risk/Low return Low risk/Low return DA supporting
Weighted of average probability of success (%)
Figure 40: Risk Return Chart at Strategic Program Level

6.3.2 Time Horizon 6.3.3 Risk Profile
3
As the central investment body, one of DAs DAs balanced risk profile reflects the
remits is to invest in projects that are importance of delivering value for farmers
1
important to the industry but would not fit with some certainty while also investing in
within the risk appetite of industry innovation programs that will build the
participants. Horizon 3 (H3) projects industrys resilience and competitive
(benefit to be achieved in 5 years or later) advantages. Investing in innovation is
would generally be in this category. Figure necessary for a sustainably profitable
41 describes the expenditure in terms of industry, but will naturally require a higher
expected outcome time horizon. As can be degree of uncertainty.
seen, only 16% of expenditure is in this
At a project level, the average probability of 2
category. The remainder is split evenly
success for all DA expenditure is 61%. The
between H1 (outcome in < 2 years) and H2
risk related distribution of project
(outcome in 2 5 years).
expenditure is represented in Figures 42
and 43. DA has allocated 41% of its 1 Industry benefit acheived
investment to projects that currently are within 2 years (41%)
graded as low risk (probability of success 2 Industry benefit acheived
75-100%). These are generally public from 2 to 5 years (43%)
good projects such as the collection and 3 Industry benefit acheived
provision of information, capability building, after more than 5 years (16%)
or stakeholder communication.
18% of expenditure is allocated to medium
Figure 41: Expenditure by Time
risk projects (50-75% POS) and a third of
Horizon
spend allocated to high risk projects
(25-50% POS). These projects tend to be
R&D oriented. 8% of expenditure is
allocated to very high risk projects which
tend to be exploratory activities associated
with research.
As would be expected, average (risk free)
returns (BCR, see Figure 42) increase as
risk increases, with the exception of very
high risk projects. For these projects
(typically exploration), it is usually too early
to fully define the future benefits to the
industry and this has the impact of pulling
down the BCR. 1
Risk Probability 3 Year % of Average Risk 1 Very high (8%)

of Success Expenditure Expenditure Free BCR 2 High (33%)
Very High 0-25% 9,015,239 8% 3.95 3 Med (18%)
High 25-50% 37,454,174 33% 6.50 4 Low (41%)
Med 50-75% 20,910,377 18% 4.52
Low 75-100% 46,727,163 41% 3.19
114,106,913 100%
Figure 42: Risk and Return Expenditure Distribution Figure 43: Expenditure by Risk
Assessment

6.4 6.5
Government R&D Priorities Collaborative Expenditure
Increasingly, government is calling for DA collaborates extensively with a range of

additional rigour in monitoring and institutions including universities, R&D
evaluation of investment in research and organisations, international research
development, as well as enhanced agencies, NGOs and cooperative research
collaboration efforts amongst RDCs. This is centres (CRC). Through collaboration DA
to ensure effective distribution of research intends to have access to leading practices
and to maximise the impact of invested and knowledge that DA can leverage in the
funds. delivery of our own Strategic Objectives, as
well as ensuring that the broader policy and
In response, this Strategic Plan articulates
national research and development
how DA will address extension, technology
objectives of government are realised as
transfer and commercialisation of R&D. To
efficiently as possible.
give rise to this outcome, DA is also
ensuring that pathways to extension and In total, DA invests approximately $19
adoption are incorporated into the planning million in collaborative projects.
and approval processes. Approximately $800k of this is invested in
NR1 An environmentally sustainable initiatives with other RDCs such as the
Australia Grains Research & Development
NR2 Promoting and maintaining good Corporation, and the Meat & Livestock
health Association.
NR3 Frontier technologies for building &
transforming Australian industries
NR4 Safeguarding Australia
NR5 Other
7 8
5 4
4 6
5
1
4
1
1
3
3
3 2
2
2
1 An environmentally
1 NR1: An environmentally 1 Productivity and adding value (46%)
sustainable Australia (47%)
sustainable Australia (34%) 2 Supply chain & markets (23%)
2 Promoting & maintaining
2 Promoting & sustaining 3 Natural resource management (6%) good health (3%)
good health (14%)
4 Climate variability & climate 3 Frontier technologies for building
3 Frontier technologies for change (7%) and transforming Australian
building & transforming 5 Biosecurity (2%) industries (40%)
Australian industries (33%)
6 Innovation skills (11%) 4 Safeguarding Australia (9%)
4 Safeguarding Australia (14%)
7 Technology (2%) 5 Other (1%)
5 Other (5%)
8 Other (3%)
Figure 44: Expenditure by National Figure 45: Expenditure by Rural Research Figure 46: Collaborative expenditure by
Research Priorities and Development Priority National Research Priority

National Research Priorities Investment ($)
Priority 1 Priority 2 Priority 3 Priority 4 Priority 5

Institution An Promoting & Frontier Safeguarding Other
environmentally maintaining good technologies for Australia
sustainable health building &
Australia transforming
Australian
industries
Commonwealth Govt 548,802 55,000 634,108 239,874 27,444
CRC 315,000 - 1,620,000 - -
CSIRO 44,000 15,374 - 41,953 -
Industry 12,500 43,500 4,375 393,319 54,889
International Research 100,369 40,000 - 52,515 -
Centre
NGO 486,923 - 89,094 147,869 27,444
RDC 459,906 - 8,714 219,820 109,778
Research Centre 2,790,000 - 1,875 310,000 -
State Govt 2,331,433 - 2,881,866 229,029 27,444
University/TAFE 1,790,676 335,709 2,323,989 122,140 -
Other 130,000 - - -
Grand Total 8,879,608 619,583 7,564,021 1,756,518 247,000
Figure 47: Collaborative Expenditure by National Research Priority

61
DA Operational
Strategy
7.1 Budget Planning 63

7.2 Organisation Structure and People 67
7.3 Governance, Compliance and Risk Management 69
7.4 Corporate Communication 73
7.5 IT, System and Processes 73
7.6 Performance Management and Evaluation 73

7.1
Budget Planning
DAs funding principally comes from farmer In framing its budgets, DA seeks to balance DAs income and planned expenditure for
levies and government matching funds for planned program outlays with expected this strategic plan.
eligible RD&E expenditure. Other income income so as to maintain a prudent level of
Investment levels will be maintained at
sources include industry and external reserves. The Board reviews the required
$59-62 million per annum over the planned
co-contributions to specific projects, minimum level of reserves annually, taking
period to maximise available funds while
interest earnings and royalties. Total annual into account the contractual commitments
reducing reserves towards the minimum
receipts in the forecast period are in the of the organisation and the potential funding
level.
range $54-56 million. required supporting the industry in the event
of a catastrophic event. Figure 48 presents
Summary 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Actual Actual Forecast AOP Strat Plan Strat Plan
Production - bn litres 9.100 9.480 9.401 9.582 9.766 9.953
Farmgate price, cents per litre 38.6 39.49 40.39 41.28
$000 $000 $000 $000 $000 $000
Opening Reserves 25,447 31,405 35,535 36,776 29,034 23,640
Income
Levy 33,103 31,190 33,037 33,728 34,376 35,036
Govt Matching Payments 18,787 18,636 19,316 19,007 18,929 19,728
Interest/Royalties/Other 2,975 5,053 4,183 1,744 1,254 1,079
Total Income 54,865 54,879 56,537 54,480 54,559 55,843
Expenditure
Project 29,126 32,149 36,081 40,540 37,728 36,197
Overheads 19,781 18,600 19,215 21,682 22,224 22,780
Total Expenditure 48,907 50,749 55,295 62,222 59,953 58,977
Closing Reserves 31,405 35,535 36,776 29,034 23,640 20,506

Minimum Reserve Level 13,100 13,600 17,200 18,485 18,947 19,421
Reserve Surplus/Shortfall 18,305 21,935 19,576 10,549 4,693 1,085
Figure 48: Annual Cash Outcomes & Projections
63 DA Operational Strategy
7.1.1 Delivery and Overhead Costs Overheads:
> Increased employee costs due to new IT
Delivery (DA labour costs related to project
Corporate Services Manager, Corporate
delivery) and general overhead costs will
Planning Manager, staff training and
increase by 5% ($967k) when compared
on-cost increases.
with the 2012/13 budget due to:
> Accommodation: Additional office space
Delivery: at Southbank.
> Increase in Extension staff during 2012/13 > Depreciation increase: Replacement of
with flow through costs into 2013/14. aging IT infrastructure.
> Addition of 3 Workforce Planning and > More travel costs associated with
Action - Regional Coordinators during additional extension staff.
2013/14. > Decrease in on-costs due to payroll tax
> Addition of personnel into Biotech and exemption.
Animal Health programs. > Decrease in Levy Collection costs due to
DAFF/LRS cost sharing revision.
Delivery + Overhead Costs 2011/12 2012/13 2013/14 Variance

Actual Budget Budget
$ $ $ $ %
Employees, on-costs and agency staff 14,248,667 15,096,238 16,164,067 1,067,829 7%
Office Accommodation, IT and Depreciation 1,749,608 1,634,956 2,154,020 519,064 32%
Telephone, Media and Comms 1,007,017 1,279,975 1,053,014 (226,961) -18%
Travel/Accommodation 561,996 585,000 758,132 173,132 30%
Finance , Insurance and Legal 938,782 894,580 648,205 (246,375) -28%
Stationery etc 380,426 411,408 381,010 (30,398) -7%
Contractors/Consultants 910,244 645,104 376,272 (268,832) -42%
Research & Data - 130,000 120,000 (10,000) -8%
Project Expense 71,668 37,800 27,550 (10,250) -27%
Grand Total 19,868,408 20,715,061 21,682,269 967,208 5%
Figure 49: Delivery & Overhead Costs

7.1.2 Planned Reserves 7.1.3 Dynamic Budget / Funding
Flexibility
Under the 3 Year plan, expenditure is
planned to exceed income with the Dynamic budget initiatives (i.e. projects
objective of maximising investment for under planning that have not been included
farmer benefit, while maintaining minimum within the forward estimate) include projects
required reserves. Current planned such as the ADHIS upgrade, the Centralised
expenditure reduces reserves to close to Data System and components of the
minimum levels by the end of 2015/16 (see National Extension Strategy, and amount to
Figure 50). approximately $16m over the next 3 years
(see Figure 51).
However, the current plan may need to be
adjusted to allow for the inclusion of Some of these planned but unbudgeted
potential new projects. Given the level of projects may prove to be more attractive
future planned reserves, there is (nominally) than current projects, so there will be a
little room for additional expenditure during mechanism to displace planned expenditure
the planned period. with excellent emerging projects.
In this regard, DA has some flexibility to
divert funding during the course of the next
3 years. For 2013/14, only 37% of the
planned expenditure by project has
currently been contracted (e.g. CRC,
ADHIS, RDPs, DIAL) at this time (see Figure
52). As such, there is the ability to manage
expenditure during the 2013/14 and later
years should there be a need to do so.
Minimum Reserve Level
Total Income
Total Expenditure
Closing Reserves
70,000
60,000
Planned Reserves ($000s)
50,000
40,000
30,000
20,000
10,000
10/11 11/12 12/13 13/14 14/15 15/16
Figure 50: Income, Expenditure and Reserves
2013/14 2014/15 2015/16
$ $ $
SP1 6,551,930 3,789,037 3,009,620
SP2 640,000 415,000 95,000
SP3 800,000 250,000 250,000
Total 7,991,930 4,454,037 3,354,620
Figure 51: Dynamic Budget: Estimated expenditure for initiatives not

included within 3 Year Planned budget
Contracted
Uncontracted
45
40
35
30
25
$m
20
15
10
0
03/14 14/15 15/16
Figure 52: Contracted project expenditure

7.2
Organisation Structure and
People
7.2.1 About Dairy Australias People 7.2.2 Organisation Structure with ADF/ADPF/ADIC on their strategic
policy priorities. The groups
DAs people have a dedication and passion DA has an investment management
investments address the export
for the dairy industry. Their expertise and role, where Program Managers oversee
commitment mean that DA can offer a element of SP1. (Increasing farm
a range of projects governed by
broad range of services across the whole profitability and competitiveness) and
investment contracts, typically
dairy supply chain. The organisation SP2. (Protecting and promoting our
undertaken by resources external to
employs around 100 people and industry).
the organisation.
approximately 12% of staff has been with Industry Promotion and Product
the organisation (and its predecessors) for These Program Managers report to one
Innovation aims to increase
more than ten years. Many of the of six Business Group General
community and dairy farmer confidence
employees bring to the organisation Managers. Investment projects may
in the dairy industry and its products
extensive farm, manufacturing and scientific consist of full or partial funding
and invest in processor innovation
research experience. A significant number responsibility for external organisations,
have tertiary qualifications in a range of
activities (including responsibility for
as described in Figure 54. Some
business and industry-related functions and DIAL) for the benefit of the Australian
Business Groups also have external
post-graduate qualifications such as dairy industry. The groups marketing
advisory bodies that assist in direction
doctorates and MBAs. and communications focus, addresses
and industry integration.
SP2. (Protecting and promoting our
DA recognises the value of harmonious Recent re-organisation of DA has industry) and, is organised around three
working conditions ensuring a safe and fair resulted in the following structure which target markets: 1. Consumer, 2.
workplace, as well as choice and is anticipated to remain stable over the Influencers, and 3. Partnerships and
opportunity for all its employees. The
forecast period. The Executive Farming Communities. Under SP2, the
Companys practices support a diverse
Leadership Team (ELT) of the group is also responsible for investment
team, providing a flexible environment that
organisation comprises the CEO and in dairy health and nutrition research
aligns with the business. DA continues to
attract and retain an adaptive and high- the Business Group Leaders marked * and industry communication thereof.
performing workforce that is able to meet in Figure 54.
This group also addresses the
current and future needs. The responsibility of each of the manufacturing element of SP 1
Business Groups is as follows: (Increasing farm profitability and
competitiveness) through its investment
Farm Productivity and Delivery in the processor industry central R&D
coordinates research development and organisation (DIAL).
extension that focus on farm
productivity and profits to address SP1. Industry People and Capability
(Increasing farm profitability) and SP3. sponsors vocational education and
(Grow capability and skills) including training for farming and manufacturing
projects related to: within the dairy industry. The
> Business management investment focus of this group is to
> Feed availability and consumption address SP3 (Grow skills and
> Herd size and breeding capability), in particular:
> Resource Management. > Workforce strategy, Planning and
Action and
This group is also responsible for DA > Attracting and Retaining people to/in
funding of RDPs and the Dairy Futures the industry.
CRC.
The NCDEA, which delivers vocational
Trade and Industry Strategy aims to education and training for and with the
enhance and sustain the Australian Australian dairy industry, is one of the
dairy industrys profitability. It works groups key investments in this area.
with industry stakeholders to facilitate
favourable international market Sustainability is an independent group
environments for Australian dairy with the responsibility of coordinating
exports and provides high level key stakeholders to develop and
technical support to industry and implement the dairy industrys
government on emerging trade and sustainability framework. This includes
industry issues. The group also establishing a sustainability report
coordinates the policy hub which which will assist dairy farming and
integrates policy work undertaken manufacturing reduce dairys
across all DA business groups to environmental impact and remain in
enhance DAs liaison and coordination business for the long term.
Business Operations provides the
financial, HR and administrative Managing Director
backbone to DA. It is responsible for
ensuring that DAs business
performance is effective and that the
organisation has optimum capability,
thereby delivering the best possible Business Group General Managers
service to stakeholders. The groups
functions are:
> Governance, compliance and risk
management
> Accounting & Finance Strategic Program Managers
> Legal Support
> Human Resource Management
> Corporate Communications
> Strategy & Planning
> Information Technology Systems and Project Leaders
Processes
> Performance Management and
Evaluation. Figure 53: DA Reporting Structure
Ian Halliday
Managing Director
General Managers/
Business Groups
Isabel MacNeill*
Chris Murphy* Charles McElhone* Shane Hellwege Ross Joblin*
Industry Promotion Helen Dornom
Farm Productivity Trade & Industry Industry People & Business
& Product Sustainability
and Delivery Strategy Capability Operations
Innovation
Partial or full funding
of external bodies
Regional
Development Dairy Innovation National Centre for
Programs (RDP) Australia Limited Dairy Education
(DIAL) Australia (NCDEA)
Dairy Futures CRC
Figure 54: DA Organisation Structure and Related Entities

* The Executive Leadership Team (ELT) of the organisation comprises the CEO and the Business Group Leaders

7.3
Governance, Compliance and
Risk Management
7.3.1 Governance Framework 7.3.1.1 Statutory Funding Deed 7.3.1.2 Membership

As a public company limited by guarantee, Since its inception in 2003, DA has Under DAs Constitution, all Australian
DA operates within the legal framework of operated in accordance with the terms dairy farmers who paid the Dairy
the Corporations Act 2001, other relevant of a Statutory Funding Deed (Deed) Service Levy or who have levy
laws and its Constitution. In addition, as the with the Commonwealth. The Deed payments deducted from the proceeds
industry services body under the Dairy was last renewed with effect from 18 of their milk sales are eligible to
Produce Act 1986, DA is party to a April 2007. This was varied by become Group A members of DA and
Statutory Funding Deed with the agreement in 2009 to align timing for its to participate in General Meetings of
Commonwealth of Australia. renewal with the DA Dairy Service Levy the Company and in the election of
The Constitution sets out rules dealing with Poll in 2012. It is currently the subject Directors. In addition, bodies that
matters such as: the Companys objects or of renewal discussions with the represent a significant sector of the
purposes; the criteria for eligibility for Commonwealth. The Deed has been Australian dairy industry are eligible to
membership; members voting entitlements; extended to the earlier of 30 June 2013 become Group B members of the
and the composition of the Board including or the signing of a new Deed. Under Company. DAs Constitution provides
the election and rotation of Directors. In the Deed, the Commonwealth agrees for formal consultation with Group B
conjunction with the Corporations Act 2001, to pay the Dairy Service Levy funds members in relation to the development
the Constitution sets out the Companys paid by dairy farmers to DA, together of the Companys strategic and
reporting responsibilities to members. DA with government matching payments. operating plans.
will undertake a review of its Constitution in In addition, the Deed sets out how
time for the November 2013 AGM. those payments may be used and DAs
reporting and accountability
requirements to the Commonwealth.
7.3.2 Board This allows the Boards composition to be 7.3.2.2 Role of the Board
reviewed annually to ensure that it continues
7.3.2.1 Board Composition to have the skills and experience necessary The Board is responsible for guiding and
to meet the challenges facing the Company monitoring the Company on behalf of its
At 30 June 2012, the Board comprised
and industry. Candidates for election are members, to whom the Board is
eight non-executive Directors (including the
nominated by a Dairy Industry Board accountable. The roles and responsibilities
Chair) plus the Managing Director. The
Selection Committee (assisted by a of the Board are set out in detail in the
Boards size and composition enables it to
Pre-Selection Committee which identifies Board Charter. These include ensuring that
make timely decisions with input from
candidates with milk-producer skills) appropriate policies, procedures and
Directors who have a variety of skills and
comprising representatives from the two systems are in place to manage risk and
perspectives. The skills, experience and
Group B members. In addition, Group A ensure high standards of accountability,
expertise of each Director in office at the
members with the necessary skills and level ethical conduct and legal compliance. DA
date of this report are set out in more detail
of Group A member support are able to recognises that an effective Board is crucial
in the Directors Report. The Board
lodge nominations for Board positions. to achieving Company and industry
recognises that the relevant skills and
objectives. Accordingly, DA has structured
experience requirements for Directors
its Board to ensure that the Board has the
might, at times, lead to a potential conflict
skills and experience necessary to enable it
of interest for a Director. Directors provide a
to deal with current and emerging dairy
standing declaration of interests and also
industry issues, and is able to effectively
provide notice when a new office or interest
and independently review management
is acquired. A policy exists for dealing with
performance and decisions.
conflicts of interest.
Under the Board Charter, the Board
The Constitution provides for three-year
conducts an annual review to evaluate its
terms for non executive Directors. At each
performance and identify areas for
AGM the Companys Group A members
improvement, with each third review being
elect Directors to fill Board vacancies
facilitated by an expert external consultant.
created when Directors retire by rotation.
Max Roberts
Chairman
Geoffrey Akers Wendy Craik Bruce Donnison John McKillop Alan Grant
Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive
Director Director Director Director Director
Kelvin Jackson Peter Nankervis Ian Halliday Ross Joblin

Non-Executive Non-Executive Managing Company
Director Director Director Secretary
Figure 55: Dairy Australia Board

7.3.2.3 Board Operations > Assisting the Board in ensuring that the 7.3.3 Governance and Compliance
Company complies with all regulatory Reporting
The Board meets monthly. Prior to Board and accounting requirements for
meetings, DAs management provides disclosure of remuneration. The SFA between DA and the Australian
Directors with comprehensive Board papers > Independently reviewing human Government governs the funding
and reports to facilitate sound decision resource management policies and relationship between stakeholders. The
making. In addition, members of the related information to ensure that Business Operations group provides
Companys ELT and other members of governance accords with contemporary corporate governance oversight within DA.
management give presentations to the good practice. Key elements of the governance framework
Board as required. The Board delegates to for the organisation are:
DAs management responsibility for: Each Committee has a Charter setting out > DA maintains a Delegated Authority Policy
> Development and implementation of its role and responsibilities. Committee that requires all major investments to be
strategy as approved by the Board from members are appointed at the first Board approved at Board level. Sign-off of
time to time meeting of each calendar year and are Board approved expenditure is delegated
> Financial performance selected on the basis of their skills, no lower than Business Group General
> Operational activities. experience and the qualities they bring to Manager level, with higher amounts
the Committees. The Chair of each requiring the Managing Directors
The Company has a formal document in Committee provides a verbal report of signature.
place, Delegated Authorities, setting out Committee meetings at the next Board
> The organisation has a set of standard
financial delegations to management and meeting. All Committee Minutes are tabled
funding contracts which are managed by
staff. While these matters have been at the following Board meeting. in-house Legal Manager and provide
delegated to management, the Board
appropriate levels of liability protection for
receives comprehensive reports from
the organisation.
management at each Board meeting with
respect to their implementation. > The accounting and project management
system provides transparency of project
The Board has two standing Committees performance and expenditure to middle
that assist it in discharging its and senior management.
responsibilities: > Standard employee agreements that
1. Audit and Risk Management manage confidentiality issues.
Committee: Assists the Board in fulfilling > Annual auditing of accounts.
its responsibilities for the accuracy and > Periodic audit of performance (most
completeness of DAs accounts and recent October 2011).
external reporting, and the assessment of
the Companys risk management plan. Some of the key activities for the current
2. Human Resources Committee: strategic planning period include:
Responsible for: > Developing monitoring and evaluation
> Providing a review and oversight frameworks to better measure
function for the Board on remuneration organisational performance.
policies and information. > Mapping stakeholder engagement
> Independently reviewing policies and opportunities and for enhanced
information to facilitate consistency with engagement and consultation with
market practice. industry bodies.
7.3.4 Risk Management
DA recognises the importance of effective
risk management in order to ensure
awareness of the breadth and depth of
uncertainties that may affect DAs ability to
deliver objectives. Accordingly, risk
management activities, are considered as
an integral part of DAs management
practices. The three areas critical to DAs
ability to deliver relate to Funding,
Governance and Operations and
Performance. Figure 56 presents the
objectives and high level mitigation strategy
for these three critical areas.
Critical area Objective Mitigation strategy

Funding To ensure a degree of certainty regarding the funding DA must work with and understand core funding
source providers priorities and requirements as well as
prudently managing its reserves
Governance and To ensure operational risks such as Fraud, Exposure to DA must have sound processes and controls
Operations Liabilities, Knowledge Management, Occupational Health in place including OH&S committee, project
and Safety, Business Continuity and Human Resources management system, standard policies and
are managed procedures
Performance To ensure stakeholder needs are met and value is DA manages its performance via stakeholder
delivered consultation, and monitoring and evaluation of DA
investments including the performance of strategic
partnership entities and collaborators
Figure 56: Critical area objectives and mitigation strategy

7.4 7.5 7.6
Corporate Communications IT, Systems and Processes Performance Management
and Evaluation
The scope of DAs corporate DA operates and continues to develop a Performance management and evaluation is
communications efforts will widen to web based interface (via the DA website) to a central DA function which informs
incorporate formal communications with all allow the industry to access central strategy, investment, implementation and
key stakeholder groups including DAFF and information. Behind this DA maintains review. It is also fundamental to
State Departments of Primary Industries, finance and accounting system (including demonstrating value to the Board, industry
given their significant contributions to a HR and payroll modules), Customer and Government.
range of industry investments. The Relationship Management (CRM) and
Via its accounting and program
Corporate Communications team supports project management systems. The web
management system, DA tracks milestone
the work of all business units with emphasis interface provides a method to integrate
performance for each project/investment.
on: access to these systems.
Key performance indicators (KPIs relating to
> The corporate brand (not the industry Over the preceding two years, DA has Strategic Objectives) are maintained for
brand i.e. promotion initiatives around the implemented a new project management each Strategic Program and are reviewed
dairy category or industry reputation - system based upon a best practice annually. At a high level, the balance of the
these are covered in SP2 investments). process for project selection and control. investment portfolio can be reviewed via
> Key stakeholder audiences including This has enabled the organisation to better risk-return or expenditure allocation charts
internal stakeholders. define and manage the breadth of activities available directly from the project
> Both DAs corporate communication undertaken. The system also helps ensure management system.
needs (dissemination of corporate DA activities are conducted with appropriate
messages around DAs role, levy rigour and transparency to deliver value for In 2011 DA initiated an independent review
investments/associated benefits and money and achieve intended outcomes. DA of the performance of DA which
progress tracking) and DAs essential will continue to refine the processes and recommended strengthening performance
farmer knowledge needs (program tools to support staff utilising the project monitoring and reporting with a particular
communications to facilitate on farm management system. emphasis on:
practice change). >F ewer performance measures linked to
Understanding and engaging effectively with DAs Strategic Plan, Annual Operating
dairy farmers (and other stakeholders) is Plan (AOP) and planning hierarchy
core to DAs business success. Recent elements.
farmer surveys indicate that this area can be >A suite of user tested and targeted
improved by adopting a more customer- information products which report
centric approach. To bring the necessary performance internally and externally.
focus and priority to meeting this challenge,
>R epeatable, cost effective business
a new role of Program Manager Customer
systems to generate the required
Information Services and Systems has been
performance information products in a
created to focus strategically on the
timely, on-going and adaptable manner.
systems, processes and technologies that
will enhance data capture, management DA has now implemented these
and delivery both within DA and within the recommendations and is currently analysing
industry. and establishing improvements to the
performance management and evaluation
function, identifying enhancements to the
Project and KPI Management System
(PKMS), and identifying benefits of
harmonising performance and evaluation
with other RDCs.
Attachment C contains the KPIs for the
current financial for the year ending 30 June
2013.
References

List of Sources for figures and tables
1. ABARES (2012), Agricultural commodity statistics 2012, Australian Bureau of Statistics and Resource Economics and Sciences,
December, Canberra and Dairy NZ (2012), New Zealand Dairy Statistics 2011-12, Dairy NZ, Hamilton, Retrieved from http://www.
dairynz.co.nz/Publications/NZDairyStats/2011-12/
2. ABARES (2013), AGSURF database, Retrieved from http://abares.win.hostaway.net.au/ame/agsurf/agsurf.asp
3. Dairy Australia (2012a), Australian Dairy Industry In Focus 2012
4. Dairy Australia (2013a)
5. Ibid
6. ABARES (2013), AGSURF database
7. ABARES (2012), Agricultural commodity statistics 2012 and Dairy Australia (2011), InCalf Fertility Data Project 2011, Retrieved from
http://www.dairyaustralia.com.au/Animals-feed-and-environment/Fertility/InCalf-resources-and-other-tools/InCalf-Research.aspx
9. Dairy Australia (2013b), National Dairy Farmer Survey
11. Ibid
12. Reserve Bank of Australia (2013) Retrieved from http://www.rba.gov.au/statistics/tables/index.html#exchange_rates and ABARES
(2012), Agricultural commodity statistics 2012
13. IMF (2013), World Economic Outlook April 2013, International Monetary Fund, Washington DC, 2013 Retrieved from http://www.imf.
org/external/pubs/ft/weo/2013/01/index.htm
15. Dairy Australia (2012b), Horizon 2020: Future scenarios for the Australian Dairy Industry, Final Report to the Project Board from the
Working Group, December 2012
16. Dairy Australia (2013b)
Other references utilised in the plan
> Dairy Australia (2012c), Dairy Australia Annual Report 2011/12, Dairy Australia Limited, Melbourne, http://www.dairyaustralia.com.au/
Industry-overview/About-Dairy-Australia/Publications-2.aspx
> Dairy Australia (2013), Dairy 2013 Situation and Outlook, Dairy Australia Limited, Melbourne, http://www.dairyaustralia.com.au/Industry-
overview/About-Dairy-Australia/Publications-2.aspx
> Constitution of Dairy Australia Limited, http://www.dairyaustralia.com.au/Industry-overview/About-Dairy-Australia/Publications-2.aspx
> Statutory Funding Deed (2007)
> Dairy Australia Board Charter
> GHD (2011), Dairy Australia Review of Performance 2006-07 to 2010-11
> Australian Government (2012), Rural Research and Development Policy Statement, Department of Agriculture Fisheries and Forestry,
Canberra
> Commonwealth of Australia (2012), Australia in the Asian Century: White Paper October 2012, Department of the Prime Minister and
Cabinet, Canberra
> National Health and Medical Research Council (2013), Australian Dietary Guidelines, Canberra: National Health and Medical Research
Council, Retrieved from http://www.nhmrc.gov.au/guidelines/publications/n55
> Commonwealth of Australia (2012), Water Act 2007: Basin Plan, Murray-Darling Basin Authority, November 2012, Retrieved from http://
www.mdba.gov.au/what-we-do/basin-plan
> 1 May 2012, Letter from the Minister for Agriculture, Fisheries and Forestry to the Chairman of DA
> DPIV/Dairy Australia (2012), Dairy Industry Farm Monitor Project, Annual Report 2011/12
> Dairy Australia (2012d), Enhancing livelihoods, improving wellbeing, reducing environmental impact: A strategic framework for keeping the
Australian dairy industry in business for the long term, Dairy Australia Limited, Melbourne
> DAFF (2013), National Food Plan, Our food future, Department of Agriculture, Fisheries and Forestry
75 References
Attachments

Swot Analysis / Strategy
Response
The following industry SWOT analysis summarises the key high level issues facing the industry and the strategic response from DA within
its own (pre-competitive) remit:
Industry SWOT Analysis DA Strategy

Strengths Weaknesses Strategic Response Strategic Program/s
Sovereign > Political and civil stability > Scale of internal market > Nil: Domain of others
> Policy uncertainty due
to possible change of
government
Geographic > Proximity to Asia - >G
eographically diverse > Match DA programs to > Alignment & Integration
freight advantage dairy regions geographic needs (RDPs)
> Extension & Change
Management
Industry Structure > Central support > Integration of support > Enhance co-operation > Extension & Change
organisations organizations with other industry Management
> Government funding >D eclining State organizations
support/Relative funding Government funding > Backfill services funding
stability where possible
Regulatory > Food safety/globally >C ost of compliance > Understand, plan and > Sustainability Reporting
respected regulatory > Impact of carbon tax report on sustainability
environment through industry inputs issues impacting the
> Australian Dietary not exempt from carbon industry
Guidelines (inclusion) price mechanism, e.g.
> Agriculture exempt from energy
carbon price mechanism
Economic > Relative general >H igh dollar damages > Farm productivity initia- > Alignment & Integration
economic stability & export competitiveness tives > Animal Performance
prosperity >R elatively high interest > Feedbase & Animal
> Availability of capital rates Nutrition
> Increasing farm input > Farm Business
costs Management
>D eclining on-farm > Resource Management
profitability
> Export presence and >S cale versus NZ/ > Provide support for > International Market
cost position declining cost position exporting companies Support
> Declining export share > Improver or defend
>T rade protection, access to markets
bilateral agreements
> Deregulated domestic >R
elative market power > Nil, apart from programs > See above
market of large retailers impacts that support supply
pricing chain cost minimisation
> Stable local demand >E
merging social trends > H&N research programs > Industry Promotion
may work against dairy (Legendairy)
> Processor volume >L
ack of scale & > Processor productivity > Manufacturing Margin
production capability profitability initiatives Improvement (DIAL)
(cheese, powders)
Natural Resources > Energy cost >W ater availability for > Improving efficient > Resources Management
> Pasture improvement some areas limits use of resources
drought resistance economically suitable and minimization of
land emissions
> MDB uncertainty
77 Attachment A
Strengths Weaknesses Strategic Response Strategic Program/s
Human Resources > Lineage > Ability to attract >U
nderstand industry HR > Workforce Strategy,
> Knowledge base personnel needs Planning & Action
> Resilience > Management capability >E
nhance skills and > Attracting and Retaining
> Turnover capabilities People
Technology/ R&D > Central planning > Fragmented >E
ncourage RO > Animal Performance
National RD&E Dairy > Lack of genuine collaboration (CRC)
Moving Forward collaboration (CSIRO & >F
ocused investment on > Manufacturing Margin
> Strong R&D base Pre Universities) extension/technology Improvement (DIAL)
& post farm transfer
> RO capability
> Technology transfer of >H
eavy investment > Extension & Change
R&D to farm in extension and Management
technology transfer
> Genetics: Herd > Herd fertility >F
arm R&D and > Animal Performance
improvement > Importing genetics extension activity
productivity increasing
Product > Product history & > Fats, Lactose >H &N research programs > Industry Reputation
reputation Health intolerance > Industry influencer
& nutrition product program
advantage
> Product quality > Not differentiated from > Manufacturing Margin
quality control, strong NZ Improvement (DIAL)
regulatory & compliance

Threats Opportunities Strategic Response Strategic Program/s
Trade > Access to markets: > Global demand to > Secure more favourable > International Market
Conditions Exclusive bilateral exceed supply and profitable export Support
trade agreements > Access to markets: market environment for
> Increased trade Exclusive bilateral trade Australian dairy products
protection via tariffs agreements > Prevention of access
and behind border > Export of higher margin erosion of opportunities
mechanisms product and conditions in key
> EU removal of markets
quotas, reform of CAP > Foster a close
awareness and active
Geo-Political > Asia/Middle East > Asia expansion of
buyer preference for
economic or civil middle class leading
Australian dairy products
issues disrupting trade to demand for dairy
> EU financial crisis products
global financial
stability/demand
Economic > Reduced commodity > Production/export of > R&D and extension >P
re & Post Farm
prices higher margin products activity that improve cost productivity related
> Continued high > Supply chain efficiency position Programs
Australian dollar improvements
> Continued/increasing > Increasing demand for >M
ostly competitive > Nil
power of large private brands issues and not in DAs
retailers/Use of > Product range remit
dairy for competitive expansion/ differentiation
advantage leading to > Regulatory intervention
lower profitability
>D
eclining farm > Farm consolidation > R&D/extension in areas >A
ll farm strategic
profitability leading to leading to economies of animal, pasture and programs
exit from the industry of scale/improved resource productivity
productivity
> Investment to create
larger, more efficient
farms
> Industry consolidation/ > Global competitiveness, > Nil > Nil
Foreign ownership of access to capital,
farms/processors access to markets
Social > Decline in farmer > Revitalize community > Development and > Industry promotion:
confidence leading to confidence in Dairy implementation of an Legendairy
exit from industry integrated, focused
> Community attitude and disciplined
to dairy: Losing the program of marketing
licence to operate and communications
strategy to realise
reputational
improvements via
Legendairy
> High staff turnover > Promotion, as above >U
nderstand industry >A
ll Skills & Capability
> Loss of labour and/ > Education programs to workforce needs, programs
or skills to other enhance industry skill support education
industries levels & staff retention programs, assist
the farmer with HR
management
> Emerging non H&N > High protein products >C
onsumer H&N >M anufacturing Margin
social dietary trends > Gut health products promotion to enhance Improvement (DIAL)
away from dairy demand > Industry Reputation
>N
ew product support
programs
> Decline in Infant/youth > H&N based R&D: > Industry Reputation
consumption Managing influencers
79 Attachment A
Threats Opportunities Strategic Response Strategic Program/s
Regulatory > Dietary guidelines > Expanded position >H
&N R&D that > Industry Reputation
loss of dairys position of Dairy within the demonstrates value of
guidelines dairy, management of
influencers
>E
xpanded guidelines:
Aged care elderly dairy
consumption
Environmental/ > Climate change > Benchmarking energy >R
esources Management >R
esource management
Natural reduction in availability and water usage efficiency improvement >S
ustainability Reporting
Resources of suitable land for > Water efficient pastures schemes >A
ustralian Industry
dairy > Carbon credits sale to >S
ustainability definition & Support
> Carbon tax (processor Government monitoring
only) > More efficient use of
> Nitrogen usage/runoff fertilizers
> Regulatory constraints
on natural resource
use water availability
> Natural disasters >B
etter preparation for >B
usiness Operations
increased frequency disasters to mitigate >A
nimal Welfare
> Bio-security/Animal negative outcomes programs
disease
Product > Dairy slowly losing its > Protein intensive > Promotion to maintain/ >P ost Farm Margin
position as a dietary products/muscle re-establish dairy as a Improvement
staple building critical element of diet: > Industry Reputation
> Non-dairy substitutes: > Gut health: Pro/pre- Legendairy
Soy, margarine biotic products > New product support
programs
Technical > New technology > On-farm and processor > Assess new >A nimal Performance:
platforms for automation technologies Precision Framing
producers or > Provide farmer with Technologies
processors makes knowledge and adoption > Extension
current infrastructure assistance
non-competitive

Project Listing
SP1 - Increasing farm profitability & competitiveness 3 Year Planned Expenditure

2013/14 2014/15 2015/16 Total
Farm Margin Alignment & P103 Regional Development 3,634,218 3,634,218 3,634,218 10,902,654
Improvement Integration Programs
P105 Pre-Farmgate RD&E 60,000 60,000 60,000 180,000
Strategic Framework (Dairy
Moving Forward)
P200 Farmer Engagement 80,000 80,000 80,000 240,000
Animal P106 Managing Milk Quality 575,298 599,376 538,157 1,712,831
Performance (Countdown 2020)
P107 Improving Reproductive 812,019 792,475 646,604 2,251,098
Performance
P108 Dairy Futures CRC - Animal 915,000 830,000 830,000 2,575,000
Improvement
P109 Australian Dairy Herd 1,300,188 1,400,000 1,400,000 4,100,188
Improvement Scheme (ADHIS)
P110 Precision Farming Technologies 880,239 650,000 650,000 2,180,239
P136 National Centralised Data - - - -
System
P213 Animal Health & Welfare - 609,500 634,500 484,500 1,728,500
On-farm Change Management
Feedbase & P116 National Feedbase 424,615 560,880 515,315 1,500,810
Animal Development
Nutrition
P117 Temperate Forage Systems 1,311,616 1,177,138 1,115,000 3,603,754
P119 Sub-Tropical and Mediterranean 500,200 312,600 200,000 1,012,800
Forage Systems
P120 Improved Feeding Systems 1,859,490 1,829,440 1,589,350 5,278,280
P217 Dairy Futures CRC - Forages 870,000 870,000 870,000 2,610,000
Farm Business P115 Farm Business Management 810,600 402,500 350,000 1,563,100
Management
Resource P125 On Farm Emissions Mitigation 630,733 518,932 200,000 1,349,665
Management Strategies
P128 On Farm Nutrient Management 688,290 848,290 570,000 2,106,580
P130 Climate Change Adaption 262,500 262,500 240,000 765,000
Strategies
P132 Improving Water Use Efficiency 323,250 300,000 300,000 923,250
Market International P219 International Market Support - 330,000 339,650 350,300 1,019,950
Support & Market China
Insights Support
P229 International Market Support - 300,000 308,750 318,450 927,200
Japan
SE Asia
Middle East
P232 International Market Support - 650,000 669,550 689,500 2,009,050
Other Markets
P218 GM Path to Market 130,000 165,000 - 295,000
Knowledge & P152 Library 117,000 117,000 117,000 351,000
Insights
P236 Support for Industry Strategy 125,000 125,000 125,000 375,000
P237 Market Information and Insights 1,219,000 1,219,000 1,219,000 3,657,000
81 Attachment B
SP1 - Increasing farm profitability & competitiveness 3 Year Planned Expenditure
2013/14 2014/15 2015/16 Total
Post farm Manufactur- P185 Dairy Innovation Australia 3,150,000 3,100,000 3,100,000 9,350,000
margin ing Demand Limited (DIAL)
improvement & Margin
P211 Improving Manufacturing 115,000 375,000 364,000 854,000
Improvement
Efficiencies
P180 New Product Opportunities with 25,000 - - 25,000
Oral Health Benefits
P182 New Product Opportunities with 190,000 150,000 65,000 405,000
Gut Health Benefits
P184 Improving the Management of 255,000 305,000 365,000 925,000
High Value Product
Opportunities
Total for Strategic Priority 23,423,756 22,914,949 21,272,594 67,611,299

SP2 - Protecting and promoting our industry 3 Year Planned Expenditure
Strategic Strategic Project Project name 2013/14 2014/15 2015/16 Total

Objective Program Number
Industry Industry P220 Marketing and Communications 2,960,000 1,850,000 1,570,000 6,380,000
Promotion Promotion to Mums and Kids
P221 Marketing to Young Singles and 330,000 550,000 800,000 1,680,000
Couples
P222 Marketing and Communication 400,000 500,000 450,000 1,350,000
to Adults 50+
P223 Food Marketing and 500,000 500,000 500,000 1,500,000
Communications
P224 Developing Dairy Ambassadors 80,000 100,000 50,000 230,000
for Farmers and Farming
Communities
P225 Increasing Knowledge of 170,000 300,000 200,000 670,000
Legendairy in Farming
Communities
Sustainability P153 Dairy Industry Sustainability 370,000 310,000 360,000 1,040,000
Reporting Framework/Strategy
P127 Pre-Farmgate Sustainability 70,000 70,000 70,000 210,000
Reporting
P210 Benchmarking developing 40,000 40,000 40,000 120,000
methodologies to measure
Processing Sustainability
Industry Australian P233 Support for Improving Wellbe- 492,500 565,000 565,000 1,622,500
Protection Industry ing (Ensuring health & safety,
Support Maximising nutrition, Caring for
our animals)
P234 Support for Reducing Environ- 130,000 130,000 130,000 390,000
mental Impact (Minimising our
environmental footprint)
P235 Support for Enhancing Liveli- 345,000 345,000 345,000 1,035,000
hoods (Creating industry pros-
perity, Supporting communities,
Investing in dairy people)
Industry P226 Marketing and Communications 385,000 385,000 385,000 1,155,000
Reputation Partnerships and Engagement
Management
P227 Nutrition Research & Science 858,679 584,073 431,510 1,874,262
P172 Industry Issues Management 90,000 90,000 90,000 270,000

P177 Managing Supply Chain Food 795,000 690,000 710,000 2,195,000
Safety and Integrity Issues
P228 Industry Reputation Manage- 375,000 345,000 345,000 1,065,000
ment
83 Attachment B
SP3 - Grow capability & skills 3 Year Planned Expenditure
Strategic Strategic Project Project name 2013/14 2014/15 2015/16 Total

Objective Program Number
Capability Attracting P207 Attracting & Retaining People 761,915 756,915 756,915 2,275,745
Development & Retaining
P154 National Centre for Dairy 1,095,250 918,000 918,000 2,931,250
People
Education (NCDEA)
P204 Education Program Delivery & 831,677 681,677 681,677 2,195,031
Support
Extension & P111 Extension - Victoria 2,396,858 2,424,521 2,466,851 7,288,230
Change
P112 Extension - New South Wales 145,000 145,000 145,000 435,000
Management
P113 Extension - Queensland 190,000 190,000 190,000 570,000
P114 Extension - Tasmania 135,043 126,291 53,000 314,334
P208 National Extension Support 469,250 200,000 200,000 869,250
P215 Extension - South Australia 55,000 65,000 35,000 155,000
P216 Extension - Western Australia 95,000 95,000 95,000 285,000
P122 Improved People Management 627,512 500,000 500,000 1,627,512
(People in Dairy)
P126 Regional Coordination of NRM 320,000 320,000 320,000 960,000
Workforce Workforce P203 Workforce Strategy, Planning & 280,000 200,000 200,000 680,000
Planning & Strategy, Action
Co-ordination Planning &
Action
DA - Supporting Activity
DA Operations Communications P141 Internal communications 60,000 60,000 60,000 180,000

P142 Corporate Media 150,000 150,000 150,000 450,000
P143 Stakeholder Communications 755,000 565,000 315,000 1,635,000
P144 Online Services 50,000 50,000 50,000 150,000
Statutory P145 Corporate Affairs 220,000 200,000 200,000 620,000
Requirements
P238 Review of Dairy Australias 87,500 - - 87,500
constitution
1,322,500 1,025,000 775,000 3,122,500
Total Project Expenditure 40,539,940 37,916,426 35,650,547 114,106,913

Delivery + Overhead Costs 21,682,269 22,224,326 22,779,934 66,686,530
Total Planned Expenditure 62,222,209 60,140,752 58,430,481 180,793,443

Strategic Program Key
Performance Indicators
SP1 Increasing farm profitability & competitiveness

Farm Margin Alignment & To better understand the needs of all farmers Nine regional visits annually engaging > 500 con-
Improvement Integration and all regions so that Dairy Australia and with more than 500 farmers and tacts
RDPs can respond appropriately. service providers
To ensure Dairy Australia is responding to the Large supplier satisfaction that they >5.5
needs of farmers and that farmers are aware have a say in their levy investment
of Dairy Australias activities and investments. (May 2012 - 5.0)
To ensure Dairy Australia is responding to the Farmer awareness of RDPs being levy >85%
needs of farmers and that farmers are aware funded (May 2012 - 78% awareness)
of Dairy Australias activities and investments.
To ensure Dairy Australia is responding to the Farmer awareness of RDPs (May >95%
needs of farmers and that farmers are aware 2012 - 93% awareness)
of Dairy Australias activities and investments.
To maximise the effectiveness in the delivery of Farmer satisfaction with RDP events >6.5
Dairy Australias pre-farmgate programs. (May 2012 - satisfaction 6.0 (useful to
farmers in your region)).
To maximise the effectiveness in the delivery of Financial leverage >3:1
Dairy Australias pre-farmgate programs.
Overhead (Program Conduct) as a <20%
proportion of total spend
Animal To protect and improve farm profitability Lift 6 week in-calf rate from 50% to 800 farms/
Performance through managing herd reproductive 51% through face-to-face training/ 100 advisers
performance. extension delivered to farmers and
advisers
To protect and improve farm profitability Improve national bulk milk cell count 95% <
through managing milk quality. (BMCC) (annual average herd BMCC 400,000
below 400,000)
To protect and improve farm profitability Improve national bulk milk cell count 65% <
through managing milk quality. (BMCC) (annual average herd BMCC 250,000
below 250,000)
Use genetic gain as a major productivity driver Genetic merit of national herd to by $10 per
for animal performance. improve by $10 profit per cow per cow pa
year
Farm To build farm business management capability
Business for dairy farmers, advisers and the research
Management sector.
To ensure good quality FBM tools are used The Dairy Farm Monitor Project is >40 datasets
effectively and appropriately. expanded to New South Wales and
South Australia and farm data is
collected for the 2012/13 year.
The Australian Dairy Farm Business >500 data-
Database (ADFBD) is established sets
and provides a consolidated set of
historical farm data from Victoria,
Tasmania and Queensland.
85 Attachment C
Farm Margin Feedbase & Improved extension of feedbase knowledge Increased farmer participation in 10% >
Improvement Animal feedbase extension programs (e.g. 2012/13
Nutrition Feeding Pastures for Profit).
Improved extension of feedbase knowledge Establishment of pilot regional Sites
feedbase demonstration sites in three established
dairy regions.
Improved nutritional management of transition Proportion of Australian farmers that > 70%
cows practice transition cow feeding.
Increased industry focus on home grown feed Dairy businesses that have an > 2012/13
consumption estimate of annual home grown feed
consumption, tonnes of dry matter
consumed per 100mm of rainfall or
irrigation.
Increased use of improved pasture genetics Strategy for the development of an Strategy
Australian pasture variety evaluation established
and selection system (Forage Value
Index) for perennial ryegrass.
Resource Man- 60% of Australian dairy farmers demonstrate 3 Fert$mart pilots conducted and two 100 farmers/
agement industry nutrient management good practice nitrogen/feedbase demonstration sites advisors
by 2018. established
Improved knowledge about the role of soil Research initiative to identify the role Achieved
micro-organisms in facilitating nutrient of soil micro-organisms in facilitating
availability in Australian dairy soils. nutrient availability under low and high
fertiliser regimes implemented
Nitrogen loss pathways across a range of One new strategy to maximise Achieved
Australian soil types and environmental nitrogen use efficiency identified and
conditions quantified and new strategies to quantified.
maximise nitrogen use efficiency identified by
2017.
Quantified, practical and profitable strategies Modelling of extreme events for three Achieved
to mitigate increased climate risk and green- dairy regions completed
house gas emissions available for a range of
Australian dairy farming systems and
environments by 2017.
Reduced energy use per litre/milk produced by 900 energy assessments conducted 900
Australian dairy farmers on Australian dairy farms assessments
Water productivity Economic and management benefits Fast flow
of faster flow irrigation quantified guidelines

Market International Government support Dairy positions incorporated into all Achieved
Support & Market Support finalised bilateral and regional trade
Insights agreements
Stakeholder support Funding from participants in DA >$70,000
International Market Support
programs and initiatives
Major exporters support marketing > 50%
initiatives undertaken
TRG/ADF PAG signoff of program Achieved
objectives/planned outcomes
Co-investment from industry allies >$100,000
(i.e.; RFAs. State and Federal Govt.
agencies) in International Market
Support programs and initiatives
Knowlegde Company participation in data collections Proportion of companies by milk 90% of intake
and Insights volume
Stakeholder satisfaction with library services Service rating for overall services At least 8 out
of 10
Stakeholder satisfaction with services and Twice yearly stakeholder tracking At least 7 out
publications of 10
Post farm Manufacturing Accelerate technology adoption Proportion of DAs technology transfer 70%
margin Margin projects with DIAL delivering a
improvement Improvement commercial return
Commercial impact of total program work Increase in 3 year rolling planned >$150 million
economic value to industry of DIALs
projest portfolio
Effective technology transfer Proportion of new ideas and >50%
innovation outcomes presented by
DIAL converted into company specific
development projects
Improved funding leverage The ratio between DIALs total mem- >1:1
bership revenue and the total value of
DIALs research activities
Opportunity and capability development Number of key industry 2 or more
to improve the uptake of new product communications around high margin
opportunities by manufacturers new product opportunities
New product commercial uptake Number of initiatives in DAs New >3
Product area in which Australian dairy
manufacturers are directly involved
Opportunity and capability development Number of key industry 2 or more
to improve the uptake of new product communications around high margin
opportunities by manufacturers. new product opportunities
87 Attachment C
SP2 Protecting and promoting our industry
Industry Industry Proportion of Balanced Mums who > 30%
Promotion Promotion recall the Legendairy campaign
(prompted)
To develop awareness and impact of the Increase the percentage of Balanced >64%
Legendairy campaign and its messages Mums who agree I trust the dairy
industry
To develop awareness and impact of the A decrease in the percentage of < 32%
Legendairy campaign and its messages Balanced Mums who agree Im
concerned dairy foods will increase
my weight
To develop awareness and impact of the Increase the percentage of consumers >39%
Legendairy campaign and its messages 50+ reporting they felt positively about
dairy foods and the industry after
talking to their health professional
Increase the % of consumers who > 76%
agree the dairy industry produces
high quality products
To shift attitudes of young singles and couples Maintain the number of physically 23%
on dairy and weight active 18 to 34 year olds who believe
dairy foods help the body recover
after exercise
Sustainability Dairy industry stakeholders demonstrate their Farming sector support for the > 50%
Reporting sustainability credentials against the industry Sustainability Framework farmers
Framework
Number of companies in the > 90%
manufacturing sector that support the
Sustainability Framework
No additional imposts of sustainability Major Customers accept the dairy > 70%
requirements on dairy companies by industrys sustainability credentials as
customers/external stakeholders evidenced by the industrys
Sustainability Report
Industry Australian The development and promotion of evidence- Policy and regulatory decisions
Protection Industry based strategic policy positions, to improve favourable to the Australian dairy
Support profitability and improve the industrys industry.
performance and reputation. Achievement of
positive policy outcomes. Minimize the risk
of adverse decisions undermining profitability
and ongoing industry sustainability. Improved
public and political perception of the industry
as the significant economic power, a good
environmental steward and a source of safe
and nutritious food.
Industry Increase confidence in Australian dairy foods % GPs who agree consumption of > 48%
Reputation and the Australian dairy industry dairy foods is not associated with
Management weight change in adults
Minimise impact of current industry issues Review of issues management Achieved

process at completion of issues
No adverse policy positions to Australian dairy Positions of policies developed and 100%
developed or implemented implemented
Positive media coverage of the Australian Ratio of positive to negative dairy Increase
dairy industry media stories
Industry Risk Maintain a position of influence Proportion of industry key contacts > 95%
Management who find DAs issues management
material important to their role

SP3 Growing capability & skills
Capability Attracting Dairy Agribusiness Career Pathway 1
Development & Retaining Developed
People
Improve Regional Workforce Support Regional Careers coordinators in place 6
with 6 RDPs
Inform and Attract people into the Dairy Cows Create Careers- Farm Module 175/7000
Industry Delivered in all Dairy Regions (schools/
Students)
Inform and Attract people into the dairy Cows Create Careers - Camembert/ 100/3400
industry Manufacturing Module delivered in
Secondary schools (schools/students)
NCDEA Alliance Partner capability NCDEA Alliance Partner Workshop held 1
developed
NCDEA Alliance partners supported to LeadIn Programs are delivered 3
delivery industry priority programs
Programs develop recognised leadership Leadership Program participants are in 50%
skills within individuals industry roles 2 years post training
Programs develop recognised leadership Developing Dairy Leaders Program Achieved
skills within individuals commenced
Support the delivery of Dairy Australia Number of activities supported 3
activities within the NCDEA
Extension & Evidence based information is used to All requests for technical input into NRM 100%
Change inform resource management on farm and climate change project and policy requests
Management change programs targeting Australian dairy development at a regional level responded
farmers to by Dairy Australia
Identify and map extension and education Through collaboration with RDPs develop 8 regions
delivery capability to support investment a full understanding of regional extension
decisions about delivery and education delivery capability
To add significant value to Dairy Australias Provide effective resource to deliver better 6 regions
existing and preceding investments in RD&E coordination of extension and farm change
to enable a more competitive, sustainable activities at a regional level
and profitable future for dairy farmers
To add significant value to Dairy Australias Implement delivery strategy to build on > 10% of
existing and preceding investments in the regional capability, increase engagement farms
People in Dairy program and increase direct farmer benefit from the
People in Dairy program
To build extension capability for the farm Supported by scholarships, attract and 3
change and extension sector appoint three new entrants to the
extension sector
To embed continuous improvement in the Implement standard measurement and 70% of farm
delivery of farm change and extension evaluation framework and apply it to Dairy programs
services through effective evaluation Australias investments in extension and
farm change
To increase the rate of dairy industry change Rate of dairy industry change through >25%
through greater farmer research and greater farmer research and participation
participation
To support a regional and national network NRM and government agencies 80%
that integrates industry and natural resource responsible for land and resources partnerships
management activities to deliver industry management form delivery partnerships
agreed outcomes with the dairy industry
89 Attachment C
SP3 Growing capability & skills
Capability Workforce Dairy Industry People Development Council Number of meetings held 5
Development Strategy, is operational
Planning &
Strategic Workforce Action activity occurring Workforce Action regional plans developed 2
Action
regionally
Sustainable processes that have been Processes in place Achieved
adopted across RDPs, Manufacturing and
other Service Providers are in place and
active within 2 years
Workforce development in the dairy services Technical Resource Manuals developed for 2
sector is supported milk machine testers
DA Supporting Activity
DA Communica- Increase farmer awareness of where levies TBA
Operations tions are invested
Increase farmer belief that levies are TBA

invested in things that matter
Farmer awareness of DA programs Increase farmer satisfaction with levy TBA
spend
Increase importance of DA rating TBA
Farmer awareness of DA programs Increase importance of DA rating 8.0 - TBC
May
Farmer awareness of DA programs Increase farmer awareness of where levies 7.0 - tbc end
are invested May
Knowledge Greater integration of stakeholder tracking in Inclusion of stakeholder tracking data in 5% increase
Management corporate strategy and program evaluation. strategic planning discussions and in usage
documents and in more project
evaluations.
Increased interest and understanding in Increased participation in research round 40% of staff
stakeholder tracking from staff. ups attend
Internal stakeholder feedback Positive feedback, use of analysis and Positive
data in development and assessment of feedback
programs from staff
Use of industry data Board, ELT and managers access and 100%
utilise data from industry databases awareness,
80% usage

91 Dairy Australia 201316 Strategic Plan
Published by Dairy Australia Limited.
Whilst all reasonable efforts have been
taken to ensure the accuracy of the
Strategic Plan 2013-16, use of the
information contained herein is at ones
own risk. To the fullest extent permitted
by Australian law, Dairy Australia
disclaims all liability for any losses,
costs, damages and the like sustained
or incurred as a result of the use of or
reliance upon the information contained
herein, including, without limitation,
liability stemming from reliance upon
any part which may contain inadvertent
errors, whether typographical or
otherwise, or omissions of any kind.
Dairy Australia Limited 2013. All
rights reserved.
ISSN 1838-4285 (Print)

ISSN 1838-4293 (PDF)
Dairy Australia Strategic Plan 2013-16
ISSN 1838-4285 (Print)
ISSN 1838-4293 (PDF)
Dairy Australia Limited ACN 105 227 987

Level 5, IBM Centre
60 City Road Southbank VIC 3006
T + 61 3 9694 3777 F + 61 3 9694 3888
www.dairyaustralia.com.au

Strategic Plan 13-16 - Web

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Strategic Plan 13-16 - Web

Caricato da

Copyright:

Formati disponibili

Strategic

Dairy Australia 201316 Strategic Plan 2

High dollar and

Increases in farm input Leverage of large

Dairy Australia 201316 Strategic Plan 4

Domestic Dairy Landscape Global Dairy Landscape

Farm profitability impacted by: Demand for dairy products in

59% 20% 18% 3% DA

SP1. SP2. SP3.

Dairy Australia 201316 Strategic Plan 6

Dairy Australia 201316 Strategic Plan 10

This Strategic Plan covers the financial

Annual Operating Plan

Figure 1: Strategic Planning Documentation

The Strategic Plan draws upon a range of

Stakeholder Tracking Dairy Moving Forward Sustainability Framework

ADIC ADIC ADPF RDPs NFF

Rural Research and Development Policy Statement

Figure 2: Supporting Policies, Documents and Studies

Dairy Australia 201316 Strategic Plan 12

DA is one of a number of organisations that DA is constituted under the Dairy Industry

Figure 3: Diagram of support organisations in the dairy industry

The Australian Dairy

Dairy Australia 201316 Strategic Plan 14

Dairy Australia 201316 Strategic Plan 16

17 The Industry: Context / Trends / Outlooks

Figure 4: Milk production - Australia and New Zealand1

Figure 5: Annual change in dairy farm performance, Australia2

Figure 6: International Farmgate Milk Prices3

Dairy Australia 201316 Strategic Plan 18

Figure 7: Dairy Regions in Australia

Figure 8: Use of milk by region and source4

Total Branded Milk

Figure 9: Trends in milk retail pricing5

(50) Farm business prot

(75) Farm cash income

Figure 10: Australian dairy farm financial performance6

Dairy Australia 201316 Strategic Plan 20

Figure 11: Average Output per Cow and Fertility7

21 The Industry: Context / Trends / Outlooks

Figure 12: No. of farms and average herd size8

Figure 13: Trends in Farmer Confidence9

Dairy Australia 201316 Strategic Plan 22

23 The Industry: Context / Trends / Outlooks

While Australia accounts for only 2% of the

Cheese 104 534 11 54 18 9 18 749

SMP 238 137 3 77 7 3 9 474

WMP* 133 154 2 109 16 39 9 461

Other ** 228 296 18 72 2 38 104 758

Total 816 1,216 57 347 54 105 162 2,757

Figure 15: Australian dairy exports by product by region 2011/1210

Dairy Australia 201316 Strategic Plan 24

now putting downward pressure on the 170

EU issues not yet impacting SE Asia:

economic slowdown (see Figure 17). With 2014p

Commodity prices: International 6

on the North Island of New Zealand. With 4

sub-continent to North Asia. This provides 3

Figure 18: Surveyed spot prices of Australian exporters ($US/t)14

25 The Industry: Context / Trends / Outlooks

seasonality to the northern hemisphere

only 1.7% annually. While growth in the

should also pursue product quality 0.1

> Re-engineer advocacy >C

We are competitive > Improve the commercial >D

Workforce Planning Workforce $0.7m > Regional ownership and >2