Program 1.8: Dairy industry
The objectives of this program are to:
- assist primary producers to develop a more competitive, internationally focused and self-reliant dairy industry
- maintain appropriate industry regulatory functions and statutory funding for research and development.
Review of performance
This review addresses the deliverables identified in the 2011–12 Portfolio Budget Statements. Table 9 summarises the extent to which we have met key performance indicators.
Responding to industry developments and issues
The Senate Economics References Committee continued to investigate competition and pricing in the Australian dairy industry. The committee conducted an inquiry into the 'Impacts of supermarket pricing decisions on the dairy industry'. Its report was released on 3 November 2011.
In February 2012, the government tabled its response to both this inquiry and an earlier inquiry, 'Milking it for all it's worth—competition and pricing in the Australian dairy industry'.
We contributed to the government response. The response agreed in principle or noted most of the committee's recommendations from both inquiries as many of the recommendations are a commercial matter for industry. A key activity for the department arising out of the inquiry is to work with the dairy industry, through Dairy Australia, to provide clear public information on dairy industry cost structures that apply in each of the dairy regions across Australia.
In 2011–12, we met industry groups regularly and monitored a range of issues of concern, including retail milk prices, market access and the 2012 Dairy Service Levy poll.
Administering dairy quotas
We manage arrangements for dairy products to be exported in-quota to the European Union (EU) and the United States (US). A new dairy quota regulatory system was implemented in 2009–10 and is operating well.
In 2011–12, the department issued 162 certificates for the export of in-quota dairy products to the United States. This was down from the 215 issued in 2010–11. Approvals for export to the European Union also fell, with only eight certificates issued in 2011–12, compared with 20 in 2010–11.
The costs for administering the quotas are fully recovered from dairy exporters through a volume-based fee. Following industry consultation, the fee was increased from $7 a tonne to $14 a tonne in 2012. The increase was agreed to offset the decline in revenue due to lower volumes of dairy products being exported to the traditionally lucrative EU and US markets, as there are fixed costs in administering quota schemes.
Australia–Japan dairy talks
We attended the 27th Australia–Japan dairy talks in Okayama in November 2011. Japan is Australia's largest dairy export market by value. The talks provided an opportunity for the two governments to discuss the supply of dairy products and trends in consumer preferences. Dairy Australia also participated in the discussions.
Parliamentary Secretary for Agriculture, Fisheries and Forestry, the Hon. Sid Sidebottom MP, visits a Tasmanian dairy farm
Supporting research, development and marketing
Legislation allows declared industry-owned research and development corporations to receive industry levies and matching government contributions via statutory funding agreements with the Commonwealth.
We administer the agreement with Dairy Australia. Dairy Australia is an industry services body that works to assist farmers to adapt to a changing operating environment and achieve a profitable, sustainable dairy industry. It invests in research and development, services for farmers, marketing and promotion. Dairy Australia deploys the levy funds it receives on behalf of the dairy industry and the matching government research, development and extension (RD&E) funds.
During the year, we twice met Dairy Australia to discuss governance, operations and research activities. Dairy Australia met all of its statutory obligations during 2011–12.
Dairy levy poll
The department worked closely with Dairy Australia on conducting its poll of levy payers, to ensure compliance with the relevant legislation. Dairy Australia is required to conduct a poll of levy payers at least every five years to vote on the rate of the dairy service levy. The levy is used to invest in essential RD&E activities, as well as industry services. Dairy Australia conducted the dairy service levy poll during February–March 2012. The majority of levy payers who responded voted for a 10 per cent increase to the dairy service levy. The government endorsed the increase and the department progressed the regulatory changes to enable the levy increase to be implemented from 1 July 2012.
Key performance indicators
|Key performance indicator||2011–12 target||Achievement|
|Meet with dairy industry representative bodies to discuss policy issues||2 meetings||Met||Met||Met|
|Performance: DAFF maintained a productive relationship with the dairy industry service bodies, including Dairy Australia.|
|Attend Japan dairy talks on supply and demand||1 meeting||Met||Met||Met|
|Performance: The dairy talks were held in November 2011 in Japan. A DAFF officer attended.|
|Meet with Dairy Australia Limited to discuss obligations under the statutory funding agreement and relevant legislation||2 meetings||Met||Met||Met|
|Performance: DAFF twice met Dairy Australia to discuss matters relating to the agreement and relevant legislation and is satisfied that the company met its obligations under the agreement.|
|Provide the dairy industry with regular feedback on quota matters||Monthly||Met||Not met||Not met|
|Performance: DAFF provided monthly feedback in 2011–12.
The target in 2009–10 and 2010–11 was weekly feedback. Due to low usage, feedback is now provided monthly and the target was adjusted to reflect that usage trend.
|Australia's international quota obligations are met||100%||Met||Met||Met|
|Performance: The quota regulatory system implemented in 2009–10 is operating well, with 162 certificates issued for the export of in-quota dairy products to the United States and eight certificates issued for exports to the European Union.|
|Levy payments made in accordance with statutory funding agreement||100%||Met||Met||Met|
|Performance: DAFF has regularly met this target. In 2011–12, all payments were made on time and in accordance with agreement.|
|Minister/parliamentary secretary and executive satisfied with the quality and timeliness of policy advice and support||High level of satisfaction achieved||Met||–||–|
|Performance: DAFF provided policy advice and support to the minister and parliamentary secretary. This advice has been received with a high level of satisfaction. This is a new indicator.|
Outlook for 2012–13
We will continue to work closely with the dairy industry to maintain and promote market access for dairy products and to promote research and development for the benefit of the industry. The department will engage the dairy industry on issues of concern as they arise, including domestic and international trade issues.