Report on Market Failure in the Western Australian Dairy Industry.

 

 

 

Read the report on the market failure in the Western Australian Dairy Industry.

final-market-failure-in-the-western-australian-dairy-industry-07-nov-2016

MARKET FAILURE IS DEFINED AS “ILLOGICAL ACTIONS TAKING PLACE FOR SEEMINGLY LOGICAL REASONS.”

SEVEN HUNDRED and EIGHTY-SEVEN MILLION  how-milk-is-consumed-in-wa-Market failure as cheese, butter and Ice-cream are not produced in the state (787,000,000) litres of milk was used to produce ALL the dairy products consumed in WA.  in 2015, WA produced 387 million litres of milk, a shortfall of 400 million litres.

 

 

 

Not only is the population growing at about 1 to 2% per year, per caper-capita-consumption-of-milk in a market failure situationpita consumption is growing bt about 2 litres per person per year.  This equates to approximately 10 million litres per year!

 

It is estimated that the land used for milk production in WA is 200,000 hectares.  If WA was to be self sufficient, 400,000 hectares of land would be required.  This is a small proportion (2.7%) of the 15 million hectares in WA’s south western agricultural region.

WA is self sufficient in drinking milk, processed by 3 factories which benefited from a regulated environment starting in 1932.  This environment of guaranteed profits and favoured liquid milk processing over storable products such as CHEESE, POWDERS and Ice-cream.

There are no significant factories producing cheese, butter, Ice-cream or powders. yoghurt is produced by some factories.  WA imports 34,500 tonnes of the 35,000 tonnes consumed.  WA also imports 10,000 tonnes of butter, all of its retail Ice Cream and a significant proportion of its yoghurt.

At the time of deregulation, cheese, butter and Ice-cream were all produced and packaged in WA.  Since that time, the cheese, butter and Ice-cream facilities have closed or are in the process of closing – They were not able to maintain profitability, reinvest and grow to supply the local market.  Some artisan companies maintain profitability, but are not looking at scaling up production.

Currently, “excess milk” is being exported to Darwin and other markets within Australia as export markets for export milk have been lost or closed down for commercial reasons.

This situation is not logical and meets the criteria of Market Failure.

It is recommended that an Industry working group is formed to in develop a dairy strategy for WA.  This must include all sectors of the supply chain

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