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Fund seeks game-changing projects to soften tough times

• Up to $150,000 in available funding announced today
• Aiming to generate projects worth almost $0.5 million through co-funding

A surprise cut in the farm-gate milk price paid by Australia’s largest dairy processor has given fresh imperative to the need for innovative ideas to boost the long-term viability of local farmers, according to SA Dairy Industry Fund chair Dennis Mutton. Mr Mutton was speaking ahead of a gathering of leaders from industry, government, economic and regional development agencies and the research sector in Adelaide on May 3, celebrating a call for the next round of projects.
Making the announcement, Fund chair Dennis Mutton said the unexpected price cut by Murray Goulburn last week was sobering news that made the work of the Fund even more critical.
“We know there are no easy, short-term solutions that will overcome the immediate situation, but it is vital that we find ways to moderate the impact of fluctuating global commodity markets and low domestic fresh milk prices on South Australian dairy farmers and their communities,” Mr Mutton said.
“We need people to come forward with projects that are genuine game-changers, that will shake things up and offer real potential to improve the long-term viability of the industry. From the processing and marketing side, we are interested in more dairy food manufacturers producing more premium products and opening up high-value domestic and export markets that will in turn lead to higher and more stable farm-gate prices, as well as a stronger processing sector. On the production side, we are looking for projects that will improve the profitability of our farmers by identifying smart ways to reduce costs, lift production, soften the impact of dry seasons, and even diversify their enterprise to open up additional sources of revenue.”
A total of up to $150,000 is available, leveraging proceeds raised from the sale of SADA Fresh milk. Based on outcomes from the first round in 2015, Mr Mutton believes that level of investment has the potential to generate projects worth almost half a million dollars. “The key to unlocking that potential is co-funding and actively working behind the scenes with the entire supply chain, from paddock to plate, to establish partnerships that give us real value for money,” he said. “The Fund’s role as a significant strategic player and financial contributor is to encourage those partnerships and drive change.”
SA Dairyfarmers Association president David Basham said falling farm-gate prices and the tough seasonal conditions being experienced by local farmers reinforced the strategic thinking behind SADA’s ground-breaking initiative to create its own milk brand and established the Fund. “It is absolutely vital that our farmers are not left in a position where they have to rely on commodity prices for low-value products that are highly susceptible to global markets,” Mr Basham said.
“We need higher demand and greater competition for milk in SA so that processors have to pay more to source it, and we need more premium products and markets, so the processors are in a position to do so. In the past twelve months, there have been a number of significant developments, with new investments in processing being made by Beston Global Foods at Murray Bridge, and the Midfield Group and Blue Lake Dairies in the Limestone Coast region. The reality is that it will take time for farmers to see the benefits from those developments, but at least we are now heading in the right direction, instead of dealing with a stagnating processing sector in SA, which was the case the last time farmers were trying to cope with low prices,” Mr Basham said.
“SADA Fresh gives us access to money that is helping to drive that change, and it also gives consumers a very tangible way to support struggling farmers at a time when they need it most. By pooling the proceeds from just 40 cents per container sold at Coles supermarkets, we have created a significant resource that wasn’t there before. We have also demonstrated in a very powerful way that the industry in South Australia is innovative and pro-active, and a major player in the State’s economic future.”
Applicants have until June 10 2016 to submit concept proposals to the Fund. The Fund Board will assess the applications and finalise a short list in early July. Short-listed projects will then be invited to submit more detailed information before funding allocations are decided in August.

SADA Fresh lands in China

In an exciting breakthrough for South Australian dairy farmers, the first commercial export shipment of SADA Fresh milk is due to arrive in China this afternoon [Thursday, April 16].

The shipment of 1,872 one-litre bottles left Adelaide yesterday aboard a Cathay Pacific flight to Hong Kong. The milk was then loaded onto a subsidiary airline for delivery to Nanjing in central eastern China, where it is being marketed to local retail outlets by a Chinese importer.

SADA Fresh was launched 18 months ago by the South Australian Dairyfarmers’ Association (SADA) to help secure the future viability of the State’s dairy industry and its farmers.

“Using the milk brand to draw investment to South Australia and open up new markets for our dairy products were always primary goals of the enterprise, so this is a very exciting day for us,” says SADA President David Basham.

“After the initial run this week, the Chinese importer has committed to purchasing one air pallet of about 3960 bottles per week for the next three months, and there are expectations that will double after that, depending on the market’s response,” Mr Basham says.

“Despite all the headlines recently about Chinese interest in Australian dairy products, and the new Free Trade Agreement between Australia and China, the reality is that it is very difficult to crack this market and convert the talk into actual sales.

“Even though the initial shipment is relatively small, we hope this breakthrough will open doors for other South Australian dairy brands and lead to greater opportunities for us all in the future.”

Parmalat holds the licence to process, package and supply SADA Fresh wholesale in South Australia, where it is currently retailed exclusively through Coles. The milk destined for China is also being processed, packaged and exported by Parmalat, under a separate licensing agreement with SADA.

Mr Basham understands that about half the bottles in this week’s shipment will be distributed as part of a promotional exercise to launch the brand to Chinese customers and help build market share.

The milk will be retailed through conventional shops and supermarkets, as well as online grocery stores which are becoming increasingly popular in China, with consumers able to purchase two or more bottles at a time and even subscribe to receive weekly deliveries.

Mr Basham says this week’s shipment follows a series of small-scale trial shipments carried out over the past two months, and something like six months of planning and negotiation.

“The opportunity came about last October when Austrade (the Australian Trade Commission) held a food expo in Melbourne. Among potential export buyers attending the event was a Chinese importer looking for companies that could supply fresh milk, and I just happened to be in Melbourne at the time so I met with them,” he says.

“The association helped set up meetings with Parmalat who negotiated a formal contract with the Chinese buyer last month. In the meantime, trials were organised to fine-tune delivery and distribution protocols, and to make sure the milk meets stringent Chinese quarantine regulations and quality control specifications.

“It’s been a far from straight forward process that has also involved developing a new label, not just to incorporate Chinese characters, but to feature blue rather than the brand’s usual red or yellow, to meet a request from the importer.”

Under the agreement, Parmalat pays SADA 20 cents for every litre of milk sold in South Australian supermarkets, with the proceeds going into a new South Australian Dairy Industry Fund. SADA will also receive 5 cents per litre for the milk sold in China.