Why we are writing this column from Argentina, based on the famous Musical Opera “No llores por mí Argentina”. Because we believe that the Australian dairy moment has similarities with what has happened in Argentina in the last 40 years.
What has happened in Australia
The avalanche of milk production that the Oceania region produced to supply Southeast Asia, but mainly the Chinese market, exploded in the air. The consequences of this have been felt over the last two years.
Australia’s imports from New Zealand in 2024 were a sword of Damocles for milk processors. These imports were at a lower price than Australian processors can sell for to be in Break Even.
Local milk processors, due to a rigid and inflexible Dairy Code of Conduct, which does not recognize the volatile nature of international dairy prices, are now facing serious difficulties in continuing to operate.
How Australian companies are faring
The latest news is not encouraging. Global companies such as Fonterra and Saputo, in various statements, have expressed their position to withdraw from this market, according to their balance sheets, the numbers are not encouraging. The local processor, Beston Foods, has expressed in a statement a delay in the payment to its producers.
Price controls in Argentina and their consequences
Price controls in Argentina have led to more unemployment and greater business poverty among its inhabitants. Sectors such as the dairy industry have suffered in recent years a number of price fixations that have led first to the poverty of its milk processors and then to the poverty of the entire dairy value chain, mainly its dairy farmers. Therefore, we are observing in Australia a similar path to Argentina.
Don’t cry for me, Australia
Damián Morais
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