Brokers good for dairy as milk volumes plummet, says Bega’s Barry Irvin

Bega’s Barry Irvin says increased competition from milk brokers reflects optimism in Australia’s dairy industry.

Bega Cheese executive chairman Barry Irvin. Picture: Adam Taylor

Bega Cheese executive chairman Barry Irvin welcomes competition from milk brokers, saying their entry into the market “reflects optimism” about Australia’s dairy industry.

Milk processors are no longer competing among themselves for milk from farmers, with third-party traders, known as milk brokers, hitting the market in recent years to deliver farmers more value amid a shrinking milk pool.

But rather than condemn brokers for driving up prices, Mr Irvin said their arrival in the Australian market was good for farmers.

“Competition is still very robust. There is no question about that, which is obviously good for dairy farmers,” Mr Irving said.

“It is pleasing to see a little bit more stability around an increase in supply, but robust competition reflects all the companies and the people who are broking are recognising there are opportunities out there and therefore they are seeking more milk, so I think that in itself reflects optimism.”

Australian milk production has slumped 19 per cent to 8.8 billion litres in the past 20 years, diving 5.7 per cent in 2018-19 alone. The industry has rallied behind The Australian Dairy Plan, chaired by former Victorian premier John Brumby, which aims to increase milk production by almost a billion litres a year and add $500m of farm gate value for farmers.

It is a big goal, considering suppliers have been closing factories and farmers, particularly in Queensland, have left the industry in droves. Meanwhile, Mr Irvin said the number of dairy farmers had fallen as properties were ­snapped up by neighbouring farmers or converted to take advantage of the more lucrative beef market.

“History does continue on the path that it has been on and that is you are seeing some farms closing down, and given the health of the beef industry, converting to beef. But you are equally seeing the properties next door being purchased and areas getting larger,” he said.

“The Bega Valley is a good example of that, where we are seeing often when a dairy farm comes on the market it is purchased by another dairy farmer and they grow bigger, but there are fewer farmers.”

Despite the challenges, Mr Irvin believes the dairy industry can grow.

“There’s no doubt that we have been through some very challenging times and extended challenging times. But here we are. We are enjoying for the first time in a long time good seasonal conditions in all regions,” Mr Irvin added.

However, the COVID-19 pandemic continues to cloud the near-term outlook, particularly in global markets.

“There is still a fair bit of uncertainty around global supply. So while we can see some good positives in the Australian domestic market, globally COVID is having its effect and we are yet to know how long it will take for markets to recover,” Mr Irvin said.