Australian dairy industry analysis. Includes the effect of deregulation of the industry

Essay by hilmer May 2004

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1 Introduction

The Australian Dairy Industry consists of five main segments. These being farming, manufacturing, processing, distribution and vending. This analysis will examine these stages/sectors of the industry by covering five broad areas. These topics include the structure of the industry, the production process and production costs, its international involvement, government policies in relation to the Australian dairy industry and finally the industries value to the Australian economy. The Australian dairy industry can be described as being an oligopoly as a large proportion of its characteristics are represented by that of a perfect oligopoly market. Dairy products are produced in several regions across Australia. These include south-east Queensland, Western Australia and eastern parts of New South Wales. 'Victoria produces 60% of Australia's gross dairy production' (Cameron, 1974, 244).

In the past few years, deregulation has been highly debated as to whether it has had positive effects or negative influences on the dairy market.

The areas listed above will be analysed alongside specific sectors of this analysis which will establish facts and draw conclusions as to whether a deregulated, highly competitive dairy industry is more appropriate than a controlled, secure industry.

2 Structure

2.1 Size of Industry

The dairy industry is the third largest rural industry in Australia, behind beef and wheat. It is a major rural employer and one of the leading rural industries in terms of value adding. Australia's production has increased both in volume and value terms over the past ten years. 'Gross farmgate value, the value of the industry immediately following the production process, has increased to approximately 3.3 billion Australian dollars. The Gross farmgate value increases almost 60% to 7.5 billion Australian dollars when the original products are turned into a diverse range of dairy goods which is the value of the ex-factory output.' (The...