Australian Dairy Industry Supply Chain †MyAssignmenthelp.com

Question: Discuss about the Australian Dairy Industry Supply Chain. Answer: Introduction Australia ranks third in the world for dairy production. They earn a farmgate value of $A 3.7 million as they export fifty percent of their dairy products. The country boasts of up to 1.6 million dairy cattle in about 7500 dairy ranches countrywide. The average dairy herd rates up to 220 per pack which sees about 9000 million liters of milk produced on average. Only twenty percent of the produce is drunk as fresh milk, and the rest is manufactured into dairy products like yogurt, cheese among others. While most of the production happens in the southeast region owing to the temperate climate, all states have dairy farms adjacent to towns and city to which the supply dairy produce (Barkema et al., 2015). About the industry The dairy in Australia produces for two markets, which are the domestic, and the international market. In average, 55% of the dairy products in Australia is exported which accounts for 16% of the world dairy global market (Westhoek et al.,2011). The dairy market categorizes into the milk market and the manufacturing market. Though the market milk accounts to 17% of the total milk production, it is the largest domestic food supply providing for up to 40% of the local food market. Cooperatives are dominant in the dairy market with them accounting for 78% of market milk. The main players were: national foods, Parmalat Corporation, and Dairy foods. On the other and the domestic supply, three players dominate chain; supermarkets, the route trade, and the food service chains. Most dominant being the supermarkets and the least is the food service chains which consist of caterers, restaurants, and fast food outlets. The route trade includes convenience stores and small stores which together account for the second sector in the domestic market. These three suppliers are quickly scaling upwards in the local dairy market supply chain (Beggs et al., 2015). Challenges and opportunities The Dairy in Australia has seen a twenty-year low in the production following different factors in the market. Low dairy produces by the past two decades, internal challenges in the largest dairy cooperative and the fluctuation of dairy milk prices to better align with the international price standards (Bjorkhaug et al.,2014). Following these strains, the industry has witnessed the decline in general produce. SWOT analysis Strengths- stability in the export market and the efficiency in production of dairy produce Opportunities- arise in the demand for dairy products in the Asian market, risk management of produce, efficient running of the dairy market Weakness- unpredictability in climatic conditions; purchasing and selling of retail and wholesale products; uncertainty policies and regulations Threats- climatic canes, competitive market; protectionism; input prices Challenges The fluctuation of market prices as seen the effect trickle down the supply chain including the production, processing, export, and manufacturing, retail sectors. These all form the supply chain in the dairy industry. Other factors like changes in the climatic conditions countrywide as seen the country suffer low milk production as the most hit are the temperate region of the country. The urbanization factor also weighs into the scheme of challenges facing the industry seeing as the emissions are polluting the environment. In light of these factors, the adaptation and restructuring of the production stage in the dairy industry are emerging as a challenge to investors (Byrne et al., 2016). The Dairy in recent times has seen regulation in prices, which have set the whole supply chain in the wind. Seeing as the previous market price setters, Murray Goulburn, is currently not leading in price discovery, and benchmarking in the southern region (Featherstone, 2014). The processor, following a contraction in milk supply, has denied it this capacity. In the country the fluctuations in the pricing of milk products has led to the farmers breaking loyalty with the various mill processors as they operate in a more commercial based market for their milk. Opportunities The major opportunities for the dairy industry lie in production factors and the rise in demand for dairy products in the international market. Due to uncertainty in the climatic conditions worldwide, various food-producing systems have found the need to adapt to remain effective in the market. These are majorly dependent on the climate for their production. Australia's key dairy producer, Victoria, has been especially hit by recent rainfall scarcity in the country (Bjornlud et al.,2010). This only emphasizes the need for the dairy producers to start adopting criteria of production that are independent of the climatic conditions in the region. Due to the decrease in milk production and increase in the demand for milk has risen both in the domestic as well as the international markets. The local market has witnessed an increase in consumption of dairy milk to up to nine percent which is a significant shift owing that this is a mature sector. Australians have also changed from the unbranded milk sold in the supermarkets in preference for the branded milk (BEVERLAN, 2010). This response in milk consumption domestically, as favored the dairy industry locally and seen its steady rise over the past twelve months. Recommendations The supply chain as a whole has seen prospects of change as the farmers and the investors alike try to adopt new criteria for production to fill the demand that is arisen in both the domestic as well as the international markets. The demand in the market, however, cannot be met if the supply chain is not properly coordinated. With the major player who is the benchmark in setting the dairy product prices in a hitch, the prices are now determined by the farmer who can control the prices according to their needs. This, however, cannot be beneficial to the chain in general since the prices are not standardized countrywide. The need for cooperatives to re-enter the chain is imperative if the prices are to stabilize. The implementation of the supply chain coordination theory, where all parts share information, materials and financial resources. This coordination will allow benefits to trickle down the supply chain right down to the producer (Stadtler et al.,2015). Conclusion The dairy industry has prospects of growth shortly with the demand for dairy products increased by the day. The production sector, however, needs restructuring in both market orientation and pricing. This way it will allow it to have the market prosperity of the dairy products in the international as well as the local market. This criterion employed will allow it to stabilize the pricing of dairy products and enhance production capacity. References Barkema, H. W., Von Keyserlingk, M. A. G., Kastelic, J. P., Lam, T. J. G. M., Luby, C., Roy, J. P., ... Kelton, D. F. (2015). 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