Australian dairy farmers might not be in the best position to immediately capitalise on the benefits spruiked by the federal government of imminent trade deals.
Federal Agriculture Minister Murray Watt is with National Farmers Federation president Fiona Simson in Europe this week promoting trade deals with the European Union and United Kingdom. The federal government has highlighted that the deals will scrap almost all taxes on Australian products entering Britain including meat, dairy, sugar and wine.
Dairy Australia senior industry analyst John Droppert told Flow on Wednesday there was less milk production in Australia in recent years and significant farmgate competition to secure milk for supermarkets or processing into other products domestically and overseas:
"It's (the EU, UK trade deals) an opportunity but we're not talking about pre 1970s 'butter for Britan' situation there. There's going to be minor opportunities there in terms of volume, potentially some high value opportunities for products to go into Europe but more so the UK.
"We've got enough challenges meeting the volume for dairy out of the markets we've been dealing with for the last 40 or 50 years since Britain joined the European common market. There's opportunities there but for milk processors, dairy manufacturers to take the expense of supplying a customer that they've been dealing with more recently, its got to be a pretty attractive opportunity. You don't want to be burning a customer here to chase an opportunity down the track.
"That's what caught a few people out in 2014-15, where they might have shorted customers in some markets to chase an opportunity in China and that can come back to bite you down the track."
Hear the full interview with Dairy Australia's Industry Insights and Analysis manager John Droppert on the Flow podcast player below: