A changed outlook and, at the same time, reduced funding from falling milk production also calls for a repositioning of Dairy Australia priorities to respond to industry needs. The Company’s priorities over the coming year are to best position the industry to recover from the drought and to help dairy farmers: o Build resilience to climate variability and adapt to and mitigate the effects of climate change; o Increase farm profitability and take advantage of strong world prices; and o Strive for continuous improvement and a sustainable contribution to the Australian economy and the wider community. APPRECIATION At the conclusion of Dairy Australia’s fourth year in operation, I would like to thank the Australian Dairy Industry Council, Australian Dairy Farmers and the Australian Dairy Products Federation for their continued support. The Australian Government has recognised the returns from investing in dairy by its matching research funding. We have enjoyed the benefits of working closely with the Minister for Agriculture, Fisheries and Forestry, Mr Peter McGauran, and the Parliamentary Secretary, Sussan Ley. Departmental officers in Agriculture, Fisheries and Forestry, Foreign Affairs and Trade, as well as state-based Departments of Primary Industries have joined in the collaboration that underpins and has become a hallmark of the Australian dairy industry. During the year, the Board welcomed one new director, Kelvin Jackson, a Gippsland dairy farmer and a director of the Bonlac Supply Company and the Toora and District AB Co-operative. Finally, the activities of Dr Mike Ginnivan and the staff of Dairy Australia must be acknowledged. Their commitment to the dairy industry is unchallenged. Their ability to identify and respond to needs and work among industry to get the most out of its resources for the collective good is to be commended. Max J Roberts Chairman
M A N AG I N G D I R E C T O R ' S R E P O R T
During 2006/07, Dairy Australia continued to engage in activities for the ultimate benefit of levy payers and
to develop its operations to provide better services to the industry and deliver greater returns.
The Company strived to reinforce the industry’s culture of collaboration and co-operation and it continued to
measure its performance, remain accountable and ensure the relevance of our activities to industry.
Company expenditure in 2006/07 was $54.8 million with $40.5 million invested in 290
contracts; 108 of these were new. The Company has placed increased emphasis on its
policy to aggregate contracts and this will continue in the near future.
Dr MJ Ginnivan
Managing Director
In line with previous announcements, the Company drew down on reserves to fund projects
in anticipation of lower income as milk production growth recovers after the drought. During
the year, the Company exited or reduced its exposure to investments that were no longer
aligned with industry priorities.
The primary sources of income are the Dairy Service Levy and Australian Government matching funds. The
total amount of levies received during the year was $30 million, which was slightly below the previous year
(2006: $31.7 million). Matching payments of $16 million were 4.2 per cent higher than the previous year
(2006: $15.4 million) due mainly to the impact of higher farmgate milk prices in 2005/06 and 2006/07.
Income from these sources, which is a function of milk production and farmgate milk prices, is expected to
remain under pressure during 2007/08.
During the year, contributions by other organisations to programs managed by the Company totalled $2.9
million (2006: $2.4 million). The largest of these was $629,042 towards regional dairying co-ordinators and
$350,000 towards the development and support of whole farm systems analysis and tools. Dairy Australia
will continue to leverage funds either directly, collaboratively or to complement its programs for the benefit of
the Australian dairy industry. Currently, Dairy Australia leverages an additional $3.45 for every dollar it invests
in on-farm activities, and an additional $1.46 for manufacturing-related R&D.
Interest on funds invested during the year was $1.97 million. Cash reserves were managed prudently, mainly
through investments in short-term bank bills and an externally managed portfolio of income and growth assets,
including direct shares, managed funds, listed property trusts and fixed interest rate products.
An analysis of the charts on page 10 shows the amounts spent by each of Dairy Australia’s business groups
in addressing the three core business objectives. As planned, close to half of the Company’s investment went
into programs that seek to increase farm productivity.
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