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.