Industry uncertainty amid dairy sales

Brad ThompsonThe West Australian

The WA dairy industry is set for another squeeze with Brownes branching out into production of a specialty product, up to a dozen farmers close to retirement and at least nine dairies in the South West already on the market.

The industry is anxiously monitoring efforts to sell a block of eight dairies near Scott River.

Four come under the banner of Lactanz - WA's biggest single milk producer - three are owned by former Australian Farmer of the Year Ross Woodhouse and the other by the Dunnet family.

Lactanz Dairies went into receivership in June with debts of $21 million, despite producing 15 million litres of milk a year. It has been on and off the market for the past 10 months with the asking price falling dramatically after starting at $30 million.

Dairy farmers have had their equity cut by up to 30 per cent in recent years because of falling farm prices. There are fears the trend will continue as the Federal Government presses ahead with a crackdown on overseas ownership of agricultural land by cutting the threshold for Foreign Investment Review Board scrutiny from $248 million to $15 million.

Chinese and Malaysian interests have shown interest in WA dairy investments over the past 18 months but stopped short of finalising purchases.

Industry sources said up to a dozen of about 150 dairy farmers still in WA were looking to retire or exit the industry, with bigger producers expected to buy their milking cows and in some cases lease part of the farms.

A Dairy Australia survey released this month showed 7 per cent of WA producers were planning to exit or were unsure about their plans for the next few years.

Brownes managing director Ben Purcell said he did not expect production to increase over the next 12 months, despite the State experiencing its biggest shortfall in milk supply in decades earlier this year.

Milk production in WA has been falling - down to about 338 million litres last year - despite a growing population and fierce competition for supplies between major processors Brownes, Harvey Fresh and Lion.

Brownes has signed a deal to process about 5 million litres of milk a year for New Zealand-based A2 Corporation for sale in WA.

The milk will be sourced from WA farmers, predominantly near Scott River. The process has involved herd testing for the gene needed to produce the A2 beta- casein protein, which research has shown may benefit digestion.

"Up until now, A2 milk has been imported into WA every year because there hasn't been anyone here to produce it," Mr Purcell said.

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