US - A new report from Rabobank has recommended that product innovation and export markets are key for future dairy industry growth.
The Rabobank Agribusiness Research and Advisory (FAR) group released its dairy industry report "California Dairies: Getting More Moola," on Tuesday. The report offers insight into how value in the dairy industry could be maintained for the benefit of both producers and processors.
Authored by Vernon Crowder, agricultural economist and senior vice president at Rabobank and James DeJong, dairy industry analyst with Rabobank, the report looks at moving the industry more in line with the free market system.
The report states that infrastructure investment and different practices are necessary in order to move away from milk marketing orders (MMO), the long standing protection for farmers against unbalanced pricing.
Despite refinements over the years Crowder and DeJong state that minimum price formulas and the redistribution of milk revenue to farmers remains the same. The future of dairy farming, they predict, will depend on product innovation and tapping into the value of dairy produce internationally.
"There's a growing demand on the world market for a variety of milk by-products and California dairies need to position themselves to capture that market share," said Mr Crowder. "California dairies can't simply continue to produce and market products for the satisfaction of their own domestic market, they really have to think globally."
Since 2008, the export market has started to offer greater possibilities alongside domestic revenues. Rabobank recommend that US farmers follow New Zealand's lead and tap into markets by tailoring products for exportation.
Referencing The Northwest Dairy Association (Darigold) as an example of a cooperative that targets good relationships with key export customers, Rabobank suggest that processors need to initiate expansion.
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