New players to fly milk to China

Following close behind highly successful air freight initiatives by the Norco co-operative and then the A2 Milk Company in the past year, the latest milk processors involved have already received relevant export license approval in Australia and ticked off some Chinese national and provincial government requirements, including going through inspection tests.

The ventures are based on the NSW Mid North Coast, South Coast and Central West and include an on-farm milk processing operation and a small farmer co-operative.

Dairy Connect NSW, which was closely involved in facilitating Norco's fresh milk export breakthrough last year and has helped "navigate" the latest developments and regulatory hurdles, says the export initiatives exemplify a much-revived confidence in the state's dairy sector opportunities.

Dairying in NSW had rebounded after a dark period of milk oversupply, unviable farmgate prices and widespread industry anxiety just a few years ago.

Dairy Connect formed as a peak industry body drawing farmers, processors and milk vendors under one umbrella in 2012 when tensions over milk pricing, cut-throat retail discounting and the lack of processing options were peaking and pushing farmers out of the game.

Chairman George Davey said the latest developments, although only toeholds in the export market, were helping build meaningful processing capacity in NSW and coincided with a handful of new farmer entrants joining the industry this year.

He said there was a much-improved mood about the sector's long-term prospects.

In the wake of milk market deregulation in 2000 and the supermarket $1-a-litre milk pricing war breaking out 2010, NSW and Queensland had suffered a savage decline in milk processing activity as major processors, notably Lion's Dairy Farmers business, concentrated their processing activities to Victoria.

However the Murray Goulburn's co-operative decision to break into fresh milk sales and build a highly efficient plant in Sydney last year, along with a similar project by A2 Milk in 2013, plus well advanced plans for nutritional formula powder processing ventures at Orange and Gloucester, have rapidly changed the milk market's mindset.

"Most of the pricing issues we really struggled with at farmer and processing level when Dairy Connect kicked off have seen a lot of resolution," Mr Davey said.

"But there's plenty more we can achieve at farmer level and we see more scope to help processors, especially smaller scale cheese makers and the like who are looking for a more united, stronger voice as the industry evolves.

"The milk distribution sector, which was badly hurt by $1 milk and lost a lot of membership strength, is also looking at how best to regroup to deal with a new market environment."

Mr Davey's optimism about the sector coincides with Dairy Connect announcing it is reviewing industry growth strategies on a local and international front.

The hunt is also on for an eventual replacement for part-time chief executive officer Mike Logan who leaves next year.

Mr Logan a former cotton grower and business owner was brought in by the infant organisation four years ago originally in a consulting capacity, later taking on the job permanently.

"The opportunity to help establish and watch the association grow has been a most satisfying part of my professional career," he told last month's annual general meeting.

"We are saddened he is leaving for other opportunities as we'll be losing his passionate contribution to the dairy sector," said Mr Davey, but he noted the news had already prompted strong inquiry from potential candidates for what was likely to be a full-time role.

Dairy Connect is partly funded by members, including farmers and milk processors Lion, Norco and Richmond Dairies, plus interest on funds in the Graham Park Trust, owned by the NSW industry.

Its farmer members produce more than half the state's milk production, with some also members of NSW Farmers dairy section.

Despite early tensions between the two farmer representative groups, Mr Davey said Dairy Connect had a good working relationship with NSW Farmers' dairy section and solid support from Australian Dairy Farmers president Noel Campbell, who was at last months AGM.