Why Trade Is Important
This section explains current trends and prospects for Australian dairy exports and our trade reform goals.
Australian Dairy - A Trade Success Story
The Australian dairy industry now sells about half its annual production in world markets, and earns more than $3.0 billion in export revenue. Annual exports in the order of 900,000 tonnes of processed dairy products are shipped to over 100 countries.
Australia is the world’s third biggest dairy exporter with an overall share of world trade of 11 per cent.
In the next few years, the Australian dairy industry has an opportunity to achieve considerable growth as the industry recovers from a number of years of drought and world demand for high-quality dairy products and ingredients continues to expand. Export growth and improved international prices will be a key to the local industry’s long term prosperity.
Why trade reform matters
Australia is one of the world’s few dairy industries that operates a free, open market environment. World market prices (or export returns) determine the farmgate price paid for milk for every Australian dairy farmer.
However, Australian dairy producers still face a very distorted world market. High protectionist barriers limit our access in many countries. Export subsidies also continue to depress international prices.
Future growth opportunities for exporters like Australia can only be guaranteed by greater trade liberalisation. This will lift world dairy prices and sustain higher values of trade and farmgate returns. The whole global dairy market would grow as consumers and producers take advantage of a more competitive supply of quality dairy foods.
What we can achieve through trade negotiations
World Trade Organisation (WTO) multilateral negotiations provide Australia’s best opportunity to achieve further meaningful reform of the trading rules for world dairy.
The Australian dairy industry has two straightforward objectives for trade reform:
1. higher and more stable world prices; and
2. opportunities to compete for markets on a fair commercial basis.
To achieve our goals we need agreements on:
1. lower tariff barriers;
2. expanded market access; and
3. the elimination of export subsidies.
A broad-based approach to reform
WTO multilateral negotiations are complex and take a very long time to complete. They can, therefore, only be one part of a successful industry strategy to achieve higher, more stable returns and growth.
While pursuing new opportunities, Australia must also defend current export opportunities and work to raise buyer awareness and preference for Australian products.
To do this, industry currently operates four levy-funded programs in addition to its multilateral trade negotiating strategies. These are:
- bilateral representations
- industry image and positioning
- technical issues management
- strategic market intelligence.