Changing face of dairy industry

Press, 2 September 1977, Page 17

Changing face of dairy industry

By

D. L. Fyfe

the chairman of the h Z d M C W lVe Dair - V Company in Ashs' E ’ Totty ’ refen *ed to the changing face of the dairy industry locally and national!* thJ 3 mpaS !? s in South and Mid-Canterburv al ? amatlon or integration of all dairy lactones into one grouping.

And on the wider scene, in spite of problems, with its ability to alter the course of its production to meet market needs, Mr lotty, who is a former chairman of the MidCanterbury dairy section of I-ederated Farmers, is still optimistic about its future

To try to assess the industry with its many ramifications and achieve a clearer picture of its future potential, particularly at the moment with the amount of cheese that will be permitted into the European Economic Community and the price that

New Zealand will receive still in doubt, Mr Totty says that it would be necessary to have more than a crystal ball. But changes were taking place nationally as well as locally. Taking the Midland company’s factory, Mr Totty said that in 1940 the company had 2592 suppliers and in that year it manufactured 1118 tons of butter. In the season just finished it would have manufactured a slightly lower tonnage of butter for the local market in Mid

and South Canterbury, but not, as was the situation in 1940, entirely from locally-produced butter.

It could be said that the Midland company had over the years changed from a “billy-can” company to an almost straight “re-work” company. A re-work factory purchased bulk butter from the Dairy Board, re-churned this butter and put it into half kilogram pats and then distributed it within a zoned area.

From the start of the new season the Midland company would no longer be processing locally produced cream. Cream from the very few remaining suppliers would still be handled by the company, but would be manfactured by the Tai Tapu company. If nothing else, this reflected the change in the economics of farming from the days when the monthly cream cheque provided the essential ready cash for immediate household requirements. There was one other factor that had hastened the exodus of the small herd dairy farmer, and that was the “regulations” and the advent of “stainless steel.” Anyone associated with the meat industry would be well aware of the problems and costs involved in meeting stringent hygiene regulations. The vital importance of these overseas markets to a country like New Zealand left no option but to comply. While the small herd had almost disappeared, on the other hand the large herd had grown even larger. In the previous season 18 bulk milk suppliers in Mid-Canterbury supplied a third of the total milk processed by the new Temuka Mechanised Cheese Company. A similar process was now taking place at factory level. Two years age the Milford, Orari and Clandeboye factories had amalgamated to form the Temuka company. At the present time the Midland company was also in the process of amalgamation as well. Suppliers had given the “green light” for that to happen. Besides this Cloverlea,

which would continue producing particularly for the local market, would also be fully integrated with the others within the next year.

And while five dairy companies were involved in the present amalgamation in Mid and South Canterbury, six companies were involved in a similar exercise in Southland.

Once the establishment of these modem sophisticated dairy factories had been completed, there was no reason why the pay-out to farmers should not equate the return received from their North Island counterparts. In fact with cheaper land, better drainage and freedom from facial eczema, dairy farmers within reach of a tanker pick-up service should be overall financially better off than some in the North Island’s more officially recognised dairying areas. With such emphasis on hygiene and the quality of ail food products, Mr Tutty said that Mid-Canterbury dairy farmers could take pride in the fact that last season milk from their area graded 99.71 finest. The withholding of milk from any animal treated with antibiotics etc., must be strictly adhered to. Pro-

duct testing could quickly establish any break down at treatment level. It was often stated that the customer was always right, but what really puzzled many who had travelled overseas was the very high standard demanded for ail imported food products. Yet a visit to the farms within those same countries left the visitor wondering. The New Zealand dairy industry had long been used to overseas customers requesting tours of inspection at factory level. Today customers were seeking farm visits as well. Anyone with a long association with the dairy industry would be well aware that cheese had always been referred to as a managed market. In fact the dairy industry had always maintained a degree of flexibility by the use of diversification incentives.

In the season just finished, owing to diversification mainly by multiple companies — so-named because they can produce more than one product — any surplus cheese was now back to a manageable level.

In 1973 the Dairy Board had marketed 75.000 tonnes of cheese in the United Kingdom and 27,000 tonnes in other markets. In the present selling season sales to markets other than the United Kingdom had expanded to around 50,000 tonnes.

What was also important was the need to produce a product acceptable to the palate of the population within many of the newlydeveloped markets. Whereas in the past Cheddar had been the main type exported to the United Kingdom, today brine cured types, a cheese with very good keeping qualities and also commanding a much higher return, together with

other varieties of cheese also acceptable on markets closer to home, must provide a degree of confidence in cheese production that had been inclined to wane somewhat in recent times. The question whether or not the E.E.C. agricultural ministers would agree to New Zealand retaining the whole or part of the present 15,000 tonne quota, must lose some significance when surveyed in its full context.

Not many years ago there was the bogey of a mountain of butter growing in the E.E.C. countries, yet in the present season the very satisfactory end-of-season payment from the Dairy Board came from the sale of fat products and more could have been sold had stocks been available.

About two years ago there had been a crisis in milk powder and the question was being asked where the next season’s production would be stored. Yet when the new season started stock had been considerably reduced. Certainly so .ie stocks of ageing milk powder had been sold as stock food. Besides this they were aware of a considerable quantity of powder still in store in the E.E.C. countries. But what was important, as far as the New Zealand dairy industry was concerned, was that once again stocks and sales had been equated to a more normal trading pattern. An industry that had proved its ability to cope with economic pressures at home and abroad, to develop new markets and be able to service these from half way round the world, provide the expertise required for market development and coupled with this a stable on-farm return, must generate confidence for dairy farming in the future.