Morgan here, on the rolling lush green

Morgan Laird
Assessment Task 2 – Farm Product Study
The Farm
No.9 Dairy is a medium scale research property owned by the government.

The milk produced at No.9 is sold to the dairy farmers co-op. This method was chosen by the manager and owner as it gave the best return. The dairy earns extra income in the form of male calves sold on as vealers or to be raised as a steer to a suitable age before being sent to slaughter.

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4019550102870Country Valley
Country Valley dairy is a small-medium scale farm owned and run by John Fairley and his family.

Figure 1 Homogeniser and Pasteuriser at Country Valley
Country Valley processes its own milk to produce a store ready product. The milk is marketed as being “locally manufactured right here, on the rolling lush green hills of Picton.”, this marketing scheme gives Country Valley the edge over large scale producers as locals are more likely to buy a local brand. Only being available in Picton lowers transport costs they would face if their product was sold in other areas.

This method of marketing was chosen by John Fairley as it was deemed to be the method that would give the highest return.

Government Regulations
By Law:
Milk must be stored under 5 degrees Celsius
Milk must be pasteurised no less than 72 degrees Celsius for no less than 15 seconds
Processed milk must have no more than 0.003mg of antibiotics per L (However, market specifications require 0mg per L in raw milk)
Processed milk must have zero coliform bacteria
Those wishing to import milk or milk products to Australia commercially may need to hold an import permit. Along with this, the milk to be imported must meet Australian Standards. Imported milk does not need to be quarantined.

Government Inspections
Dairy farms are subject to routine inspections to ensure the farm is meeting standards regarding herd health and milk storage. The inspections must be paid for by the license holder. Action may be taken on those who fail inspections.

Decision Making and Management Strategies
No.9 Dairy is efficient in its production of milk with its cows producing approximately 6600L of milk per lactation cycle. This figure is above the state average of 6054L. Along with this, fat and protein percentages are also higher than the NSW state average. No.9 cattle produce milk with fat and protein percentages at 3.91% and 3.14% respectively. State averages are at 3.79% and 3.1% respectively.

Despite the efficiency, No.9 may be improved with the addition of a small to medium sized robotic rotary milking system and smart gates and collars to go with it. This would allow the manager to closely monitor individual health and ensure each cow is performing to her best. It would also allow rapid detection of heat or illness.

No.9 had (in one year) variable costs of $649 877 and an income of $915 000. These figures result in a gross margin of $265123.

Country Valley
Country Valley, like No.9 is also efficient in its production of milk. Exact production figures could not be found. Based on processed whole milk figures, milk from Country Valley has fat and protein percentages above average at 3.8% and 3.3% respectively.

A robotic rotary milking system would likely not improve efficiency greatly at Country Valley due to its small size and is likely to cost more money than it would generate.

The gross margins for Country Valley would likely be similar to No.9 due to the similarity of input requirements; they would differ however in that expenditures would also have to be made on the onsite processing factory along with increased returns due to the value adding done to the raw product.

Economic Factors
High input costs may prevent farmers making changes to the system to increase efficiency, on No.9, due to the high cost of robotic rotary dairies, it would likely be unprofitable to install one at the farm. Another high cost faced by farmers is insurance to cover injury or thefts/damage done to property. Despite its high cost, the insurance is a necessary cost as it removes liability for injuries sustained by workers on the farm and gives assurance of reimbursement if damage or theft occurs to goods or property.
To meet market demands, No.9 Dairy steeples its breeding times to ensure births are happening year round, in turn ensuring equal milk production year round, giving the farm higher returns in winter when milk prices are higher due to its difficulty to produce.

Country Valley likely also steeples its breeding times to the same effect. In another effort to meet market demands, Country Valley produces different products and amounts at different times. They have also started production of different products to meet changing ideas about the ‘healthiness’ of products, for example, Country Valley now sells organic milk in response to the consumer demand for it as it seems healthier than a non-organic alternative.

4210050410845Agricultural Technology
Scientific research and new technology has influence the marketing and production of milk in that it has allowed the development of healthier milk and more efficient milking systems.

4210050996950Figure 3 Robotic Rotary Dairy
The development of the robotic rotary dairy has allowed an increase in efficiency for milking systems, freeing up labour for use elsewhere. The first robotic rotary dairy was developed by DeLaval n conjunction with the FutureDairy project. The Elizabeth Macarthur Agricultural Institute in Camden, NSW has a fully operational prototype which has been operating since 2009. Robotic rotary dairies have been in use for several years in European countries but have only been adapted to use in the Australian pasture based system in the last 10 years.

Figure 3 Foreground: Holding Pen fffffffffffBackground: Automated Feeder
The system installed at the Elizabeth Macarthur Agricultural Institute is an Automated Milking System (AMS), this includes the robotic rotary dairy, smart collars, gates and feeding systems. The robotic rotary dairy system installed here has 5 robots, two to clean teats, two to apply milking cups and 1 to spray iodine on the teats. The iodine robot cleans the lens used to locate the teats after each application with a spray of water.

Smart collars interact with the milking system to identify which cow is currently being milked and measure exactly how much milk the cow has produced, whether she is producing abnormally or whether she is in heat. If the cow is producing abnormally or in heat, she may need to be looked at by the farmer and so the collar interacts with the gates and lets her into a holding pen rather than letting her through to the automatic feeder. A cow may also be put into a holding pen if the robot cannot attach the milking cup after so many tries. If a cow has been put in to the holding pen the farmer will receive a notification on their phone to tell them there is a problem that needs attending to.

The automatic feeder has stalls that fit one cow at a time for an allocated ration, the feeder uses the smart collar to determine the cow being fed. The size of the ration is determined by which milking stage the cow is in. After each milking a cow will receive 8kg of feed when in the first third of the lactation curve, 5kg when in the second third and 3kg when in the final third.Marketing Investigations
Milk has strict quality criteria:
It has a minimum butter fat and protein percentage, specified by the buyer.
It must have zero antibiotics and sediment.
Milk must be pasteurised at 72.5 ?C for 15 seconds
Pasteurised milk must have samples taken at regular intervals and a phospatase test performed on it to ensure the pasteurisation process has been performed correctly.

Processed milk must have zero coliformMilk must be stored at or below 5 ?C, Country Valley has their cool room set at 2?C
Country Valley uses Delvotest® to ensure there is zero antibiotics in their milk.

Quality assurance programs are essential in providing a safe and high quality product. HACCP is one of many such programs. HACCP consists of seven principles:
Hazard analysis – Consists of recognising hazards to food safety. A plan should be put in place to avoid the hazards.

Critical control points – Consists of recognising points during the manufacturing at which pose the most risk.

Critical limits – Minimum and maximum limits for control points. Breaches of limits need to be addressed.

Critical control monitoring – Monitoring standard to ensure critical control points and limits are monitored and noted if changes occur.

Corrective Action – Plan for corrective action if a hazard occurs at a critical control point.

Procedures – Procedures to ensure HACCP is always followed and put in place correctly.

Record Keeping – Reliable and detailed records of all occurrences must be kept.

Consumer demand for products has changed over the years and in recent years has shown a trend towards healthier options. Consumers want high quality, healthy products that are reliable in supply with a low/ affordable price.
Value adding is a process done to increase the return for a product. Instead of milk being sold in its bare-minimum processed form it may be sold as flavoured milk, cheese or yogurt which increases the return per unit of product sold. Country Valley, for example, value adds by producing coffee flavoured milk, natural yogurt and sweetened yogurt.

Some of Australian’s key export markets are Greater China, South Korea, Indonesia, Japan, Malaysia and India. Milk and milk products exported to these countries must meet the standards of that country. Each country receives different amounts of various products based on needs.

The top export to Greater China by volume is milk at 49% of exported milk products, by value, milk makes up 15% of exported milk product value. In value, however, infant powder is the top export at 39% of exported milk product value, by volume, infant powder makes up 8% of milk product exports.

The top export to South Korea by value and volume is cheese at 48% and 37% of milk product exports respectively.

The top export to Indonesia by value and volume is skim milk powder (SMP) at 36% and 70% of milk product exports respectively.

Similar to South Korea, Japan also has the top export of cheese by value and volume with both at 89% of milk product exports.

SMP and whole milk powder (WMP) tie for top export value to Malaysia at 24% of milk product exports. SMP is the top milk product in terms of volume at 41% of total exports.

Cheese is the top export by value and volume for India at 72% and 74% of milk product exports respectively.

*Top export refers to top export from Australia
** All figures above are from the 2016/17 financial year
Restrictions in importing/exporting include tariffs and non-tariff barriers. China for example has a non-tariff barrier that limits overseas companies to only three brands to prevent drowning of local brands. The Chinese government has also set tariffs in place. As of the 2016/17 financial year, the tariff applying to “Milk and cream, not concentrated nor containing added sugar or other sweetening matter” was at 12%.

Annets, S and others, Milk production and marketing: Part 2 Product Quality and Processing, pp30 , Learning Materials Production, OTEN, 2004
Group Interview with Brian Trench, 16 March 2018
Geoff Riley, 14th July 2017, ‘Non-Tariff Barriers – China Toughens Dairy Regulations’, tutor2u Accessed 26th May 2018
Country Valley, Country Valley ; ; Accessed 20th May 2018
‘Food Standards Code’, Food Standards Australia and New Zealand, ; ; Accessed 23rd May 2018
‘Dairy Primary Production’, 2017, Food Authority, ; ; Accessed 24th May 2018
‘Dairy Processing’, 2017, Food Authority, ; ; Accessed 24th May 2018
Micheal Stewart, 26th February 2013, ‘The Seven Principles of HACCP’, Australian Institute of Food Safety, ; ; Accessed 25th May 2018
Market Brief Greater China, August 2016, Dairy Australia ;–market-briefs-greater-china.ashx?la=en&hash=8659C74B2C1EEF6AED4BABB0478FAD79DD64519C > Accessed 26th May 2018
Market Brief Japan, August 2016, Dairy Australia ;–market-briefs-japan.ashx?la=en&hash=570855168616150A161A6DFFED011921278928A0 > Accessed 26th May 2018
Market Brief Republic of Korea, August 2016, Dairy Australia ;;hash=6DD91C632E83E87D2E3A0A58439EA615DA28E187 ; Accessed 26th May 2018
Market Brief Indonesia, August 2016, Dairy Australia ;;hash=AE06F6354A85879AF9A5B14FAFF747C8F2FB6A23 ; Accessed 26th May 2018
Market Brief Malaysia, August 2016, Dairy Australia ;;hash=F7AB39713610112E7537E39DCA3B2CAF9F2D6898 ; Accessed 26th May 2018
Market Brief India, August 2016, Dairy Australia ;;hash=F15F9EACC63FEF0A41B68CF255CBF9C0ED215105 ; Accessed 26th May 2018
Robotic Rotary, May 2012, DeLaval and Future Dairy ; ; Accessed 27th May 2018
Robotic Rotary, November 2010, DeLaval and Future Dairy ;; Accessed 27th May 2018

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