Chairman of IBIS Business Information, Phillip Ruthven, believes that the dark cloud of that hangs over the future of the nation’s dairy industry may have a silver lining.
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Deregulation has buffeted the industry, and farmers in Western Australia have witnessed farm gate prices drop by 30%. On average, farmers throughout the nation saw a drop of 13%.
Indeed, since the 1960s, the number of dairy farms in Australia has plummeted by 75%, and the current figure is set to drop by a further 30% over the course of the next five years. Ruthven has also predicted that income for the farmers would also fall by 4% over the same period.
The prospect is not all doom however, according to Ruthven. He believes that this could be an exciting, productive and profitable, time for those businesses prepared to change with the market. By considering alliances with other businesses in the supply chain, Ruthven argues that farmers can explore new opportunities and aim for five to ten times the current average return on equity during the next five years.
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