Crisis talks on Gore district plan
Moves are underway for farmers and Māori in Southland to try and resolve and get clarity over what appears to be a controversial section of the proposed Gore District Plan.
The 57 farmer shareholders, who supply milk to DGC, are banking on a new board and leadership team to guide the NZ goat milk sector back to profitability after three challenging years which saw some farmer shareholders forced out of business.
DGC’s new chair and Te Aroha farmer René Burri says the past three years have been very tough on dairy goat farmers.
“From a financial perspective, morale has been pretty low,” he told Dairy News.
The financial pressures forced some farmers to exit the industry while others offloaded milk supplying shares to fellow shareholders.
Burri believes the worst isn’t over: the next 12 months will remain extremely challenging.
However, he says farmers are hopeful of a turnaround in the business.
“As farmers, we believe in the long-term future of DGC. We know we have very good milk, great manufacturing assets and we now need to grow sales.
“We know there’s no magic bullet and that the next 12 months will be challenging but we are very excited about five years from now.”
Burri says that every goat farmer believes in the health benefits of goat milk.
But there’s no point in having the best product in the world but not converting that into sales and high farmgate returns, he adds.
DGC hired respected agribusiness leader Alastair Hulbert as its new chief executive three months ago.
Hulbert and his team are tasked with creating a two-pronged strategy: a 12-month strategy to boost farmer returns and a longer 5-to-10-year strategy on diversifying DGC’s offering around the globe.
Today, DGC is an infant formula and ingredients supplier to 30 countries. The leading markets for baby formula include Taiwan, Poland, Thailand, UK and Korea. DGC sells goat milk ingredients to China and Korea where it is used in sports nutrition and pet formula.
Infant formula has been the co-op’s mainstay, but its biggest market China was thrown into disarray when Covid surfaced. The Daigou channel, where returning Chinese visitors took cans of infant formula back to their homeland, dried up.
Hulbert describes it as ‘a perfect storm’. The collapse of the Daigou channel was compounded by the loss of State Administration for Market Regulation (SAMR) registration which infant formula exporters require to send products into China.
“This removed a large part of our sales into China,” he says.
DGC still has China in its sights: it plans to submit another SAMR application. But at the same time, the co-op is looking to boost infant formula and ingredient sales in other countries.
This month, Burri and Hulbert will visit markets in Asia and will later visit Europe in October.
Hulbert says infant formula will remain the mainstay of DGC.
“That’s what we are good at, that’s where our legacy and science come from,” he says.
“But we are looking at boost ingredient sales and third-party manufacturing to utilise our plant to full capacity.”
Another key part of the short-term strategy is to lift farmer returns and restore milk production to full capacity.
For the past two seasons, farmer suppliers were asked to cut back supply to 80%. This year, farmer suppliers agreed to further reduce supply to 65%.
With a reduced farmgate milk price, farmers have been facing a double whammy.
Hulbert says DGC staff are “very cognisant” of the pressures facing farmer shareholders.
“We are focused on turning things around. We’ve got the support of a very good board for our plan to build sales, lift farmgate returns and increase milk volumes from farmers.”
Health Benefits
The dairy goat sector is banking on the results of a program of scientific trials to boost sales.
The GiraFFE clinical study, part of a Primary Growth Partnership programme (now the Sustainable Food and Fibres Futures) launched in 2018, looks to prove the positive link between consuming goat milk formula and lower instances of eczema in babies.
DGC chief executive Alastair Hulbert says previous studies have indicated that drinking goat formula may reduce the likelihood of eczema.
Hulbert says DGC hopes to promote the findings via healthcare professionals around the globe.
He thanked the Ministry for Primary Industries (MPI) for supporting Caprine Innovations NZ (CAPRINZ) - a multi-year, $29.65 million investment programme between MPI and DGC. Through the partnership, 40% of the funding is provided by the Governmen with the balance provided by DGC.
The end goals include improving the health and well-being of families, delivering a range of benefits such as growing research and farming capability and increasing export revenue across the New Zealand dairy goat milk industry.
The programme has also helped DGC farmers access tools to improve financial benchmarking and feed issues on farm.
About DGC
- 57 farmer suppliers
- 4.1million kgMS produced last year
- Current season forecast 3.5m kgMS
- Forecast farmgate milk price of $13.50 to $14/kgMS.
- 230 staff
