Australia’s biggest milk processor Murray Goulburn has sourced $20 million from a Scandinavian pension fund to use to boost stagnant milk production through the purchase of nine dairy farms which will be sublet to “accomplished dairy farmers’. The investment will add approximately 30 million liters of milk to the co-op’s annual supply which accounts for 39% of the nation’s total milk production. Domestic Australian investors have been hesitant to invest in Australian agriculture because of the risks associated with primary production, but the growing middle class in Asia which is set to reach 3.2 billion by 2030 and the opportunity for Australia and New Zealand to export dairy to these markets is attracting investments from European and U.S. pension funds. Milk production in Australia has declined by 20% over the past 10 years from 11.2 billion liters to 9 billion liters per year and processors are engaged in strategies to reverse this trend. Saputo, which owns 88% of Warrnambool Cheese and Butter has appealed to dairy farmers to increase their herd size and production, and Fonterra has implemented a plan to offer to co-fund the expansion of dairy farming operations through the purchase of cows and equipment, or the purchase or leasing of land in exchange for the farmer signing a three to five year supply contract with the company.
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