Dairy goat farmers hope the cooperative will be successful

Farmers running the Dairy Goat Co-operative (DGC) in Hamilton say they believe in the long-term future of the business.

The 57 farmer-shareholders who supply milk to DGC are counting on a new board and leadership team to help the New Zealand goat milk sector return to profitability after three difficult years that saw some farmer-shareholders forced to close down.

New DGC chairman and Te Aroha farmer René Burri says the last three years have been very difficult for dairy goat farmers.

“From a financial perspective, morale was pretty low,” he said. Dairy news.

Financial problems have forced some farmers to exit the industry, while others have sold their dairy holdings to other shareholders.

Burri believes the worst is not over yet: the next 12 months will continue to be incredibly difficult.

He adds, however, that farmers are counting on an improvement in the situation in the industry.

“As farmers, we believe in the long-term future of DGC. We know we have very good milk, great production assets and now we need to increase sales.

“We know there is no magic solution and that the next 12 months will be difficult, but we are very excited about the upcoming five-year plan.”

Burri says every goat farmer believes in the health-promoting properties of goat milk.

But he adds that there is no point in having the best product in the world if it does not translate into sales and high farm profits.

Three months ago, DGC hired respected agribusiness leader Alastair Hulbert as its new CEO.

Hulbert and his team are tasked with creating a two-pronged strategy: a 12-month strategy to increase farmer profits and a longer, 5- to 10-year strategy to diversify DGC’s offerings globally.

DGC currently supplies infant formula and ingredients to 30 countries. Leading markets for infant formula are Taiwan, Poland, Thailand, the UK and Korea. DGC sells goat milk ingredients to China and Korea, where it is used in sports nutrition and pet products.

Infant formula was the co-op’s mainstay, but its biggest market was China, which was thrown into chaos when Covid hit. The daigou channel, where returning Chinese visitors took cans of infant formula back home, dried up.

Hulbert describes it as a “perfect storm.” Daigou’s demise was compounded by the loss of its registration with the State Administration for Market Regulation (SAMR), which infant formula exporters need to ship to China.

“This caused us to stop selling to China,” he says.

DGC still has China in its sights: It plans to file another SAMR application. At the same time, the cooperative is trying to increase sales of its infant formula and ingredients in other countries.

This month, Burri and Hulbert will visit markets in Asia and in October they will visit Europe.

Hulbert says formula milk will remain the cornerstone of DGC’s offering.

“That’s what we’re good at, that’s where our heritage and learning comes from,” he says.

“But we are thinking about increasing sales of ingredients and outsourcing production to third parties to fully utilize the capabilities of our plant.”

Another key element of the short-term strategy is to increase farmers’ incomes and restore full milk production efficiency.

For the past two seasons, agricultural suppliers have had to reduce deliveries to 80%. This year, agricultural suppliers have agreed to further reduce deliveries to 65%.

Due to the fall in milk prices at agricultural producers, farmers are facing a double blow.

Hulbert says DGC staff are “very aware” of the pressures shareholder farmers face.

“We are focused on turning things around. We have the support of a very good board for our plan to increase sales, increase farm returns and increase the volume of milk from farmers.”

Health benefits

The dairy goat sector is relying on the results of a scientific research programme to increase sales.

The GiraFFE clinical trial, part of the Primary Growth Partnership (now Sustainable Food and Fibres Futures) programme launched in 2018, aims to prove a positive association between the consumption of goat milk-based formula and fewer cases of eczema in infants.

DGC chief executive Alastair Hulbert says previous research suggests drinking goat’s milk may reduce the risk of eczema.

Hulbert says DGC hopes to disseminate its research findings to health care workers around the world.

He thanked the Ministry of Primary Industries (MPI) for supporting Caprine Innovations NZ (CAPRINZ), a $29.65 million multi-year investment program between MPI and DGC. The partnership sees 40% of funding from the government and the remainder from DGC.

The end goals include improving the health and wellbeing of families, providing a range of benefits such as expanding research and agricultural opportunities, and increasing New Zealand’s goat milk export revenues.

The programme also helped DGC farmers gain access to tools that enabled them to improve financial benchmarking and improve on-farm feed management.

About DGC

• 57 agricultural suppliers
• Last year, 4.1 million kgMS was produced
• Forecast for the current season 3.5 million kgMS
• The projected farm gate milk price is $13.50 to $14/kg body weight.
• 230 employees