Sector lacking strategic direction

However O’Connor says he’s impressed with Landcorp’s focus on low cost production systems.

He says the dairy industry in general at present is lacking an overall strategic direction and individuals are making potentially risky decisions.

“There are some players in the industry who are intensifying their systems while others are more cautions and probably winding back their production,” he says. 

“That leads to the question of processing capacity in terms of the wider industry and I don’t think anyone would want to see the dairy end up with a meat industry situation where we have excess capacity.”

He notes a number of foreign investors are becoming involved in the dairy processing industry to vertically integrate their systems. 

There is real risk of over-capacity becoming a reality in the dairy sector, he says. While some commentators are encouraging farmers to increase production, farmers who don’t focus on profit will go broke and additional production alone doesn’t develop a better outcome.