Bega’s plan to grow

With world demand for milk products soaring, Bega is worried new competition for raw milk supplies may not leave enough milk in Australia to expand its operations and meet new export opportunities.

The nation's fourth biggest dairy processor wants to establish long-term supply agreements to help meet export and domestic customer needs, plan its growth and help suppliers plan their own growth and farm sustainability.

Bega will spend $25 million on business initiatives aimed at avoiding long-term milk supply shortages and promoting sustainable production from its supplying farms.

Worried about rising competition for milk and prospects for "relatively static" milk production in Australia, executive chairman Barry Irvin said it was important Bega developed strategies that more strongly linked its needs with suppliers.

"It is important to think about new approaches that encourage existing suppliers to invest and sustainably grow their milk supply and for the company to have longer term supply security which allows long-term business growth objectives to be met," he said.

Bega Cheese directors and senior management have met suppliers in western and northern Victoria and will talk to NSW South Coast farmers tonight, then move to Victoria's Gippsland region.

Mr Irvin said the meetings were for discussing new models of longer term relationships with suppliers.

Flush with about $44m in profits after selling its 19 per cent stake in Warrnambool Cheese and Butter in December, Bega Cheese will commit financial support to promote environmentally sustainable practices and farm supply growth projects.

About 30pc of Bega's cheese-based output is exported, but increasingly high-value returns are being derived from specialist nutritional milk powder products which are in strong demand overseas.