Challenges of The Dairy Industry

Introduction

At the current time farmers are facing difficult trading conditions due to a number of factors including Low prices of dairy product, Increased input costs and Dry weather conditions. The challenge appears to be greatest for those farming businesses with high debt levels. This is further compounded where falling land values have decreased the equity of that farm business, and a reduction in the ability to service debt with cash flow from the lower milk price.

In fact, the provision of adequate and safe food is a basic economic activity in any society. This statement reminds us the safety of dairy goods is a potential problem that needed to be emphasized. As the cases occurs in China in before, 2008 Chinese milk scandal. It was a widespread food safety incident in China. The scandal involved milk and infant formula along with other food materials and components being adulterated with melamine. About 3 000 000 victim suffer with it and unfortunately, six babies died from kidney stones and other kidney damage and an estimated 54,000 babies were hospitalized. This incident have absolutely effect the confident of consumer toward the dairy product .

Besides, lack of skills and training is also one of the problems in dairy industry. In 1980s ,smallholders were completely new to loves husbandry management. One of the main constraints of developing the dairy sector was inadequate training provided to farmers. The shortage of trained manpower at all levels lead to poor hygiene and milking techniques, resulting in the rejection of milk by MCCs (Dijkman,1992).The situation will be more obvious in especially third world countries such as Africa.

Possible solutions to tackle the problems

Realistic solutions frequently involve accepting there are things we cannot control and changing the things we can. Though the weather is not controlled, but the input cost is actually controlled. To minimize the input costs, dairy industry will build creation and security through union, modernization, and specialization. Worldwide exchange will be an essential factor impacting benefit, and bigger dairy homesteads will keep on making more prominent utilization of robotization to diminish costs. Upgrades in genetic choice will prompt dairy cows lines that are more advantageous, deliver milk all the more proficiently, and are more condition and warmth safe.

Next to prevent the dairy product price goes to the lower price level, as the similar concept of the minimum wages laws will be shown. However, to make sure the health of economic situation, we also have to prevent deadweight loss occur. A deadweight loss known as excess burden or allocative inefficiency. Demand or supply surplus even demand and supply is not an expected phenomena.

Based on the past studies and observation on the field, we believe that training farmers on adopting a proper feed formulation regime should be priority as to establish a baseline indicator on the issues concerning feed. A training program allows to strengthen those skills that each farmer needs to improve. A development program brings all farmers to a higher level so they all have similar skills and knowledge as others countries.

Recommendations to market players/ policy implication

Firstly, as we can know that milk is can’t last longer and cannot stored in fluid for longer period. The supply of milk is quite constant and increase slightly in the summer months. However, the demand is more difference then the supply will be inversely correlated. It has been argued that government involvement. Government involved can provide the subsidies to the farmer. It is because government can pay the part of the cost of production in good and services, so that the diary industry can be minimize the input cost during the process (Tarver, n.d.).

Beside that, for the supply side, government subsidies can help the industry to produce more goods and services to increase the quantity of demanded good or service (Tarver, n.d.). However, for the consumer side, government can go through the tax credit to help the potential buyers (Tarver, n.d.).

Moreover, Price floors can be affected differently in depending on the government policy (Berman, n.d.). Many government will do this also to prevent some of the company set the unfair low prices of the products (Berman, n.d.). Thus, the government should control the price floor of the dairy products due to the deadweight loss affected. Government can set a minimum and maximum price of the dairy products to make sure that the dairy company won’t set their price in unfairly to everyone. This is because the price range of the dairy products will easily effect the whole markets not only the dairy company’s sales.

Lastly, the training courses are extremely expensive from the existing adult budget (McDonals, 2016). So, the government can come out the free digital skills training to everyone such as farmer, students and etc (McDonals, 2016). As we know that digital economy is very famous nowadays. This also because of the low education and less experiences of the famers, so they can learn more knowledge through the free digital and learn more skills and knowledge. The basic training also can help the farmer to work smarter and gain more experience to their company.