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Dairy Australia Limited—Report for 2018-19


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ANNUAL REPORT

2018-19

Glossary

ADF Australian Dairy Farmers

ADIC Australian Dairy Industry

Council

ADPF Australian Dairy Products

Federation

AGM Annual General Meeting

AOP Annual Operating Plan

CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership

R&D Research and Development

RD&E Research, Development and Extension

RDC Rural Research and Development

Corporation

RDP Regional Development Program

SFA Statutory Funding Agreement

SP Strategic Plan

"One of Dairy Australia's great strengths is that our regional network is embedded and 'in touch' with dairy communities."

Jeff Odgers Chair, Dairy Australia

major export markets tonnes

244,828 t Greater China

9

8,816 t Japan

70,119 t Singapore

61,184 t Malaysia

56,647 t Indonesia

THE AUSTRALIAN DAIRY INDUSTRY

value of farmgate production

$ 4.4 billion

46,200Dairy industry workforce

35%of milk production is exported

annual per capita consumption

98.6 litresmilk 13.5 kgcheese

4thDairy is Australia’s fourth largest rural industry

total annual milk production

8,795million litres

average annual milk production per cow

6,169litres

australian milk utilisation

38% Ch eese

2

8% D

rinking milk

21% S

kim milk powder or

butter

4% W hole milk powder

9%

O

ther

average herd size

276cows

australian dairy farms

5,213

annual production of main commodities

381,111 t Cheese

2

24,107 t Milk powders

73,322 t Butter

australian dairy herd

1.44 millioncows

CONTENTS

01 O verview 1

Chair's report 2

M

anaging Director's report 4

F

Y19 Key achievements

6

02 D airy Australia 1 3

About Dairy Australia 1 4

Strategic priorities 15

03 I nvestment activity 1 7

FY19 revenue 1 8

Funding allocation 1

8

Program investment

1

9

Investment focus

1

9

Australian Government Research,

2

0

Development and Extension Framework

Collaborative investment

2

1

04 C orporate operations 2 3

Our people 2 4

Leadership team 2

6

Corporate governance and compliance

2

8

05 F inancial report 3 9

Directors’ report 4 0

Statement of profit or loss

4

6

and

other

comprehensive income

Statement of financial position

4

7

Statement of changes in equity

4

8

Statement of cash flows

4

9

Notes to the financial statements

5

0

Directors' declaration 7

2

Independent auditor's report 7

3

Auditor’s independence declaration 7

6

06 A ppendices 79

Our FY19 projects 8 0

Recommended conditions of matched

8

2

Australian

Government funding

Our collaboration partners 8

3

Financial contribution to cross-sectional

8

4

collaboration with other Research and Development Corporations

Chair's report 2

Man aging Director's report 4

F

Y19 Key Achievements

6

Overview

01

CHAIR'S REPORT

The 2018-19 season was one of the toughest in recent memory. Persistent, very dry conditions across all regions significantly impacted the cost of key inputs and farm profitability, yet farmers showed their resilience in the face of these challenges. National milk production decreased 5.7 per cent to 8.8 billion litres. The Murray region was hardest hit, with high water prices and

falling production an ongoing concern.

Dairy Australia worked hard to support farmers through a challenging year. A feed shortage planning campaign was launched to help farmers assess the seasonal settings, optimise Spring feed production and quickly mobilise procurement. The combined response of our Southbank and Regional Development Program (RDPs) teams made a real difference at farm level.

Our new Managing Director, David Nation, has provided strong leadership on several key initiatives during his first year in the role. His efforts in reshaping and refocusing Dairy Australia’s functions has supported the delivery of more targeted and tailored services in line with our Annual

Operating Plan.

I’m pleased that our farmer engagement continues to improve

Latest survey data shows nearly two in three farmers (66 per cent) have attended or participated in at least one regional activity or event. This

participation rate has

risen slowly over the past five

years and corresponds

with an improvement in overall

farmer satisfaction

with

engagement. One of Dairy

Australia's great strengths

is that our regional network is

embedded in and 'in touch'

with dairy

communities.

Our major innovation investments in DataGene, DairyBio and DairyFeedbase are hitting milestones and targets. These developments will add significant value over time through increased farm productivity and help keep our

industry globally competitive. Partnering with government and organisations like Gardiner Dairy Foundation in research and development is critically important. Farmer

levies account for approximately one-fifth of total

investment in these three flagship programs.

Maintaining community trust is key to our industry’s social licence and freedom to operate. Trust is built by providing credible and transparent information on all aspects of the supply chain. Based on market research, our Dairy

Matters campaign targeting opinion formers is

hitting the

mark.

The cumulative impact of several tough years has undoubtedly taken a toll on the industry and the Australian Dairy Plan process is very timely. Dairy

Australia

has played a key organisational role in the plan alongside Australian Dairy Farmers, Australian Dairy Products Federation and Gardiner Dairy Foundation, and is fully committed to supporting its fundamental aim of creating a more profitable, confident and united industry. The

partner organisations are working well together and

the level of engagement across industry, particularly through regional and July’s national workshops, has been

outstanding.

The big issues at stake are well summarised in the Australian Dairy Situation Analysis report produced by Dairy Australia and the partner organisations. It shows how the market — in terms of global competition, the supply chain and consumer trends — has evolved faster than our industry. The profitability of dairy farming has also become more volatile and increased risk management skills are required. There is a widespread shortage of skilled labour. Industry structure is another area where we can make improvements. There are also plenty of opportunities for the industry, built on continuing strong demand for dairy products in Australia and around the world.

Dairy Australia’s next strategic plan was put on hold pending the outcomes of the Australian Dairy Plan. The

consultation process for the plan has clearly identified key priorities for the industry and we look forward to supporting the recommendations of the resulting report once published.

2

This year will see an element of renewal in our Board elections a s we farewell Jan West. On behalf of the Board I would like to thank Jan for her contribution since she became a Director in 2014 and for her effective Chairing of

the Audit and Risk

Management Committee.

I would like to thank all Directors for their ongoing efforts. Their experience and perspective are valued.

This year’s Annual General Meeting will be held in Gippsland in order to make it easier for farmers to attend. This will also allow us to showcase the contribution of this important region, while highlighting progress with several national research and development programs.

Jeff Odgers Ch air

Dairy Australia A nnual Report 2018-2019 3

MANAGING DIRECTOR'S REPORT

The Annual Report provides an overview of Dairy Australia’s key achievements, during what was an exceptionally challenging season for the industry.

For the first time we have also produced a separate Performance Report with detailed information on our programs and investments. This level of transparency helps to show the value that Dairy Australia provides to our industry — not only today, but in setting it up for future

success.

We worked hard to support farmers through the extremely dry conditions experienced in most dairying regions during 2018-19

The feed shortage campaign was rapidly activated early

in the season, as feed availability and pricing became an increasing concern. We collaborated closely with our network of eight Regional Development Programs (RDPs) to provide a national level response with

regional specific

delivery.

Our on-the-ground support included 546 one-on-one Taking Stock sessions where trained advisors worked with farmers on decision making during this challenging time. We also helped organise discussion groups for farmers to connect and share common problems and increased promotion of the monthly Hay & Grain Report to provide farmers with comprehensive information on commodity prices and trends.

Our Farm Profit & Capability team has been focused on

program support delivered on the ground by our

RDPs.

We invested over $5 million into RDPs to provide local, relevant and accessible services such as field days, discussion groups and focus farms across Australia. Across the eight regions, our extension staff hosted over

1,000 farmer facing events.

This team has supported the continued roll-out of our

DairyBase, Dairy Farm Monitor, irrigation for profit (across-RDC Rural R&D for Profit program) and Advanced Nutrition in Action programs. I am confident that the insights offered by these programs to individual farms can make a significant contribution to their ongoing success.

I’m very excited that the ‘Our Farm, Our Plan’ initiative will launch in the coming year, with the objective of

supporting every dairy farm in Australia to have a high-quality business plan. It uses a simple planning process that involves all the decision makers in a farm business, creating a plan that everyone owns, can be shared and used to track progress.

Attracting newcomers to the industry and capability building remain big focus areas. During the past year we

rebuilt our Discover Dairy schools program, increasing the variety of resources to drive dairy education in the

classroom. We also redeveloped our flagship program Picasso Cows, reducing costs and increasing reach. Our Cows Create Careers program was delivered to over

14,000 students in 259 schools, involving 535 volunteer farmers and industry advocates. This is a highly regarded program with dairy farmers making a big contribution to its

continued success.

During the past year we’ve built a new Learning and Development team to better address the skills gap in the industry and drive on-farm adoption of the newest technologies and best practice. Our Young Dairy Network connects young people in the industry and helps them develop the skills they need to further their

careers.

This

very successful initiative currently supports around 2,500 young farmers across Australia. This year, 11 young people will complete the pilot of our personal and professional development program, DairyPath, deepening their industry and farm knowledge and developing critical technical skills.

We maintain strong national and international research collaborations and commercial partnerships, leveraging dairy farmer levies by co-investing with others and supporting world-leading innovation and R&D happening within these flagship investments in collaboration with our joint venture partners Agriculture Victoria and the Gardiner

Foundation.

4

Our investment in DataGene has fostered a cohesive herd improvement sector and enabled Australia to reap the benefits of selecting genetics suitable for Australian farming conditions. This was a major milestone year, with DataGene implementing a new and improved computing infrastructure for genetic evaluation. This

ensures Australian

evaluations are quick, accurate and world-class and can respond to the needs of the herd

improvement sector.

Our investment in DairyBio continues to develop important new breeding tools for pastures and cattle. New breeding lines for hybrid ryegrass were established, the first genome-edited plants for increased feed quality

were bred, and new tools to improve breeding outcomes developed. Continual improvement in the reliability of cattle breeding values was also achieved.

DairyFeedbase was launched last year to fast track our ability to improve the practical management of agronomy and nutrition. Highlights from the past year include remote measurement of pasture, and rapid development in our ability to measure pasture quality as well as quantity. At Ellinbank in Gippsland, we also saw early indications that gains could be made by early

lactation feeding of cattle.

Our Trade and Strategy team has made a valuable contribution to the industry in the past year including to the development of every piece

of legislation or policy related

to dairy. This

includes significant work advising on

water

policy, the development of the industry’s response to proposed EU regulations on Geographic Indications, policy development for the Dairy Industry Labour Agreement, review of health star ratings and food waste. The team also continued to provide a valued range of

data reports,

including Situation and Outlook, monthly milk production reports and In Focus. The dairy industry continues to have an unparalleled analysis of the dairy supply chain, when compared with all other agricultural sectors. I acknowledge the support of businesses across the whole dairy supply chain in supporting our efforts to

produce valuable

analyses and

insights.

We continued to play a lead role in the dairy industry’s Sustainability Framework, leading the process to set goals and targets for sustainable production by 2030 and to present an annual report of progress against the

industry’s

current targets. We have also collaborated on a cross-commodity basis to support the development of their sustainability frameworks and learn from their

experiences.

Farmers are seeking a greater focus on marketing and promotion to support a better understanding of our industry and benefits of dairy products. At the same time, socially conscious consumers want to know more about the food they are consuming and the way it is produced to ensure this aligns with their values.

In April, we launched a new marketing and promotion campaign, called Dairy Matters, which is a major part of the $4 million invested annually on marketing and

promotion activities. The focus is to build trust through transparency by providing factual information about dairy product and practices. The campaign has been well

received by consumers and farmers.

We have been active in responding to climate change and the environment. This includes securing funding from the Federal Government under the Smart Farming Partnership to build a Natural Capital and Climate Risk reporting tool for dairy. We’ve also gained funding from the Australian Packaging Covenant Organisation for the development of an industry-led strategy on sustainable packaging.

I’m proud of the significant role Dairy

Australia has played in

supporting the development of

the

Australian Dairy Plan

Our people from Southbank and all eight regions provided assistance to the plan organisers and helped facilitate engagement with over 1,000 people. The plan will inform the future shape and strategies of organisations that lead and serve the dairy industry, including Dairy Australia.

During the past year we’ve been focused on reshaping Dairy Australia’s operations to improve how we evaluate and report on each investment, foster more collaboration across the organisation, and implement a new Human Resources strategy. There have also been structural changes in the Farm Profit and Capability, Business Operations and Human Resources teams. I’d like to recognise the work of all our people over the past year and their dedication to deliver quality programs for the dairy industry in what has been a challenging year. I’d also like to recognise the significant contributions of Ian Halliday, Chris Murphy and others who finished with Dairy Australia in the last year and made substantial contributions over many years.

Dairy Australia continues to have an active program of investment and activities that advance the dairy industry, which is made possible through the investment of farmer levies, the support of the Federal Government in matching investment in research and development, and in the many partners who support our work. The Board and I are grateful for this support, and we will continue to focus our efforts on rebuilding the profitability and confidence of the industry.

David Nation M anaging Director

Dairy Australia A nnual Report 2018-2019 5

Engaged and inspired 2,500

people through the Y

oung Dairy Network.

FY19 KEY ACHIEVEMENTS

Continued collaborative investments with other Research and Development Corporations and research partners to address shared challenges and leverage research findings.

Achieved yield increases of 20% through DairyBio

Hybrid

Perennial

Ryegrass trials.

Continued to play lead role in the dairy industry’s Sustainability Framework, setting goals and targets for sustainable dairy production by 2030, alignment with

the United

Nations Sustainable

Development Goals and published a

report of the industry’s

progress.

Achieved 99% compliance to an industry target for completely phasing

out

calving induction by 2022.

Delivered year one of DairyFeedbase investment, achieving rapid development in measuring pasture quality

and quantity.

Contributed to the development of other industries sustainability frameworks, both nationally and

internationally.

Registered additional dairy farmers and advisors on the farm business performance tool DairyBase, taking the total number of users to 2,470

farms.

6

Responded to immediate industry challenges during a tough year through the implementation of the Feed Shortage campaign, a

multifaceted response to support farmers. Delivered 546

one-on-one

consultations with farmers through the Taking Stock program.

Dairy Australia A nnual Report 2018-2019 7

8

FY19 KEY ACHIEVEMENTS

Enhanced promotion of dairy across key Asian markets through a joint commodity market development program with Meat & Livestock Australia, Horticulture Innovation Australia, Wine Australia and

Austrade.

Identified and responded to four emerging material sustainability risks — sustainable dietary nutrition, antimicrobial stewardship, food waste and human rights.

Delivered flagship market analysis report Situation

and Outlook, reaching over 8,000 direct recipients, 1,000 website views and 13,400 social media users.

Invested $5 million into Regional Development Programs to provide local, relevant and accessible services to dairy farming

communities.

Delivered significant project with DataGene implementing a new and improved computing infrastructure for genetic

evaluation.

Published Dairy Farm Monitor results for 230 farms across all 8 regions, providing strong analysis and insights into farm performance across different regions and herd sizes.

Delivered Cows Create Careers to 259 schools, reaching over 14,000, and involving 535 volunteer farmers and industry advocates.

Delivered the DairyPath program enabling young people to tailor their learning pathway and maximise their potential in

the dairy industry.

Launched a new consumer marketing program Dairy Matters, to build trust in dairy through transparent information on product and practices. 78%

of

the

socially conscious target

audience

‘feel more supportive of the dairy industry’ as

a

result

of the campaign.

Played a critical role in supporting the development of the Australian Dairy Plan, recognising the need for the industry to deeply engage and set out priorities for the

next

five

years.

Dairy Australia A nnual Report 2018-2019 9

FY19 KEY ACHIEVEMENTS

Established a Learning and Development team to deliver training needs and technical information for people on-farm, in-factory and to support services, helping drive

on-farm adoption.

Established the DairyLearn partnerships network to deliver vocational training through registered training

organisations.

Delivered the redeveloped Picasso Cows schools education program to 130 primary schools, reducing costs by 78%.

Delivered over 1,000 farmer facing events, reaching 6,100 people - to increase knowledge, develop skills and connect with dairy communities.

Secured funding from the Federal Government under the Smart Farming partnership to build a Natural

Capital and Climate Risk reporting tool for

dairy.

Piloted ‘Our Farm, Our Plan’ program that provides strategic planning and risk management support for farmers.

Enhanced relationships in key markets of Japan, China and South East

Asia. 55 participants

in scholarship programs and 860 attendees at in-market seminars.

Played a critical role in all major policy discussions informing the decision-making process on key areas including Free Trade Agreements, Geographical Indicators, climate change, water, animal welfare and

gene technology.

Redeveloped the Discover Dairy online resource hub to increase accessibility, usability and drive increased dairy education in primary school classrooms. Over

159,000 page

views and 14,000

resource

downloads in

first six

months.

10

Dairy Australia A nnual Report 2018-2019 11

About Dairy Australia 1 4

Strategic priorities 1

5

Dairy Australia

02

ABOUT DAIRY AUSTRALIA

We are the national services body for the Australian dairy industry, funded by a combination of levies paid by dairy farmers and matching payments from the Commonwealth Government for eligible research and development (R&D) activities.

Our purpose is to support the profitability and sustainability of dairy farming. We work closely with our levy payers and other important stakeholders to

understand their needs and shape our investment priorities. We provide practical tools, services and advice to assist farming operations and the dairy supply chain. Our investments in innovation are focused on increasing farm productivity and the global competitiveness of

our

industry.

People are at the heart of everything we do

This includes attracting people to the industry, building s kills, providing insights, informing policy formation and trade relations, promoting the benefits of dairy to consumers and meeting community expectations on issues such as

environmental impact and animal welfare.

Our structure comprises a head office in Melbourne which

supports on the ground delivery of services by eight Regional Development Programs (RDPs) located

in dairy regions across the country.

We work closely with a wide range of industry, government and research organisations to advance the interests of dairy farmers. This includes Australian Dairy Farmers (ADF), state dairy farmer organisations, Australian Dairy Products Federation (ADPF), the Gardiner Dairy Foundation, state and federal Governments, other Rural R&D Corporations (RDCs) and University research bodies. Our partnership funding arrangements with these organisations in major industry investments maximises the

value of the dairy levy.

14

STRATEGIC PRIORITIES

Strategic Priority - focus/scope Strategic Programs

1 P rofitable dairy farms

Pre-farmgate activities that contribute directly towards improving farm profitability by balancing cost of production, risk and total return on investment. The majority of this activity is productivity improvement-oriented R&D, best practice identification and subsequent program development.

• A nimal Health, Welfare and Fertility

•

G

enetics and Herd Improvement

•

F

arm Business Management

•

F

eedbase and Animal Nutrition

•

A

gTech and Innovation

•

L

and, Water and Carbon

•

I

nternational Market Support

•

M

anufacturing Margin Improvement

Post-farmgate activities are focused on improving farmgate sustainability and opportunities through supply chain cost reductions or improved conditions in key international markets.

2 C apable people

Programs that enhance the capability of industry participants, including extension services (which assist the adoption of

R&D through activities that educate

and inform or develop

capacity to adopt change). This

includes education and

training activities, attracting people to the sector and assistance with career transitions.

• R egional Operations and Extension

•

P

eople and Capability

3 T rusted dairy industry

Activities that have a strong focus on maintaining the industry’s long-term ‘social licence to operate’ including:

•

m

arketing and communications to build consumer trust and

confidence in dairy products and the industry

•

i

nforming industry and government policy development with

industry insights and research

•

c

ollecting, analysing and distributing sector statistics and

information for the benefit of industry stakeholders

•

m

aintaining the sector’s Sustainability Framework which sets and measures goals around sustainability credentials.

• I ndustry and Community Marketing

•

I

ndustry Risk and Reputation Management

•

Kn

owledge and Insights

To achieve our core business objectives, Dairy Australia annually develops and reviews a set of strategic priorities, which guides our investment activities. A

complete

list of

our FY19 projects can be found in Section 6 - Appendices.

Dairy Australia A nnual Report 2018-2019 15

FY19 revenue 1 8

Funding allocation 1

8

Program investment

1

9

Investment focus

1

9

Australian Government Research, 2

0

Development and Extension Framework Collaborative investment

21

Investment activity

03

FY19 REVENUE

Dairy Australia’s revenue is obtained primarily through the dairy service levy and Commonwealth Government funding for eligible Research, Development and Extension (RD&E) activities.

The dairy service levy is deducted from payments made to farmers by milk processing companies which are then remitted to the Australian Government. In FY19, the rate of milk levies was 2.8683 c/kg milk fat and 6.9914 c/kg protein. Based on national average milk composition, these combined levies were equivalent to approximately 4.7302 c/kg milk solids.

A Statutory Funding Agreement (SFA) between Dairy Australia and the Commonwealth Government of Australia (Commonwealth) includes the terms for the Commonwealth’s provision of contributions which match the industry levy to a maximum of 50% of the gross annual milk production by the Australia dairy industry for eligible R&D activities.

The Commonwealth’s important contribution of funds reflects the benefits of the agriculture industry including dairy to the Australian public and economy. Rural research and development corporations such as Dairy Australia are the mechanism by which dairy farmers and the Commonwealth co-invest in research and development for community and industry benefits.

Revenue 2019 ($’000) 2019 (%)

Dairy service levy 30,936 56

Government matching payments 20,058 36

External contributions 2,820 5

Interest revenue 394 1

Distributions from investments 147 1

Royalties 138 -

Other income 520 1

Total revenue 55,013 100

FUNDING ALLOCATION Project expenditure

SP 3 20%

SP 2 26%

SP 1.2 4%

SP 1.1 50%

Strategic Priority 1

Pre-farmgate activities

Funding allocation ($'000) 29,178

Post-farmgate activities

Funding allocation ($'000) 2,333

Total funding allocation ($'000) 58,789

Strategic Priority 2

Funding allocation ($'000) 15,555

Strategic Priority 3

Funding allocation ($'000) 11,722

Dairy Australia maintains a balanced portfolio of RD&E investments which is achieved by investing:

•

o

ver different time horizons including both long-term and short-term initiatives

•

i

n response to critical short-term issues e.g. feed shortage

•

i

n projects following thorough consideration of the

benefits (benefit-cost ratio) and risks

•

t

o maximise other funds while managing our risks i.e. with Universities, Ag Vic and the Gardiner

Foundation

•

i

n projects that consider research, development and

extension activities and recognising the importance of

rolling our successful research to the industry

•

i

n projects with other RDCs to address similar problems that farmers face and agricultural wide industry issues

•

i

n strategic initiatives to achieve long-term benefits for

the dairy industry.

18

PROGRAM INVESTMENT How funding is allocated across Dairy Australia’s strategic programs

Industry risk and reputation management

Industry and community marketing

People and capability

Regional extension services

Animal health and fertility

Genetics and herd improvement

Farm business management

Feedbase and animal nutrition

Land, water, carbon

Farm systems and modelling

International market support

Manufacturing innovation and sustainability

Knowledge and insights

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

SP1.1 Profitable dairy farms - pre-farmgate SP1.2 Profitable dairy farms - post-farmgate SP2 Capable people SP3 Trusted dairy industry

INVESTMENT FOCUS Triple bottom line allocation

Economic 54%

Environmental 16%

Social 30%

Time horizon to achieve project benefits

Achieved within 48% two years

Achieved from 20% two to five years

Achieved after 32% five + years

Dairy Australia A nnual Report 2018-2019 19

AUSTRALIAN GOVERNMENT RESEARCH, DEVELOPMENT AND EXTENSION FRAMEWORK

Our investments support the achievement of the Australian Government’s Science and Research priorities and Rural Research, Development and Extension (RD&E) priorities.

In FY19, approximately 80 per cent of our expenditure was directed towards activity that qualified as RD&E under government matching funding criteria.

Rural RD&E priorities FY19

Biosecurity 1%

Minimise biosecurity threats, improve management of pests and diseases, and maintain or improve market access

Soil, water and managing natural resources 19% Improve resilience to climate events and impacts, improve water use e*ciency, sustainably manage production systems and manage soil health

Advanced technology 39%

Enhance innovation through technologies such as genetics, precision agriculture, robotics, digitisation and big data

Adoption of R&D 41%

Delivery of extension services that meet dairy farmers’ needs, directly and in partnership with private service providers

Science and research priorities FY19

Environmental change 8%

Build capacity to respond to environmental change and integrate research outcomes from biological, physical, social and economic systems

Soil and water 13%

Build capacity for improved accuracy and precision in predicting change to inform better decision-making

Food 79%

Maintain Australia’s reputation for clean, safe and quality-controlled dairy production

20

COLLABORATIVE INVESTMENT

We collaborate extensively with a range of Australian and international partners to deliver innovation and value to Australian dairy farmers.

Our partners include universities, state and federal governments, RD&E organisations, agricultural industry agencies and non-government organisations. Further

detail can be found in Section 6 - Appendices.

In FY19, we collaborated with all 15 RDCs through Rural

R&D for Profit projects, via other cooperative project activities and through participation in the Council of

Rural R&D Corporations.

During FY19, we continued our collaborative investment with the Victorian Government and Gardiner Dairy Foundation in DairyBio and DairyFeedbase, aimed to

help farmers improve pasture production, utilisation and herd nutrition. We also signed a Memorandum of Understanding with University College Dublin which is currently undertaking research in maximising milk production using pasture and supplements. A

Memorandum of Understanding was also renewed with DairyNZ, enabling collaboration on a range of projects including DairyBio, Pastoral Genomics and the sharing of information in the Farm Business Management and

farm skills areas.

Other collaborative investments included working with the Tasmanian Institute of Agriculture (TIA), the

Queensland Department of Primary Industries, GRDC, MLA, AWI and AgriFutures Australia on a range of feedbase and animal nutrition projects including the Pasture Genebank. In FY19 we also partnered with the University of Melbourne in initiating the Dairy

Vet

Residency Program and continued to invest in the Western Dairy Hub with the Department of

Agriculture

in Western Australia

In FY19, Dairy Australia financially contributed $500,180

(not including in-kind contributions) to cross-sectoral collaboration. (see Section 7.3 - Appendices for

details).

Dairy Australia A nnual Report 2018-2019 21

Our people 24

L eadership team 2

6

Corporate governance and compliance

2

8

Corporate operations

04

OUR PEOPLE

Through the collaborative and committed efforts of our skilled, motivated people we are able to meet the needs of our farmers, stakeholders and industry.

Achievements • A s trategic review of Human Resources (HR) has led to

a redefined team, with changed leadership, priorities and culture — the aim of which is to support, positively influence and ultimately help shift the organisation’s approach to servicing our stakeholders.

•

D

airy Australia underwent a redesign of the Farm Profit

and Capability (FPC) and Business and Organisational Performance (BOP) teams to address the way we

work. This led to significant structural changes in

April. While

a

significant upheaval, the

objective is to ultimately provide more targeted products and

services and generally better outcomes for the

dairy

industry.

•

Gr

owth and development opportunities were plentiful across the organisation as a result of the restructure or staffing changes throughout FY19. More than 18 internal promotions or role changes occurred resulting in positive outcomes for organisational innovation and

efficiencies and ultimately benefiting our stakeholders.

•

R

eimagined and rolled-out flexible working at Dairy

Australia which has been embraced by the

organisation. This resulted in positive outcomes for

employee engagement, motivation and productivity, gender equality, retention of top talent, and access to regional talent; with some employees choosing to divide their time between multiple offices.

Key workforce data Dairy Australia’s decentralised model provides service, support and investment in relevant regional communities, while ensuring the organisation operates at maximum effectiveness and in

the best interests of farmers.

Total headcount FTE

174 143.7

Above statistics as at 30 June 2019

Regional Development Program employees — supported by Dairy Australia

Location Headcount FTE

GippsDairy 10 9.0

Murray Dairy 16 11.0

Dairy NSW 11 6.3

DairySA 5 2.7

Subtropical Dairy 6 3.5

DairyTas 6 3.4

WestVic Dairy 10 9.3

Western Dairy 6 4.5

Total 70 49.7

Above statistics as at 30 June 2019

174 40% 67% 57% 33%

people are based in

regional areas

women women at

executive level

women at Board level

24

Communications Planning and Content Manager Dairy Australia

"It’s critical that we’re reaching our farmers and other stakeholders with communication that is relevant, in a

way that resonates with them."

Rene Borggreve is Dairy Australia’s Communications Planning and Content Manager. He leads the communications team in planning and creating content, and the design team in producing high quality collateral and resources. Despite being new to Dairy Australia, Rene

is not new to the industry having worked most recently at Fonterra Australia as the Marketing Manager Farm Source where he was committed to understanding farmers and translating their insights into valuable propositions. Prior to Fonterra, Rene was building his knowledge and experience in consumer marketing roles across food and beverage and fast moving consumer goods in Australia, Switzerland and his home country, the

Netherlands.

Rene has had an immediate impact at Dairy Australia. With a focus on pursuing and nurturing a collaborative mindset and one-team approach, Rene has created a consistent and structured way of planning content and continuously improving the way we interact with farmers and other industry stakeholders.

He also believes that to have the best impact for our farmers and industry stakeholders, respect and active listening is absolutely critical to being able to effectively communicate to our farmers

Regional Manager Murray Dairy Regional Development

Program

"My role is to support farmers in the Murray Dairy region, working together to deliver practical solutions

and

communicating the

priorities and

challenges of

the

region to stakeholders."

Jenny Wilson joined Dairy Australia as the Regional Manager for Murray Dairy RDP having worked across the

various aspects of agriculture including research, policy and extension.

She’s led state and national projects on farm planning, drought policy reform and environmental management systems

Jenny now leads a team who deliver practical and regionally relevant research, development, extension and education services

to the dairy industry across the Murray Dairy region of northern Victoria and southern NSW.

For Jenny, collaboration is key. Her role is integral for highlighting regional issues, opportunities and priorities with the aim of applying collaborative approaches and solutions. She successfully developed a three-year

project funded through Regional Development Victoria that provides $1 million to the Victorian RDPs to deliver activities which increase the engagement of students with the dairy industry. This spirit of collaboration with government and industry also led to the development of Future Focus, a whole of industry strategy for dairy

in

the Murray region. The strategy has been instrumental in supporting conversations with government as the industry responds to current seasonal challenges on feed

shortage, water affordability and land use changes.

Rene Borggreve Jenny Wilson

Dairy Australia A nnual Report 2018-2019 25

LEADERSHIP TEAM

Our Leadership Team is responsible for our day-to-day activities and ensuring we deliver against the performance targets set out in our strategic and operational plans.

David leads Dairy Australia and is Managing Director. In a career in dairy spanning 20 years, David

brings extensive experience across the sector, including leading roles in a number of key dairy innovation pipeline projects. He has a background in agricultural science and has fulfilled various commercial and technical roles in the animal breeding and herd fertility service industries. Prior to joining Dairy Australia in 2018, David was Co-Director of DairyBio and DairyFeedbase, and Chief Executive Officer of the Dairy Futures Cooperative Research Centre.

Dr David Nation M anaging Director BSciAg (Hons) PhD,

Grad. Cert Bus Mgmt, GAICD

Charlie leads the Trade and Industry Strategy team at Dairy Australia and is responsible for facilitating profitable international trade of Australian dairy products and providing information, analysis and market intelligence to the Australian dairy industry. Charlie has a long history of working within the agriculture and food sector in areas related to policy, advocacy and informing decisions related to the market dynamics. Charlie came to Dairy Australia from the National Farmers Federation (NFF), where he was the General Manager of Policy. Apart from overseeing all policy activities of the NFF, he also took primary carriage of the organisation's advocacy in the Economics and Trade portfolios.

Charlie McElhone G roup Manager - Trade and Industry Strategy BAgrEc, GDip (International Business), MBA, GAICD

Peter leads the Farm Profit and Capability Group, which invests in research, development, extension and education activities to support the profitability, sustainability and competitiveness of Australian dairy farmers. He was previously the Program Leader of the Feedbase & Nutrition portfolio. Peter has a broad range of Agribusiness experience, coming to Dairy Australia from the Pasture Seed Industry where he was the National Sales and Marketing Manager of a large seed company and led a strong period of growth combined with a number of business acquisitions and integrations. Peter has worked for Rabobank, was an Agricultural Advisor in the Falkland Islands and worked in extension for NSW Agriculture delivering courses including Top Fodder and ProGraze.

Peter Johnson Gr oup Manager - Farm Profit and Capability BSciAg MBA

Elizabeth leads the Business and Organisational Performance Group which includes Strategy and Corporate Planning, Portfolio Management Office, Finance, Information Technology, Company Secretariat, Legal and Risk Management. Elizabeth has over 25 years’ experience in senior management and corporate advisory roles in KPMG and Lander & Rogers. She has a strong record of achievement in roles including as a corporate finance director and chief operating officer. Elizabeth has broad board experience and has served as a director on multiple boards and the chair of audit and risk committees.

Elizabeth Parkin Gr oup Manager - Business and Organisational Performance BBus, FFin, CAANZ, FINSIA

26

Kendra leads the Marketing and Communications Group which includes consumer marketing, corporate and farmer communications, digital and design. Kendra has over 15 years’ experience in marketing, corporate communications and public relations (PR), most recently as a Marketing Manager with Coles

Express. Prior to that, she held senior management roles at Bakers Delight Holdings, including

General Manager Marketing, Group Marketing Manager and Group Corporate Communications

Manager. Kendra

has been responsible for entire portfolios spanning brand

advertising, marketing, product development, PR, media relations, stakeholder communications and

engagement, issues and crisis management, and internal/external communications.

Kendra Campbell Gr oup Manager - Marketing and Communications BBus (Marketing)

Helen leads the Sustainability team at Dairy Australia including Food Safety and Integrity. She has a long history in the dairy industry having worked previously for CSIRO, the Australian Dairy Industry Council and the Australian Dairy Products Federation on research, development and extension strategies, issues management, supply chain, regulatory standards, policy frameworks, export facilitation, sustainability and international work including the development of International Dairy Federation/Food and Agriculture Organisation guides. As part of her role, Helen works with the Global Dairy Sustainability Framework and the Sustainable Agriculture Initiative.

Helen Dornom M anager - Sustainability including Food Safety and Integrity BAgrSc (Hons), GAICD

Imogen leads the HR team at Dairy Australia bringing over 10 years’ experience to the role. She has previously worked in a variety of industries including engineering, consulting, media/technology and property development. Imogen also brings specialist experience in HR Analytics, HR Technology and Employment Relations. Prior to joining Dairy Australia Imogen led the HR function at Caydon Property

Group.

Imogen McBain M anager - Human Resources MCom (HR) BAppSc (Psychology)

Dairy Australia A nnual Report 2018-2019 27

CORPORATE GOVERNANCE AND COMPLIANCE

Dairy Australia is committed to an effective system of corporate governance to transparently demonstrate its performance and accountability to members, levy payers, Government and other stakeholders.

Dairy Australia is an unlisted public company limited by guarantee. As the industry services body under the Dairy

Produce Act 1986 (Cth), Dairy Australia operates within a corporate governance framework consisting of:

•

D

airy Australia’s Constitution

•

A

ustralian Charities and Not-For-Profits Commission Act 2012 (Cth)

•

S

tatutory Funding Agreement with the Commonwealth of Australia

•

O

ther relevant laws such as the Corporations Act 2001

(Cth)

Statutory Funding Agreement Dairy Australia entered into the current Statutory Funding Agreement (SFA) with the Department of Agriculture and Water Resources on 26 June 2017 for a term of four years. The SFA is the agreement under which the Commonwealth agrees to pay the dairy service levy funds from dairy farmers to Dairy Australia, together with government matched payments. The SFA also sets out:

•

c

orporate governance and board requirements

•

r

equirements for a review of performance against the

agreement

•

m

anagement and application of the funds in accordance with Commonwealth guidelines

•

c

onsultation requirements with levy payers, members and the Commonwealth

•

r

eporting requirements of Dairy Australia including Strategic Plan, Annual Operational Plan, Evaluation

Framework

•

r

isk management requirements including a risk management plan, compliance audit and certification

reports.

The last external review of Dairy Australia’s performance against the SFA was conducted in 2017. All key improvement actions have been implemented by Dairy Australia from this review including performance dashboards, improvements to the annual report, improved marketing and promotional activities and enhanced communications to levy payers. The next independent assessment of compliance with the current SFA will occur in 2020.

Constitution Dairy Australia’s constitution includes:

•

t

he objects (purpose) of the company

•

m

embership eligibility criteria and voting rights

•

co

nsultation processes with members

•

p

owers of the board

•

c

omposition and selection of board members and

committees.

The Constitution and SFA are available on our website.

Membership Under the Constitution, there are two classes of members:

•

G

roup A members: dairy farmers who pay the dairy services levy and elect to become members. Group A members have voting rights on resolutions and director

appointments.

•

G

roup B members: bodies that represent the Australian dairy industry and currently consists of the Australian Dairy Farmers and Australian Dairy Products

Federation.

Group B members do not have voting rights but can move resolutions at general meetings.

While not a listed company, DA draws on best practice corporate governance guidelines such as the ASX Corporate Governance Principles and Recommendations. A report against the 3rd edition of the Principles and Recommendations for FY19 is on the following pages.

28

Dairy Australia A nnual Report 2018-2019 29

Lay solid foundations for management and oversight

The roles and responsibilities of the Board are set out in detail in the Board Charter, which is available on our

website.

More specifically, the Board’s responsibilities include:

•

op

en and transparent accountability to all stakeholders, particularly Group A and Group B members, non-member levy payers and the Australian

Government

•

r

eviewing, approving and monitoring progress against the strategic direction and financial objectives of Dairy

Australia

•

o

verseeing investment of the levy, government matching payments and other funds in essential activities across the dairy supply chain including research, development, extension and industry services aimed at enhancing the sustainability and profitability of the dairy industry

•

appr

oving the operating budgets, major capital expenditure and monitoring capital management ensuring a corporate governance framework is in place and effective monitoring of compliance and performance to ensure high standards of corporate

governance

•

c

onsidering the social, ethical and environmental impact of Dairy Australia’s activities

•

e

nsuring risks are assessed and strategies in place to

manage them

•

e

ncouraging dairy levy payers to join as Group A members

•

e

nsuring there are adequate resources to meet Dairy

Australia’s objectives

•

app

ointing the Managing Director, monitoring and reviewing his/her performance and overseeing succession planning.

Dairy Australia has a formal document in place called Delegated Authorities, which sets out financial delegations to management and the Board receive reports from management at each Board meeting with respect to their

implementation.

In accordance with the Board Charter, each Board member participates in an annual review process which is based on the results of a peer assessment. A more extensive Board and Board committee performance review is undertaken every three years and is facilitated by an external specialist. The next review will be undertaken in 2021.

The last Board performance review in 2018 highlighted a well-functioning board and recognised the diverse skillsets of Board members. A number of improvements have been implemented including:

• e arlier engagement on strategic planning which

has been facilitated by focus on the industry-wide Australian Dairy Plan

•

m

ore targeted engagement to different stakeholders which has been addressed with improved communication materials

•

i

mprovements to the quality of performance monitoring and reporting.

The Board has established three standing committees that assist in discharging its responsibilities:

•

A

udit and Risk Management Committee

•

H

uman Resources Committee

•

Bo

ard Selection Committee.

Each committee has a Charter setting out its roles and responsibilities. These are available on our website. The frequency of board meetings is outlined in Section 5.

The Board Selection Committee:

•

u

ndertakes background checks on Board nominees

•

p

rovides written reports to the Board regarding the Board selection process

•

a

ssesses the skill requirements needed for the Board to adequately fulfill its responsibilities

•

ad

vertises Board position vacancies caused by director retirement and engages an executive recruitment firm to assist in identifying relevant candidates

•

a

ssesses the candidates for each of the advertised vacancies and recommends a candidate for each vacant position

•

pr

ovides information to assist members make director appointments at the Annual General Meeting.

The key terms and conditions applicable to the appointment of new directors are contained in a letter of appointment. Further details on the Director selection process are included in Principle 2.

PRINCIPLE 1

30

Structure the Board to add value

An effective Board is crucial to achieving company and industry objectives. Our

Board is structured to ensure it:

• h

as the skills and experience necessary to deal with current and

emerging

dairy industry issues, and

• c

an conduct effective and independent reviews of management performance and decisions.

As at 30 June 2019, the Board comprised eight non-executive Directors (including the Chair) plus the Managing

Director. The skills, experience and expertise of

each Director are set out in more detail in the Directors’ report (Section 5 — Financial report).

The Board skills matrix is used as a basis for identifying the skills and experience required of the Board as a whole and is reviewed annually. This includes skills reflective of all aspects of the dairy supply chain, and the Dairy Australia Constitution requires that the Board must have four milk producer Directors. The Board skills matrix is available on our website.

Every year, each Director completes a self-assessment against the skills matrix. The results of this exercise are then

used to assist in the development of:

•

ac

tions and training requirements for individual

Directors

•

t

he specifications for any Director vacancies arising that year on the Board.

The Constitution provides for three-year terms for non-executive Directors, capped at a maximum of three terms (nine years). At each Annual General Meeting, Dairy

Australia’s Group A members elect Directors to fill Board vacancies created when Directors retire by rotation.

The Board Selection Committee comprises two representatives from each of the Group B members and one representative from the Board and is a standing committee appointed by the Board approximately every 12 months. The Board Selection Committee for 2019

comprised:

•

D

avid Lord (Chair and Dairy Australia representative)

•

S

imone Jolliffe (ADF nominee)

•

V

ictoria Taylor (ADF nominee)

•

P

eter Stahle (ADPF nominee)

•

S

teve Oldridge (ADPF nominee). Once elected to the Board, all Directors participate in an induction program tailored to their specific learning needs. The Board’s continuing education program is reviewed and updated on a periodic basis and is overseen by the Board Human Resources Committee.

The Board recognises that the relevant skills and experience requirements for Directors might, at times, lead to a potential conflict of interest for a Director. Each Director is required to disclose all interests, positions and relationships that may bear on his or her independence prior to being appointed to the

Board.

This disclosure is updated and shared with other Directors prior to each Board meeting. Our Policy on the Independence of Directors details a process for dealing with conflicts

of

interest once declared. The Policy on the Independence of

Directors is available on our website.

PRINCIPLE 2

Dairy Australia A nnual Report 2018-2019 31

PRINCIPLE 3 PRINCIPLE 4

Safeguard integrity in corporate reporting

Our Audit and Risk Management Committee assists the Board in fulfilling its responsibilities in relation to:

•

fi

nancial reporting and policies to ensure the balance, transparency and integrity of published financial information

•

e

nsuring the effectiveness of the internal control and risk management systems

•

p

rocesses for monitoring compliance with legislative requirements, internal policies and expectations of key stakeholders

•

i

nternal and external audit functions, including appointment and assessing the performance of internal and external auditors

•

m

anagement of investments including review of investment strategy and monitoring performance.

Members of the Audit and Risk Management Committee are appointed at the first Board meeting of each calendar year and are selected on the basis of their skills and experience they bring to the committees.

In FY19, the Audit and Risk Management Committee comprised three non-executive Directors plus the Board Chair who attended meetings in an ex-officio capacity. The chair and a majority of the Committee members are independent. The Charter for the Audit and Risk Management Committee requires that all members of the Committee be financially skilled, with at least one member having advanced accounting and financial expertise, and at least one member having a strong understanding of the dairy industry. Dairy Australia’s external auditor Deloitte attends the AGM and as per last year, was available to answer questions on the conduct of the

statutory financial statements audit and the content of the audit report.

Act ethically and responsibly

We aim to maintain a high standard of ethical business behaviour at all times. Our Dairy Australia Code of Conduct establishes the ethical standards by which directors, executives and employees are expected to abide.

The Code of Conduct includes:

•

c

ompliance with laws and requirements that apply to the organisation

•

a

cting honestly and with integrity at all times

•

e

nsuring confidentiality and not using information gained in the course of a person’s employment or position with Dairy Australia for personal gain, or to obtain a benefit

•

a p

rocess for managing conflicts of interests to ensure that behaviour is in accordance with the organisation’s best interests

•

d

ealing with gifts and hospitality to safeguard against unethical payments or inducements

•

r

eporting of any alleged misconduct with the Code to maintain an appropriate culture of ethical behaviour.

No breaches of the Code were reported during FY19.

32

PRINCIPLE 5 Make timely and balanced disclosure

As an unlisted public company, Dairy Australia i s not subject to the disclosure requirements of

the ASX. Regular updates are provided to levy payers and key stakeholders in addition to annual reporting on financial results and operations.

In FY19, we developed an evaluation framework to measure the efficiency and effectiveness of our performance and investments. This framework was approved by the Dairy Australia Board and the Australian Government in December 2017. Refer to Dairy Australia’s Performance

Report.

Dairy Australia A nnual Report 2018-2019 33

PRINCIPLE 6 Respect the rights of shareholders

As an unlisted public company, Dairy Australia does not have shareholders however we have an extensive and active engagement program with members and other key stakeholders.

We are committed to open, accountable and responsive decision-making, informed by effective communication and consultation between Dairy Australia, levy payers, the Government and industry stakeholders. This is detailed in our stakeholder engagement plan. Dairy Australia’s Managing Director, senior staff and Directors frequently travel to dairy regions and attend industry events, providing numerous opportunities for levy payers to ask questions or raise issues.

We undertook a wide range of stakeholder communication and engagement initiatives throughout FY19 ensuring levy payers had a strong voice in decision-making and understood our levy-funded programs. Initiatives included:

•

a

ttendance and presentations at industry events such as farmer conferences, meetings and agricultural shows e.g. Australian Dairy Conference

•

R

DP-led activities such as seminars, on-farm workshops, field days and priority-setting sessions

•

r

egular on-farm visits by senior Dairy Australia staff and

Board members

•

m

edia releases distributed to print, electronic and broadcast media

•

r

egular news articles and features in regional and rural print and online press

•

f

act sheets and research reports in both print and online formats

•

q

uarterly electronic newsletters to farmers and service

providers

•

m

onthly electronic and hard copy RDP newsletters to

farmers and regional stakeholders

•

D

airy Australia and RDP Facebook pages

•

D

airy Australia’s YouTube channel, featuring a broad range of farmer-facing content and topical Tactics for

Tight Times information to support farmer decision-making.

In addition, we met regularly with ADIC, ADF, ADPF, their executive teams, others representing industry and the various state dairy farmer organisations. ADF and ADPF provide representatives to industry reference groups (such as special purpose committees), who work with our

people in the areas of farm productivity and delivery, dairy food safety, nutrition, workforce development and trade to maximise the alignment of industry investments.

Our corporate governance documents are available on our website. Levy payers are also provided with the opportunity to ask questions at the Annual General

Meeting.

34

PRINCIPLE 7 Recognise and manage risk

Our Risk Management Plan outlines Dairy Australia’s approach to risk including which risks are identified, assessed and managed. The plan also includes Dairy Australia’s risk appetite statement that indicates the level of risk that is acceptable and guides the treatment of risk and development of controls or mitigation strategies. The

Risk Management Plan is reviewed by the Audit and Risk Management Committee and endorsed by the Board.

We review the Risk Management Plan and update our risk profile regularly. Mitigation strategies or management actions are also monitored regularly by the Leadership Team, the Audit and Risk Management Committee and the Board.

Dairy Australia's internal auditors, RSM Australia, were appointed on 1 July 2018 and report to the Audit and Risk Committee. They provide a systematic, disciplined approach to evaluating and continually improving the effectiveness of risk management and internal control

processes.

The FY18 internal audit of our Risk Management Framework considered it ‘sustainable’ and appropriate

for an organisation of Dairy Australia’s size.

We maintain an insurance program that provides cover for identified, insurable risks. As provided for in the Constitution, Dairy Australia indemnifies Directors and Senior Officers for potential losses arising from a

claim by reason of an act committed by them in their capacity as Director or Officer, unless the liability arises from conduct involving a lack of good faith.

PRINCIPLE 8 Remunerate fairly and responsibly

The role of our Human Resources Committee is to provide assistance to the Board in fulfilling its responsibilities.

This includes:

•

m

aintaining an overview of the company’s reward strategy and principles and ensuring alignment with

the

company’s vision and business objectives

•

r

eviewing policies for directors and executives of Dairy

Australia on

remuneration and employment

terms

and conditions

•

r

eviewing and recommending to the Board the annual Key Performance Indicators for the Managing Director

•

r

eviewing and recommending to the Board salary adjustments and incentive payments for the Managing

Director

•

a

ssisting the Board in ensuring that Dairy Australia complies with all regulatory and accounting requirements for disclosure of remuneration

•

r

eviewing and making recommendations on the total funds (pool) available for annual salary increases and incentives payable to staff and the aggregate pool of

remuneration of the Directors.

In FY19, the Human Resources Committee comprised four non-executive Directors plus the Board Chair who

attended meetings in an ex-officio capacity.

Remuneration for Directors, key management and staff was externally benchmarked against general market

data. Remuneration is in line with the market data against which it is benchmarked, and further information regarding the total remuneration paid to Directors and senior executives (Leadership Team) is set out in section 6.

Dairy Australia A nnual Report 2018-2019 35

36

INTELLECTUAL PROPERTY MAINTENANCE AND

PROTECTION

Background Dairy Australia has a portfolio of intellectual property, consisting predominantly of copyright subsisting in reports derived from research and development (R&D) projects and other materials or works prepared by subject matter experts engaged by Dairy Australia and, to a lesser extent, patents, trademarks, domain names and interests in plant breeders’ rights.

Creation The commissioning or funding of R&D initiatives by Dairy

Australia is not driven by the prospect of generating a portfolio of intellectual property capable of returning a revenue stream through commercialisation. Rather, the goal of its investment is to return a real and direct benefit to Industry by generating relevant and valuable outputs and delivering these to levy-paying farmers (and, where relevant, other Industry stakeholders) efficiently and free-of-charge.

Protection and administration Dairy Australia has developed formal processes for the protection and administration of Intellectual Property (IP) that is created and managed as a result of its research investment. Dairy Australia has an approved IP Management Plan.

The IP Management Plan supports the objects of Dairy Australia by providing clear direction to Dairy Australia and its personnel, and also research provider personnel, in respect of the identification, protection and management of IP rights arising from Dairy Australia’s R&D investment. This is to ensure that the products and services arising from this investment are delivered to the Australian dairy industry through the most efficient and appropriate route to adoption and without excessive encumbrances.

Dairy Australia requires R&D partners to have an IP management system which records all third party IP, background IP and proposed project IP for all research projects funded by Dairy Australia. Each Dairy Australia funded research project is required to maintain and administer an IP Register.

Core objectives of Dairy Australia’s Intellectual Property management 1 E nsure the intellectual property provisions contained in

its contracts with third party educational institutions, research organisations and consultants commissioned to perform R&D or provide services requiring specialist knowledge and technical expertise allow Dairy Australia to own or use all outputs (hereafter “Foreground IP”) in order to maximise the

value to

levy paying farmers and generally make use of the Foreground IP to achieve Dairy Australia’s objectives and mission as the Industry services body.

2

E

nsure that Foreground IP stemming from its R&D expenditure is competently examined and assessed at

the time of its creation to ensure that opportunities to secure statutory protection or commercialise the IP are not overlooked and likely benefits in pursuing further R&D in the relevant area are identified and, where commercially viable, pursued.

3

M

aintain procedures to effectively manage ongoing costs of protection of registered intellectual property.

Dairy Australia A nnual Report 2018-2019 37

Financial report

05

Directors’ report 4 0

Statement of profit or loss 4

6

and

other

comprehensive income Statement of financial position

4

7

Statement of changes in equity

4

8

Statement of cash flows 4 9

Notes to the financial statements

5

0

Directors' Declaration 7

2

Independent auditor's report 7

3

Auditor’s independence declaration 7

6

DIRECTORS’ REPORT

The Directors of Dairy Australia Limited submit their report for the year ended 30 June 2019.

The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Jeff owns an expanding dairy farming business on properties near Shepparton, Victoria. He has over 30 years’ experience managing large scale farm enterprises in northern Victoria and Tasmania. He has a strong understanding of Australian dairy systems and their evolution and intensification, particularly over the past decade. He served as Director of Murray Dairy Inc. Regional Development Program (2006-12) and as Chair (2008-12). Jeff became a Director of Dairy Australia in 2013 and has led the organisation as Chair since 2017. He is a Director of Bega Cheese Ltd. His formal qualifications include a Bachelor of Business (Agricultural Management) and an Associate Diploma in Farm Management.

Jeff Odgers Chair Appointed November 2013; appointed Chair November 2017

Ex-officio member - Audit and Risk Management Committee and Human Resources Committee (from December 2017)

Ian was appointed Managing Director of Dairy Australia in January 2010, bringing to the position the experience of a career which has spanned the supply chain. His expertise includes an extensive range of

management roles with SPC, Goodman Fielder, Kraft Foods, KR Castlemaine and Vesco Foods.

Ian Halliday M anaging Director Resigned July 2018

David was appointed Managing Director of Dairy Australia in July 2018. Prior to his appointment, David

was a co-Director for both DairyBio and DairyFeedbase, and Director of Dairy Strategy and Investment Planning (Agriculture Victoria Services/Dairy Australia). In that role, David led Dairy Australia’s role in developing large innovation projects in partnership with the Victorian Government and jointly managed two of the key initiatives - DairyBio and DairyFeedbase. David has experience in managing large-scale science initiatives, including past roles as Chief Executive Officer (CEO) of Dairy Futures Cooperative Research Centre and in program management at Dairy Australia. David has also had technical and commercial roles in the animal breeding and herd fertility service industries.

Dr David Nation M anaging Director Appointed July 2018

Tania owns and operates a dairyfarming business in South-West Victoria. She has more than 20 years' e xperience in the successful operation of small, medium and large scale dairy farms and a range

of

governance roles including Director of the WestVic Dairy Board, Director of the Bonlac Supply Company and Chair of the Warrnambool CBD Committee. Tania holds an Advanced Diploma of

Agriculture and is currently undertaking a Bachelor of Agribusiness Management.

Tania Luckin Appointed November 2017

Member - Human Resources Management Committee (from February 2018)

David has held a range of senior executive roles across Murray Goulburn Co-operative Co Ltd (MGC) and other processors and has extensive operational line experience including business transformation and operations. Additionally, he brings finance and senior managerial skills, along with his full P&L responsibility in his previous roles as Chief Financial Officer, Interim CEO and Executive General Manager Business Operations at MGC, which sells products in Australia, South East Asia, China, Japan, USA and the Middle East. He has previously been a Non-Executive Director on the Board of Snapsil Corporation. He has undergraduate qualifications in business and finance, has undertaken postgraduate business studies at Monash University and has been a participant on the Executive Management Program at Stanford University. David is a Fellow of the Australian Society of Certified Practising Accountants and a

graduate of the Australian Institute of Company Directors.

David Mallinson Resigned November 2018

40

James is the owner of Donovan’s Dairying Pty Ltd at Wye, South Australia, which is one of the nation’s leading dairy businesses. James has been involved in the Australian dairy industry for over 25 years, with experience in farm systems used in dairy farming and agriculture more broadly, across different regions in Australia as well as New Zealand and the United Kingdom. Donovan’s Dairying supplies over 20 million litres per annum and milks 2,000 cows. James was the Chair of the DairySA Regional Development Program from 2002-2015 and has also performed other dairy industry leadership roles.

James Mann Appointed November 2015

Member - Audit and Risk Management Committee (from December 2017) Member - Human Resources Committee (to November 2017)

John has extensive agribusiness experience with national and international corporations. He is currently a Director of Marcus Oldham College, Primary Industries Education Foundation and is the CEO of Hassad Australia. John holds a Diploma of Farm Management, a Bachelor of Business (Charles Stuart University), an MBA, and is a graduate of the Australian Institute of Company Directors.

John McKillop Resigned November 2018

Graeme is a dairy farmer from South Gippsland, Victoria. He owns and operates a perennial pasture based dairy business, milking a crossbred herd, at Fish Creek in South Gippsland. Graeme holds qualifications in

Horticultural and Dairy Science and Land Rehabilitation. He was awarded a Nuffield Scholarship in 2010, which provided him with the opportunity to study the global dairy industry. His industry roles have included Deputy Chair and subsequently Chair of the GippsDairy Regional Development Program. He is a member of UDV and has a strong national and international network of agricultural contacts. Graeme brings a deep passion for the dairy industry and extensive knowledge of dairy farming systems and technologies to the Dairy Australia Board.

Graeme Nicoll Appointed January 2017

Member - Human Resources Management Committee

Jan has more than 35 years’ finance experience with Australian and international listed and private companies, government agencies and community organisations. She was an audit partner of Deloitte Touche Tohmatsu and retired from the practice in December 2011. Jan is a Fellow of Chartered Accountants Australia and New Zealand, a graduate member of the Institute of Company Directors and holds a Bachelor of Commerce degree from the University of Melbourne. Jan was awarded a Centenary Medal in 2001 and appointed a Member of the Order of Australia in 2007. Jan is a Non-Executive Director of Australia Post, the Australian Red Cross (ending November 2018) and Neurosciences Victoria Ltd. She is also an independent member of the Audit and Risk Management Committee of the Victorian Department of Treasury and Finance.

Jan West AM Appointed November 2014

Chair - Audit and Risk Management Committee

Paul has over thirty years’ experience in agricultural R&D. Paul has been successful as both a research scientist and as an R&D leader. He is internationally recognised for his research in veterinary immunology, tuberculosis and vaccine development and is the inventor on a number of patents. He has led R&D teams from CSIRO, CSL and Pfizer Animal Health (now Zoetis). He has been responsible for bringing a number of innovative products to the market, receiving recognition for his work including the CSIRO medal and the Clunies Ross award. He has served on several boards with both R&D and commercial entities, currently serves as the Chair of the Agriculture and Foodtech Committee for AusBiotech and is an Adjunct Professor at Monash University. Paul is also a Director of the Global Alliance for Livestock Veterinary Medicines and P&R Wood Partners. He is also a Fellow of the Australian Academy of Technological Sciences and Engineering.

Professor Paul Wood AO Appointed November 2016

Member - Human Resources Management Committee

Dairy Australia A nnual Report 2018-2019 41

Roseanne is an experienced non-executive director who has served on the boards of not-for-profit and ASX listed companies, as well as statutory corporations in the agribusiness and innovation sectors. Roseanne is currently Deputy Chair of the Board of the Grains Research and Development Corporation, Chair of Dairysafe SA and Chair of VineHealth Australia and was a former Director of the Rural Industries Research and Development Corporation. She holds a BA (Economics), Master of Business Administration, Master of Business Research (Commerce) and is a graduate of the AICD’s International Company Directors course.

Roseanne Healy Appointed November 2018

Member - Audit and Risk Management Committee

David is an experienced dairy industry leader with extensive capabilities in strategic planning and implementation, leadership and corporate governance. David has served as CEO and Managing Director of Parmalat Australia Ltd, Warrnambool Cheese & Butter Factory Company Ltd, and most recently as President and Chief Operating Officer at Saputo Dairy Australia. David holds an MBA (Executive) (MBS) and a Graduate Diploma of Business (Management) (Monash) and is a member of the Australian Institute of Company Directors.

David Lord Appointed November 2018

Emma Braun was appointed Company Secretary in February 2017. She completed her undergraduate and postgraduate studies at the University of Melbourne and has undertaken further postgraduate governance studies with the Governance Institute of Australia. She is a Fellow of the Governance Institute of Australia and of the Institute of Chartered Secretaries and Administrators (UK) and is a member of the Australian Institute of Company Directors.

Emma Braun C ompany Secretary Resigned May 2017

Elizabeth has over 25 years' experience in senior management and corporate advisory roles in multiple organisations such as KPMG and Lander & Rogers. She has a strong record of achievement in roles including as a corporate finance director and chief operating officer. Her strength lies in the strategic planning for the companies she has served along with implementing these strategies and business

improvement. Elizabeth has broad board experience and has served as a director on multiple boards and as the chair of audit and risk committees. Elizabeth holds a Bachelor of Business and a Graduate Diploma of Finance and is a member of Chartered Accountants Australia and New Zealand and

a member of Financial Services Institute of Australasia.

Elizabeth Parkin Appointed May 2019

42

Meeting of Directors

Directors Directors’ meetings Committee meetings

Audit and Risk Management Committee Human Resources

Committee

A B A B A B

Mr J Odgers 11 11i 4 4iv 4 4iv

Dr D Nation 11 11 4 4 3 3

Mr I Halliday (resigned July 2018) 1 1 - - 1 1

Ms R Healy 6 6 2 1 - -

Mr D Lord 6 6 - - 2iii 2

Ms T Luckin 11 11 - - 4 3

Mr D Mallinson 5 5 2 2 - -

Mr J Mann 11 11 4 4 - -

Mr J McKillop 5 5 - - 2ii 2

Mr G Nicoll 11 11 - - 4 4

Mrs J West AM 11 10 4 4i - -

Professor P Wood AO 11 9 - - 4 4

A

N

umber of meetings held during the time the Director held office B

N

umber of meetings attended i

I

ndicates Chair ii

I

ndicates Chair from July 2018 to November 2018 iii

I

ndicates Chair from November 2018 iv

I

ndicates attendance as an ex-officio member

Dairy Australia A nnual Report 2018-2019 43

Our Strategic Priorities During the 2018-19 financial year Dairy Australia focused on implementing the three strategic priorities identified in its Strategic Plan 2016-17 to 2018-19.

These short-term and long-term strategic priorities focus on:

•

pr

ofitable dairy farms

•

c

apable people

•

t

rusted dairy industry.

The following table shows how our principle activities were aligned to achieving our strategic priorities in FY19.

Dairy Australia Strategic Priorities Strategic Programs

Major FY19 activities that contributed to

the

achievement of our strategic priorities

1

Profitable dairy farms • A nimal health and fertility

•

G

enetics and herd improvement •

F

arm business management •

F

eedbase and animal nutrition •

A

gtech and innovation •

L

and, water and carbon •

I

nternational market support •

M

anufacturing margin improvement

• D ataGene Ltd

•

D

airyBio

•

D

airyFeedbase •

D

airyBase •

M

anaging milk quality (Countdown 2020) •

I

mproving reproductive performance (InCalf) •

E

missions mitigation strategies •

T

rade policy reform •

I

nternational marketing programs

2

Capable people •

R

egional operations and extension •

P

eople and capability

•

T

actics for Tight Times •

R

egional extension coordinators •

R

egional Development Programs (RDPs) •

C

ows Create Careers •

D

airyLearn •

T

he People in Dairy program •

T

he Young Dairy Network

3

Trusted dairy industry •

I

ndustry and community marketing •

I

ndustry risk and reputation

management

•

K

nowledge and insights

•

S

ustainability Framework •

P

olicy and industry engagement •

C

hemical risk strategy •

In

dustry issues management •

H

ealth and nutrition programs targeting consumers and health professionals •

A

ustralian Grand Dairy Awards •

D

airy Situation and Outlook report

44

Limited liability of members (guarantee) The Constitution states that, if the Company is wound up, the liability of members is limited as follows:

•

E

ach member at the time the winding up starts, and

•

E

ach person who, at any time in the 12 months before the winding up started, was a member

undertakes to contribute to the assets of the Company up to an amount not exceeding $2 for payment of the debts and liabilities of the Company, including the costs of the winding up. The total amount that members of the Company are liable to contribute if the Company is wound up for 2018-19 is $13,452.

Any surplus members’ funds on winding up must not be paid to members but must be paid or transferred to another corporation with similar objects to the Company and with a constitution which prohibits the distribution of its income and property among its members.

Statement of Corporate Governance A statement of corporate governance is set out on pages 28-35.

Registered office Level 3, HWT Tower 40 City Road Southbank Victoria 3006

Rounding The amounts in the financial report have been rounded to the nearest thousand dollars ($'000) unless otherwise stated under the option available to the Company under ASIC Corporations Instrument 2016/191 (Instrument). The Company is an entity to which the Instrument applies.

Auditor independence The Auditor’s Independence Declaration in relation to the audit for the year ended 30 June 2019 has been received by

the Company. A copy follows the financial statements.

Signed in accordance with a resolution of the Directors.

Jeff Odgers Director

26 September 2019

Dr David Nation Director

26 September 2019

Dairy Australia A nnual Report 2018-2019 45

STATEMENT OF PROFIT OR LOSS AND

OTHER

COMPREHENSIVE INCOME For the year ended 30 June 2019

Note 2019 2018

For the year ended 30 June 2019 $’000 $’000

Revenue 2

Dairy service levy 30,936 33,373

Government matching payments 20,058 20,528

External contributions 2,820 4,834

Interest revenue 394 499

Distributions from investments 147 164

Royalties 138 125

Other income 520 884

Total revenue 55,013 60,407

Expenses 3

Farm Profit and Capability 30,768 32,160

Marketing and Communications 9,137 6,083

Trade and Industry Strategy 5,841 6,683

Business and Organisational Performance 13,043 11,755

Total expenses 58,789 56,681

Surplus/(Deficit) (3,776) 3,726

Other comprehensive income/(loss)

Items that may be reclassified subsequently to profit or loss:

Net fair value gains/(losses) on available-for-sale financial investments 6.3 843 88

Other comprehensive income for the period 843 88

Total comprehensive income/(loss) (2,933) 3,814

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

46

STATEMENT OF FINANCIAL POSITION For the year ended 30 June 2019

Note 2019 2018

For the year ended 30 June 2019 $’000 $’000

Assets

Current assets

Cash and cash equivalents 5.1 8,191 12,592

Trade and other receivables 6.1 9,731 14,280

Other financial assets 6.2 560 560

Total current assets 18,482 27,432

Non-current assets

Plant and equipment 4.1 1,962 2,077

Intangible assets 4.2 367 80

Available-for-sale financial investments 6.3 18,063 16,777

Total non-current assets 20,392 18,934

Total Assets 38,874 46,366

Liabilities

Current liabilities

Trade and other payables 6.4 10,140 13,861

Provisions 3.2.2 1,874 2,568

Total current liabilities 12,014 16,429

Non-current liabilities

Provisions 3.2.2 394 538

Total non-current liabilities 394 538

Total liabilities 12,408 16,429

Net assets 26,466 29,399

Reserves

Retained surplus 25,934 29,710

Available-for-sale reserve 6.3 532 (311)

Total reserves 26,466 29,399

The above statement of financial position should be read in conjunction with the accompanying notes.

Dairy Australia A nnual Report 2018-2019 47

STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2019

Retained surplus Available-for-sale reserve Total

For the year ended 30 June 2019 $’000 $’000 $’000

At 1 July 2017 25,984 (399) 25,585

Surplus for the year 3,726 - 3,726

Other comprehensive income - 88 88

Total comprehensive income for the period 3,726 88 3,814

At 30 June 2018 29,710 (311) 29,399

Deficit for the year (3,776) - (3,776)

Other comprehensive income - 843 843

Total comprehensive loss for the period (3,776) 843 (2,933)

At 30 June 2019 25,934 532 26,466

The above statement of changes in equity should be read in conjunction with the accompanying notes.

48

STATEMENT OF CASH FLOWS For the year ended 30 June 2019

Note 2019 2018

For the year ended 30 June 2019 $’000 $’000

Cash flows from operating activities

Levy and government matching payment receipts 50,177 48,781

Receipts from customers and other contributors 7,699 5,540

Interest received 411 483

Distributions received 2.6 147 164

Payments to suppliers and employees (61,649) (54,148)

Net cash flows provided by/(used in) operating activities 5.2 (3,215) 820

Cash flows from investing activities

Net proceeds from other financial assets - 2,717

Net proceeds from/(purchases of) available-for-sale financial investments

(443) 1,231

Proceeds from disposal of plant and equipment - 18

Purchase of plant and equipment (743) (713)

Purchase of intangible assets - -

Net cash flows provided by/(used in) investing activities (1,186) 3,253

Cash flows from financing activities

Net cash flows from financial activities - -

Net increase in cash and cash equivalents (4,401) 4,073

Add: Opening cash and cash equivalents at beginning of year 12,592 8,519

Cash and cash equivalents at end of year 5.2 8,191 12,592

The above statement of changes in equity should be read in conjunction with the accompanying notes.

Dairy Australia A nnual Report 2018-2019 49

1. About this report

1.1. Date authorised for issue The financial report of Dairy Australia Limited for the year end 30 June 2019 was authorised for issue in accordance with a resolution of the Directors on 26 September 2019.

1.2. Corporate information Dairy Australia Limited is a company limited by guarantee incorporated in Australia.

1.3. Basis of preparation The financial report is presented in Australian dollars and has been prepared in accordance with the historical cost convention, except for available-for-sale financial investments, which have been measured at fair value.

For the purposes of preparing the financial statements the Company is a not-for-profit body.

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Australian Charities and Not-for-profits Commission Act 2012, Australian Accounting Standards - Reduced Disclosure Requirements and other authoritative pronouncements of the Australian Accounting Standards Board (AASB).

1.4. Economic dependency Dairy Australia Limited is dependent upon receipt of the dairy service levy and Government matching payments.

2. Funding the delivery of services The Company’s main revenue streams are the dairy service levy, Government matching payments and external contributions.

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specific recognition criteria must also be met before revenue is recognised as outlined below.

Structure

•

2

.1 Summary of revenue that funds the delivery of services

•

2

.2 Dairy service levy

•

2

.3 Government matching payments

•

2

.4 External contributions

•

2

.5 Interest revenue

•

2

.6 Distributions from investments

•

2.

7 Royalties

•

2

.8 Other income

NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2019

50

2.1. Summary of revenue that funds the delivery of services

Note 2019 2018

$’000 $’000

Revenue

Dairy service levy 2.2 30,936 33,373

Government matching payments 2.3 20,058 20,528

External contributions 2.4 2,820 4,834

Interest revenue 2.5 394 499

Distributions from investments 2.6 147 164

Royalties 2.7 138 125

Other income 2.8 520 884

Total revenue 55,013 60,407

2.2. Dairy service levy The dairy service levy is paid by farmers based on milk production and is calculated per kilogram on milk fat or protein

content. The rate of milk levies is 2.87c/kg milk fat and 6.99c/kg protein.

The levy is deducted from the payments milk processing companies make to farmers and paid to the Commonwealth Government. The proceeds are then paid to the Company in accordance with the Statutory Funding Agreement.

Dairy service levy revenue is brought to account at the time the milk is harvested, when it is probable that the levy will be

received by the Company and the value of the levy can be reliably measured.

2.3. Government matching payments The Commonwealth Government supports the dairy industry by providing matching payments for eligible research and development activities. The maximum amount of Government matching payments received each year is the lesser of 0.5% of the amount determined by the Minister of the Department of Agriculture, Water and Resources to be the gross value of whole milk produced in Australia in the financial year, based on a three-year average, and 50% of the amount that is spent by the Company on qualifying research and development activities.

The revenue from Government matching payments is recognised when qualifying research and development expenditure is incurred. That portion of Government matching payments which is owed but not invoiced by nor remitted to the Company at reporting date is reported as Government matching payments receivable.

Dairy Australia A nnual Report 2018-2019 51

2.4. External contributions

2019 2018

$’000 $’000

Department of Agriculture and Water Resources 1,432 2,640

Geoffrey Gardiner Dairy Foundation Ltd 380 440

Cotton Research & Development Corporation 11 237

California Dairy Research Foundation - 209

Meat & Livestock Australia Ltd 153 194

Department of Agriculture and Food WA 100 192

Others 744 922

Total External Contributions 2,820 4,834

The Company receives external contributions from other dairy and agricultural bodies such as the Department of Agriculture and Water Resources, the Geoffrey Gardiner Foundation and the State Departments of primary industries.

Revenue from external contributions is recognised in accordance with the terms specified in contracts with co-funding partners. Where revenue is received in advance of providing services, it is treated as deferred revenue and brought to account as the services are provided.

2.5. Interest revenue Interest revenue includes interest received on bank deposits and from available-for-sale financial investments. Interest revenue is recognised on an accrual basis using the effective interest rate method which allocates interest over the relevant period.

2.6. Distributions from investments The Company receives distributions from the externally managed funds invested with Colonial First State Global Asset Management. For more information, please refer to notes 6.3 and 7.1.

2.7. Royalties Royalties are received from the commercialisation of intellectual property. Revenue from royalties is recognised on an accrual basis in accordance with the terms specified in contracts involving payment of royalties.

2.8. Other Income

2019 2018

$’000 $’000

Government grants 268 72

Sundry income 252 812

Total other income 520 884

Government grants represent the reimbursement of eligible expenses the Company received under the Commonwealth Government’s Export Market Development Grants scheme. The grants are recognised at their fair value where there is reasonable assurance that the grant will be received.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

52

Sundry income includes profit on sale of assets $12,275 (2018: $120,285).

The Company exercised its rights to sell its shareholding in TGR Biosciences Pty Ltd (TGR) to Sygnis AG during the 2017/18 financial year. The Company had in prior years written down the value of this investment to nil due to continuing losses. As a result of the sale, an amount of $53,152 (2018: $276,845) has been received and has been included in Sundry Income.

Sundry income is recognised when an amount becomes receivable.

3. Costs of delivering services The Company’s main activities are contributing to the promotion and development of the Australia dairy industry and Australian dairy produce by:

•

f

unding research, development and extension activities for the benefit of the Australian dairy industry and the Australian community generally

•

c

arrying out activities to develop the Australian national market for, and international trade in, Australian dairy produce

•

pr

oviding information and other services, and

•

c

arrying out other activities for the benefit of the Australian dairy industry.

These activities are aimed at developing and driving industry services and innovation for the ultimate benefit of dairy levy payers and they are implemented through a series of programs managed by the following business groups:

•

F

arm Profit & Capability

•

M

arketing and Communications

•

T

rade and Industry Strategy

•

B

usiness and Organisational Performance

Structure

•

3

.1 Lease and license payments

•

3

.2 Employee benefits

•

3

.3 Commitments for expenses

3.1. Lease and license payments

2019 2018

$’000 $’000

Office rent and outgoings 686 628

Car park 58 70

Computer leases and licenses 100 358

Motor vehicles 108 22

Total lease and license payments 951 1,079

Office rent and car park leases relate to the lease of the Company’s office at Southbank and car park spaces provided to key Southbank staff. The motor vehicles leases relate to running costs of motor vehicles which are now borne by the Regional Development Programs since the beginning of the 2017/18 financial year.

Computer leases and licenses relate to agreements in place for the rental of computer equipment and annual software licensing fees.

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or

assets and the arrangement conveys a right to use the asset.

Dairy Australia A nnual Report 2018-2019 53

The Company only has operating leases, where the lessor retains substantially all the risks and benefits incidental to ownership of a leased item.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

3.2. Employee benefits

3.2.1. Employee benefits in the statement of profit or loss and other comprehensive income

2019 2018

$’000 $’000

Salaries and allowances 13,347 12,736

Superannuation 1,148 1,129

Long service leave (348) (312)

Termination benefits 462 185

Workers compensation costs 51 50

Total employee benefits expenses 14,660 13,788

Employee benefits refers to all payments made to employees during the year. Payments include ordinary time, overtime, allowances, on-costs, Fringe Benefit Tax, redundancy costs and Workers compensation costs. Any employee benefits outstanding at year end are accrued.

Superannuation includes superannuation contributions made by the Company of up to 9.5% of employees’ wages and

salaries, as legally enforceable in Australia.

Termination benefits are payable when an employee accepts an offer of benefits in exchange for the termination of

employment.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

54

3.2.2. Employee benefits in the statement of financial position

2019 2018

$’000 $’000

Current

Employee benefits in respect of:

Performance-based remuneration 40 312

Annual leave (expected to be settled within 12 months) 726 743

Annual leave (expected to be settled after 12 months) 167 306

Long service leave 941 1,207

Total provision for employee benefits - current 1,874 2,568

Non-current

Employee benefits in respect of:

Long service leave 394 538

Total provision for employee benefits - non-current 394 538

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service and performance-based remuneration when it is probable that settlement will be required and the benefits are capable of being measured reliably.

Liabilities recognised in respect of short-term employee benefits are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Company in respect of services provided by employees up to reporting date.

The Managing Director's performance-based remuneration is based on a percentage of his remuneration package provided under the contract of employment. A provision is recognised and is measured as the aggregate of the amounts accrued under the terms of the contract to reporting date.

3.3. Commitments for expenses

3.3.1. Research and development expenditure commitments

2019 2018

$’000 $’000

Commitments contracted at reporting date but not recognised as liabilities are as follows:

Not later than one year 16,609 11,606

Later than one year but not later than five years 14,522 11,236

Total research and development expenditure commitments 31,131 22,842

Dairy Australia A nnual Report 2018-2019 55

The Company enters into contracts with research organisations in respect of research, development and extension for the benefit of the Australian dairy industry. The Company performs a small proportion of research and development activities internally. Contracts are generally for periods up to a maximum of three years and include clauses which enable the Company to withhold or cease further funding in the event of factors arising which are outside the Company’s control.

Research and development costs are expensed as incurred. Commitments for future expenditure are disclosed above at their nominal value exclusive of GST. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the statement of financial position.

3.3.2. Operating lease commitments

2019 2018

$’000 $’000

Future minimum rentals payable under non-cancellable operating leases as at 30 June are:

Not later than one year 1,292 1,262

Later than one year but not later than five years 2,243 3,180

Total operating lease commitments 3,535 4,442

Operating lease commitments relate to office and motor vehicles. These leases have an average life of three to five years. The office lease for the Company’s office premises at Southbank commenced in August 2017 and runs for five years with an option to renew for a further five years. Motor vehicle leases are for three years initially, with an option to renew for a further three years. There are no restrictions placed upon the Company by entering into these leases.

4. Assets available to support the provision of services The Company controls plant and equipment and other assets that are utilised in fulfilling its objectives and conducting its activities. They represent the resources that are owned by the Company for use in the delivery of services.

Structure

•

4.

1 Plant and equipment

•

4.

2 Intangible assets

•

4.

3 Depreciation and amortisation

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

56

4.1. Plant and equipment

2019 2018

$’000 $’000

Furniture and equipment at cost 1,207 1,029

Accumulated depreciation (559) (420)

Total furniture and equipment 648 609

Leasehold improvements at cost 1,333 1,333

Accumulated depreciation (249) (116)

Total leasehold improvements 1,084 1,217

Motor vehicles at cost 834 623

Accumulated depreciation (604) (372)

Total motor vehicles 230 251

Total plant and equipment 1,962 2,077

Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current and previous financial years are set out below.

Furniture and equipment

Leasehold improvements

Motor vehicles

Total

Year ended 30 June 2019 $’000 $’000 $’000 $’000

Opening balance at 1 July 2018 609 1,217 251 2,077

Additions 193 - 212 405

Disposals - - - -

Depreciation charge for the year (154) (133) (233) (520)

Closing balance at 30 June 2019 648 1,084 230 1,962

Year ended 30 June 2018

Opening balance at 1 July 2017 283 1,291 365 1,939

Additions 553 64 96 713

Disposals (86) (13) (6) (105)

Depreciation charge for the year (141) (125) (204) (470)

Closing balance at 30 June 2018 609 1,217 251 2,077

Dairy Australia A nnual Report 2018-2019 57

Initial recognition

The cost method of accounting has been used for all acquisitions of assets during the year. Cost is determined as the fair value of the assets given up at the date of acquisition plus any costs directly attributable to the acquisition. Fair value at acquisition is equal to cost.

Subsequent measurement

Plant and equipment is subsequently measured at cost less accumulated depreciation and any accumulated impairment losses. Repairs and maintenance costs are recognised as expenses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follow

•

F

urniture and equipment: 1.5 to 10 years

•

Le

asehold improvements: 10 years

•

M

otor vehicles: 3 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

4.1. Plant and equipment (cont.) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amounts being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

Many assets of the Company are not held primarily for their ability to generate net cash inflows and are typically held for continuing use of their service capacity. Given that these assets are rarely sold, their cost of disposal is typically

negligible. The recoverable amount of such assets is expected to be materially the same as fair value.

The recoverable amount of plant and equipment that generates cash inflows is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the

asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its

fair value. Impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable

amount. The asset or cash-generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the surplus or deficit and allocated across functions.

Derecognition and disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in surplus or deficit in the year the asset is derecognised.

4.2. Intangible assets

2019 2018

$’000 $’000

Computer software at cost 1,030 690

Accumulated amortisation (663) (610)

Total computer software 367 80

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

58

Reconciliations of the carrying amounts of intangible assets at the beginning and end of the current and previous financial years are set out below.

2019 2018

$’000 $’000

Opening balance at 1 July 80 192

Additions 340 -

Amortisation charge for the year (53) (112)

Closing balance at 30 June 367 80

Initial recognition

The Company’s intangible assets consist of purchased computer software and are initially measured at cost.

Subsequent measurement

All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing. The following useful lives are applied:

•

C

omputer software: 3 years

Derecognition and disposal

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in surplus or deficit.

4.3. Depreciation and amortisation

2019 2018

$’000 $’000

Leasehold improvements 133 125

Furniture and equipment 154 141

Motor vehicles 233 204

Intangible assets 53 112

Total depreciation and amortisation of non-current assets 573 582

All plant and equipment and intangible assets that have limited useful lives are depreciated and amortised on a straight-line basis over the estimated useful life of the assets.

5. Cash flow information and balances This section provides information on the Company’s cash flow and balances.

Structure

•

5

.1 Cash and cash equivalents

•

5

.2 Reconciliation of operating surplus/(deficit) to net cash flows from operating activities

Dairy Australia A nnual Report 2018-2019 59

5.1. Cash and cash equivalents

2019 2018

$’000 $’000

Cash at bank and in hand 8,191 12,592

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits that are for periods of less than three months are considered as cash at bank. Due to their short-term nature, their carrying value is assumed to approximate their fair value.

5.2. Reconciliation of operating surplus/deficit to net cash flows from operating activities

2019 2018

$’000 $’000

Operating surplus/(deficit) (3,776) 3,726

Non-cash flows in operating surplus/(deficit)

Depreciation 520 470

Amortisation 53 112

Gain on disposal - fixed assets - (120)

Changes in assets and liabilities

Trade and other receivables (increase)/decrease 4,549 (5,585)

Trade and other payables increase/(decrease) (3,717) 2,550

Provisions increase (844) (333)

Net cash flows provided by operating activities (3,215) 820

6. Other assets and liabilities This section sets out the other assets and liabilities that arose from the Company’s operations.

Structure

•

6

.1 Trade and other receivables

•

6

.2 Other financial assets

•

6.

3 Available-for-sale financial investments

•

6

.4 Trade and other payables

•

6

.5 Contingent assets and liabilities

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

60

6.1. Trade and other receivables

2019 2018

$’000 $’000

Receivables 1,085 6,444

Levies receivable 6,086 6,820

Sundry receivables and prepayments 2,560 1,016

Total trade and other receivables 9,731 14,280

Trade and other receivables disclosed above include amounts that are past due at the end of June 2019 for which the Company has not recognised a loss allowance because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Company always measures the loss allowance for trade receivables at an amount equal to lifetime Expected Credit Loss (ECL). Trade and other receivables are non-interest bearing and are

generally 30-day terms. Due to the short-term nature, their carrying value is assumed to approximate their fair value. It

is expected that these balances will be received when due. Bad debts are written off when identified.

Levies receivable are determined by a formula which includes the actual and estimated volume of milk production. The

Company receives dairy service levy income based on the fat and protein content of milk produced. Due to a delay of approximately four months before milk production figures are known, levies receivable is estimated based on

expected production for the last four months of the financial year and the estimated levy rate based on historical fat

and protein content.

6.1.1. Ageing analysis of receivables

At 30 June, the ageing analysis of receivables is as follows:

2019 2018

$’000 $’000

0-30 days 5,089 14,006

31-60 days 4,013 100

61-90 days 629 174

Total 9,731 14,280

The lifetime ECL is $nil (2018: $nil) because there has not been a significant change in credit quality and the amounts are still considered recoverable.

6.2. Other financial assets

2019 2018

$’000 $’000

Short-term deposits 560 560

Short-term deposits are for periods of three months or more and earn interest at the respective short-term deposit rates. Due to their short-term nature, their carrying value is assumed to approximate their fair value.

Dairy Australia A nnual Report 2018-2019 61

6.3. Available for sale financial investments

2019 2018

$’000 $’000

Investments in equity instruments designated at Fair Value through Other

Comprehensive Income (FVTOCI)

Externally managed funds 18,063 16,777

These funds are invested with Colonial First State Global Asset Management as a means to prudently manage the return on longer term cash reserves.

The portfolio is invested in two funds:

•

M

ulti-asset Real Return - objective based and offers a more diversified asset allocation, and

•

W

holesale Global Credit Income.

The fair value of funds is determined by reference to the unit price of the investment funds which are available each day

based on closing values of the previous day.

In the current year, the Company has applied AASB 9 Financial Instruments (as revised in December 2014) and the related consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1 January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives and the Company has elected to take advantage of these transition provisions and not restate comparatives in respect of

the

classification and measurement of financial instruments.

AASB 9 introduced new requirements for:

1

T

he classification and measurement of financial assets and financial liabilities

2

I

mpairment of financial assets, and

3

G

eneral hedge accounting.

There is no impact on the Company’s financial statements are described below. The Company has applied AASB 9 in

accordance with the transition provisions set out in AASB 9.

Classification and measurement of financial assets.

The date of initial application (i.e. the date on which the Company has assessed its existing financial assets and financial liabilities in terms of the requirements of AASB 9) is 1 July 2018. Accordingly, the Company has applied the requirements of AASB 9 to instruments that continue to be recognised as at 1 July 2018 and has not applied the requirements to instruments that have already been derecognised as at 1 July 2018.

The fair value of the available-for-sale financial investments increased by $1,286,392 (2018: $1,212,780) during the year. This comprised income of $443,202 (2018: $398,578) and unrealised gains on available-for-sale reserve of $843,190 (2018: $87,715). The unrealised gains were offset against the unrealised losses of previous years, resulting in the available-for-sale reserve of $532,116 (2018: $311,074).

Impairment

The company assesses at each reporting date whether a financial asset or Company of financial assets is impaired.

For the purposes of impairment assessment, the available for sale assets are considered to have low credit risk. Lifetime ECL has been considered for these assets upon initial application of AASB 9 and it was determined on initial application of AASB 9 that it would require undue cost and effort to determine whether their credit risk has increased significantly since initial recognition to the date of initial application of AASB 9.

The Company always recognises lifetime ECL for trade and other receivables. The expected credit losses on these financial assets are estimated based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as forecast direction of conditions at the reporting date, including time value of money where appropriate.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

62

In determining the expected credit losses for these assets, the directors of the Company have taken into account the historical default experience, the financial position of the counterparties, as well as the future prospects of the industries in which the issuers operate, obtained from economic expert reports, financial analyst reports and considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of these financial assets occurring within their respective loss assessment time horizon, as well as the loss upon default in each case.

6.4. Trade and other payables

2019 2018

$’000 $’000

Accrued research and development expenditure 1,255 2,687

Trade payables 5,245 2,455

Other payables 3,377 4,473

Deferred revenue 1,238 3,214

GST payable / (receivable) (975) 1,032

Total trade and other payables 10,140 13,861

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. They are normally settled on 30-day terms and are unsecured.

Accrued research and development expenditure relates to work completed at 30 June 2019 where invoices have not been received.

Deferred revenue is the unutilised amounts of external contributions received on the condition that specified services are delivered or conditions are fulfilled.

Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.

6.5 Contingent assets and liabilities Contingent assets and contingent liabilities are not recognised in the statement of financial position but are disclosed and if quantifiable are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively where applicable.

Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. These are classified as either quantifiable where the potential economic benefit is known or non-quantifiable.

Contingent liabilities are:

•

p

ossible obligations that arise from past events, whose existence will be confirmed only by the occurrence or

non-occurrence of one or more uncertain future events not wholly within the control of the Company, or

•

p

resent obligations that arise from past events but are not recognised because it is not probable that an outflow of

resources embodying economic benefits will be required to settle the obligations, or the amount of the obligations cannot be measured with sufficient reliability.

6.5.1 Quantifiable contingent assets

In addition to the $53,152 received from the sale of TGR shares, as disclosed in note 2.8, there may be additional consideration of up to $77,033 to be received in the next two years, contingent upon the conditions stipulated in

the

sale/purchase agreement being met by TGR.

Dairy Australia A nnual Report 2018-2019 63

6.5.2 Non-quantifiable contingent liabilities

The Company has legal claims pending. Due to the uncertainty inherent in litigation, an accurate assessment of any outcome is not possible. The Company is of the view that further disclosure of these disputes may prejudice the position of the Company.

7. Financial instruments (a) Classes and categories of financial instruments and their fair values

The following table combines information about:

•

c

lasses of financial instruments based on their nature and characteristics;

•

t

he carrying amounts of financial instruments;

•

f

air values of financial instruments (except financial instruments when carrying amount approximates their fair value); and

•

f

air value hierarchy levels of financial assets and financial liabilities for which fair value was disclosed.

Structure

•

7

.1 Categories of financial instruments

•

7

.2 Financial instruments specific disclosures

•

7

.3 Fair value determination

•

7

.4 Impairment

7.1. Categories of financial instruments

2019 2018

$’000 $’000

Financial assets

Amortised Cost

Cash and cash equivalents 8,191 12,592

Short-term deposits 560 560

Trade and other receivables 9,731 14,280

18,482 27,432

Fair Value through Other Comprehensive Income (FVTOCI)

Available-for-sale financial investments 18,063 16,777

Total Financial Assets 36,545 44,209

Financial liabilities

Amortised Cost

Trade and other payables 10,140 13,861

Total Financial Liabilities 10,140 13,861

The carrying value of financial assets and liabilities approximates their fair value.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

64

7.2. Financial instruments specific disclosures Investments and financial assets in the scope of AASB 9 Financial Instruments are classified as either financial assets at amortised cost or investments in equity instruments designated at FVTOCI, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through other comprehensive income.

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised when the rights to receive cash flows from the asset have expired.

(i) Amortised cost and effective interest method

For financial assets other than purchased or originated credit-i

mpaired financial assets (i.e. assets that are

credit-i

mpaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the financial asset, or, where appropriate, a shorter period, to the gross carrying amount of the financial asset on initial recognition. For purchased or originated credit-i

mpaired financial assets, a credit-ad

justed effective interest rate is

calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the financial asset on initial recognition.

For financial assets other than purchased or originated credit-i

mpaired financial assets, interest income is calculated

by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-i

mpaired (see below). For financial assets that have subsequently become

credit-i

mpaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-i

mpaired financial instrument improves so

that the financial asset is no longer credit-i

mpaired, interest income is recognised by applying the effective interest rate

to the gross carrying amount of the financial asset.

(ii) Equity instruments designated at FVTOCI

Available-for-sale financial investments are non-derivative financial assets that are designated at fair value through other comprehensive income.

Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments revaluation reserve. The cumulative gain or loss is not be reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.

Dividends on these investments in equity instruments are recognised in profit or loss in accordance with AASB 9, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the ‘Distributions from investments’ line item in profit or loss.

The Company has designated all investments in equity instruments that are not held for trading as at FVTOCI on initial application of AASB 9.

7.3. Fair value determination Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 102 Inventories or value in use in AASB 136 Impairment of Assets.

Dairy Australia A nnual Report 2018-2019 65

Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:

•

L

evel 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

L

evel 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•

L

evel 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of the available-for-sale financial investments is determined by reference to unit price of the investment funds, which are available each day based on closing values of the previous day. This is considered level 1 in the fair value hierarchy. There are currently no financial instruments with fair value estimated based at level 2 or level 3 in the

hierarchy.

7.4. Impairment Impairment of financial assets

The company assesses at each reporting date whether a financial asset or Company of financial assets is impaired.

For the purposes of impairment assessment, the available-for-sale assets are considered to have low credit risk. Lifetime ECL has been considered for these assets upon initial application of AASB 9 until these financial assets are derecognised as it was determined on initial application of AASB 9 that it would require undue cost and effort to determine whether their credit risk has increased significantly since initial recognition to the date of initial application of

AASB 9.

For the purposes of impairment assessment, trade and other receivables are considered low risk on the basis of historical trends and the company having never written off any debts as bad in the current and past years. Lifetime ECL has been applied for trade and other receivables.

In determining the expected credit losses for these assets, the directors of the Company have taken into account the historical default experience, the financial position of the counterparties, as well as the future prospects of the industries in which the issuers operate, obtained from economic expert reports, financial analyst reports and considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of these financial assets occurring within their respective loss assessment time horizon, as well as the loss upon default in each case.

8. Director and executive disclosures Structure

•

8

.1 Details of key management personnel

•

8

.2 Compensation of key management personnel

•

8.

3 Other transactions and balances with key management personnel

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

66

8.1. Details of key management personnel (i) Directors

Mr J Odgers

C

hair (non-executive)

D

r David Nation

M

anaging Director

app

ointed July 2018

Mr I Halliday

M

anaging Director

r

esigned July 2018

Ms R Healy

D

irector (non-executive)

a

ppointed November 2018

Mr D Lord

D

irector (non-executive)

a

ppointed November 2018

Ms T Luckin

D

irector (non-executive)

M

r D Mallinson

D

irector (non-executive)

r

esigned November 2018

Mr J Mann

D

irector (non-executive)

Mr J McKillop

D

irector (non-executive)

r

esigned November 2018

Mr G Nicoll

D

irector (non-executive)

Mrs J West AM

D

irector (non-executive)

Prof P Wood AO

D

irector (non-executive)

(ii) Executives

Mrs K Campbell

G

M Marketing and Communications

Mrs H Dornom

M

anager Sustainability

Mr P Johnson

G

M Farm Profit and Capability

Ms I McBain

H

uman Resources Manager

Mr C McElhone

G

M Trade and Industry Strategy

Mr R McHenry

G

M Human Resources

r

esigned September 2018

Mr C Murphy

G

M Farm Profit and Capability

r

esigned December 2018

Ms E Parkin

G

M Business and Organisational Performance

Dairy Australia A nnual Report 2018-2019 67

8.2. Compensation of key management personnel Total consideration paid or payable to the key management personnel of Dairy Australia Limited was:

2019 2018

$ $

(i) Directors

Short-term employee benefits 810,681 966,667

Post-employment benefits 54,607 56,259

Other long-term benefits 11,461 2,348

Total 876,749 1,025,274

(ii) Executives

Short-term employee benefits 1,520,030 1,267,222

Post-employment benefits 117,182 95,952

Other long-term benefits 26,115 16,526

Termination benefits 76,431 -

Total 1,739,758 1,379,700

Total key management personnel compensation 2,616,507 2,404,974

Fees to directors of the Board comprise fixed remuneration only (base salary plus superannuation) and these fees have remained the same as the last financial year. Remuneration for all directors is in line with the market and is based on advice received from independent external remuneration consultants.

•

D

irectors other than the Managing Director and Chair are remunerated at $41,963 per annum (2018: $41, 963).

•

M

embers of the Board sub-committees receive a further $3,045 p.a. (2018: $3,045)

•

C

hairs of the Board sub-committees receive $6,090 p.a (2018: $6,090)

•

T

he Chair of the Board receives $87,871 p.a. (2018: $87,871) and is an ex-officio member of the Audit and Risk Management Committee and Board Human Resources Committee and receives $6,090 p.a (2018: $6,090) for this role.

•

B

oth the current (Dr David Nation) and prior (Mr Ian Halliday) Managing Directors’ remuneration packages comprise a

fixed and short-term performance-based component, in addition the prior Managing Director also received a

long-

term performance-based component. The fixed remuneration element comprised a base salary plus

superannuation.

The performance-based component is subject to satisfying performance measures approved by the Board. With the new Managing Director commencing in July 2018, the total directors compensation above includes payments to the current Managing Director (eleven months) and the prior Managing Director (one month).

The Board undertakes an annual review of its performance and the performance of the Board subcommittees and the

Managing Director.

Board directors’ fees are recommended by the Board Human Resources Committee and approved by the Board.

In respect to the prior year, the former Managing Director's short-term and long-term incentives were included in

the

provision for employee entitlements and were subsequently paid in July 2018.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

68

Executives

Executives are eligible to receive fixed remuneration only. The increase in remuneration from last financial year reflects termination benefits paid to a former executive and re-classification of one existing staff member as a member of key management personnel.

8.3. Related party transactions Transactions with key management personnel related entities are detailed below. Note that individual key management personnel did not receive any personal benefit as a result of the transactions.

Payments made to key management personnel-related entities

During 2019, $239,878 (2018: $175,701) was paid or payable to the following key management personnel-related entities under normal commercial terms and conditions.

2019 2018

Entity Dairy Australia key management personnel $ $

Australian Dairy Conference Ltd Mr C Murphy1 44,527 39,845

Australia Post Mrs J West 57,939 45,830

Australian Red Cross Mrs J West 1,537 2,401

Marcus Oldham College Mr J McKillop 135,875 87,625

Total 239,878 175,701

Income earned from key management personnel-related entities

During 2019, $36,951 (2018: $212,396) was received or receivable from the following key management personnel related entities under normal commercial terms and conditions.

2019 2018

Entity Dairy Australia key management personnel $ $

Bega Cheese Ltd Mr J Odgers 4,000 6,000

Grains Research and Development Corp Ms R Healy 32,951 -

Murray Goulburn Co-operative Co. Ltd. Mr D Mallinson2 - 67,796

Pasture Trials Network Ltd Mr C Murphy1, Mr P Johnson3 - 138,600

36,951 212,396

1

Mr C Murphy was on the Board of Directors of Australian Dairy Conference Ltd and Pasture Trial Network Ltd as the Dairy Australia representative until December 2018. Mr C Murphy did not receive remuneration from these organisations. 2

Mr D Mallinson was the Chief Financial Officer of Murray Goulburn Co-operative Co. Ltd until April 2018. 3

Mr P Johnson was on the Board of Directors of Pasture Trials Network Ltd as the Dairy Australia representative from May 2019. Mr P Johnson did not receive remuneration from this organisation.

Dairy Australia A nnual Report 2018-2019 69

9. Other disclosures This section includes additional material disclosures required by accounting standards or otherwise for the understanding of this financial report.

Structure

•

9

.1 Events after balance sheet date

•

9

.2 Income tax

•

9

.3 Other taxes

•

9

.4 Auditor’s remuneration

•

9

.5 Members’ funds

•

9

.6 Significant accounting judgements, estimates and assumptions

•

9

.7 New accounting standards and interpretations

9.1. Events after balance sheet date There have been no significant events occurring after reporting date which may affect either the Company's operations or results of those operations or the Company's state of affairs.

9.2. Income tax The Company is exempt from income tax pursuant to section 50-1 of the ITAA 1997.

9.3. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except:

•

w

hen the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable, and

•

r

eceivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as

operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation

authority.

9.4. Auditor’s remuneration The auditor of Dairy Australia Limited is Deloitte Touche Tohmatsu. Amounts received or due and receivable by Deloitte Touche Tohmatsu are as below:

2019 2018

$ $

Audit of the financial report of the Company including Statutory Funding Agreement compliance 85,000 87,000

Other services

- returning officer (AGM) 5,000 7,900

Total auditor's remuneration 90,000 94,900

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

70

In the event that other services are provided by Deloitte Touche Tohmatsu, they are approved by the Audit and Risk Management Committee and do not compromise the independence of the auditor.

9.5. Members’ fund The Company is limited by guarantee. The Constitution states that, if the Company is wound up, each nominated member at the time the winding up starts and each person who was a nominated member at any time in the 12 months before the winding up started, is required to contribute a maximum of $2 each towards payment of the debts and liabilities of the Company including the costs of winding up.

Any surplus members' funds on wind up must not be paid to members but must be paid or transferred to another corporation with similar objects to the Company and a constitution which prohibits the distribution of its income and property among its members.

2019 2018

number number

Group A members

Nominated 3,597 3,847

Joint 3,127 3,349

Total 6,724 7,196

Group B members

Total 2 2

Total Group A and Group B members 6,726 7,198

9.6. Significant accounting judgements, estimates and assumptions The Company is required to make judgements, estimates and assumptions, which affect the reported amounts in the financial statements.

(i) Significant accounting judgements

Management has not made any other significant judgements which have a significant effect on the amounts recognised in the financial statements in the process of applying the Company's accounting policies, other than determining when an available-for-sale financial investment is impaired.

(ii) Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. At reporting date, other than dairy service levy receivable, there are no other significant estimates and assumptions that could have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period.

(iii) Classification of and valuation of investments

The Company has decided to classify the externally managed funds as available-for-sale investments and movements in fair value are recognised directly in equity. The fair value of funds has been determined by reference to the unit price of the investment funds which are available each day based on closing values of the previous day.

Dairy Australia A nnual Report 2018-2019 71

9.7. New accounting standards and interpretations Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the following new and amended Australian Accounting Standards and AASB Interpretations that are relevant to its operations as of 1 July 2018:

•

A

ASB 9 Financial Instruments

The adoption has not had any material impact on the Company.

New and revised Australian Accounting Standards in issue but not yet effective

At the date of authorisation of the financial statements, the Company has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective:

•

A

ASB 1058 Income of Not-for-profit Entities

•

A

ASB 15 Revenue from Contracts with Customers

•

A

ASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities

•

A

ASB 2018-8 Amendments to Australian Accounting Standards - Right-of-Use Assets of Not-for-Profit Entities

The Company is currently assessing the expected impact on its financial statements arising from the new and revised Australian Accounting Standards.

DIRECTORS' DECLARATION

The Directors declare that in the Directors' opinion:

a

T

here are reasonable grounds to believe that the Company is able to pay its debts, as and when they become due and payable, and

b

T

he financial statements and notes satisfy the requirements of the Australian Charities and Not-for-profits Commission Act 2012, including compliance with the Australian Accounting Standards - Reduced Disclosure Requirements and giving a true and fair view of the financial position and performance of the Company.

Signed in accordance with a resolution of the directors made pursuant to subsection 60.15(2) of the Australian Charities and Not-for-profits Commission Regulation 2013.

On behalf of the Board

Jeff Odgers Director

26 September 2019

Dr David Nation Director

26 September 2019

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) For the year ended 30 June 2019

72

INDEPENDENT AUDITOR'S REPORT

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network.

42

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent Auditor’s Report to the Members of Dairy Australia Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Dairy Australia Limited (the “Entity”) which comprises the statement of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the declaration by the Directors.

In our opinion, the accompanying financial report of the Entity is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012 (the “ACNC Act”), including:

(i) giving a true and fair view of the Entity’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and

(ii) complying with Australian Accounting Standards - Reduced Disclosure Requirements and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Entity in accordance with the auditor independence requirements of the ACNC Act and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The Directors are responsible for the other information. The other information obtained at the date of this auditor’s report comprises the Director’s Report included in the Entity’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Dairy Australia A nnual Report 2018-2019 73

INDEPENDENT AUDITOR'S REPORT (CONTINUED)

43

Responsibilities of Management and Directors for the Financial Report

Management of the Entity is responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the ACNC Act and for such internal control as management determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, management is responsible for assessing the ability of the Entity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going con cern basis of accounting unless management either intend to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

The D irectors are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis fo r our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.

 Evalu ate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management .

 Con clude on the appropriateness of management ’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to dra w attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network.

42

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent Auditor’s Report to the Members of Dairy Australia Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Dairy Australia Limited (the “Entity”) which comprises the statement of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the declaration by the Directors.

In our opinion, the accompanying financial report of the Entity is in accordance with Division 60 of the Australian Charities and Not-for-profits Commission Act 2012 (the “ACNC Act”), including:

(i) giving a true and fair view of the Entity’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and

(ii) complying with Australian Accounting Standards - Reduced Disclosure Requirements and Division 60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Entity in accordance with the auditor independence requirements of the ACNC Act and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The Directors are responsible for the other information. The other information obtained at the date of this auditor’s report comprises the Director’s Report included in the Entity’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based

on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

74

43

Responsibilities of Management and Directors for the Financial Report

Management of the Entity is responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the ACNC Act and for such internal control as management determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, management is responsible for assessing the ability of the Entity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going con cern basis of accounting unless management either intend to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

The D irectors are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis fo r our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.

 Evalu ate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management .

 Conclude on the appropriateness of management ’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to dra w attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

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We communicate with management and the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

DELOITTE TOUCHE TOHMATSU

Stephen Roche Partner Chartered Accountants Melbourne , 26 September 2019

Dairy Australia A nnual Report 2018-2019 75

AUDITOR’S INDEPENDENCE DECLARATION

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network.

41

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

26 September 2019

The Board of Directors Dairy Australia Limited Level 3, HWT Tower 40 City Road SOUTHBANK VIC 3006

Dear Board Members

Auditor’s Independence Declaration to Dairy Australia Limited

In accordance with Subdivision 60-C of the Australian Charities and Not-for-profits Commission Act 2012, I am pleased to provide the following declaration of independence to the directors of Dairy Australia Limited.

As lead audit partner for the audit of the financial statements of Dairy Australia Limited for the financial year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours faithfully

DELOITTE TOUCHE TOHMATSU

Stephen Roche Partner Chartered Accountants

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Dairy Australia A nnual Report 2018-2019 77

Appendices

06

Our FY19 projects 8 0

Recommended conditions of matched 8 2

Australian

Government funding

Our collaboration partners 8

3

Financial contribution to cross-s

ectional

8

4

collaboration with other Research and Development Corporations

OUR FY19 PROJECTS

Strategic Program Project

number

Project name

SP1: Profitable Dairy Farms (Pre-farmgate)

Animal Health and Fertility P106 Managing Milk Quality

P107 Improving Reproductive Performance

P213 Animal Health and Welfare - On-farm

Genetics and Herd Improvement P108 Dairy Bioscience - Animal Improvement

P109 Herd Improvement

Farm Business Management P240 Farm Business Information

P241 Farm Business Management Capability

Feedbase and Animal Nutrition P252 Supporting Practice Change

P255 Forage Improvement

P217 Dairy Bioscience - Forages

P253 Integrated Feedbase RD&E

P254 Animal Nutrition and Feed Systems

P264 Dairy Feedbase

AgTech and Innovation P110 AgTech and Innovation

Land, Water and Carbon P128 On Farm Nutrient Management

P130 Climate Change Adaptation

P132 Improving Water Use Efficiency

SP1: Profitable Dairy Farms (Post-farmgate)

International Market Support P219 China

P229 Japan

P230 SE Asia

P232 Other Markets

Manufacturing Innovation & Sustainability P249 Supporting Manufacturing Innovation and Sustainability

SP2: Capable People

Regional Extension Service P103 Regional Development Programs

P200 Large Supplier Engagement

P268 Feed Shortage 2018

People and Capability P207 Attracting and Retaining People

P203 Workforce Strategy, Planning & Action

P154 Industry Education

P260 Farm Safety

80

Strategic Program Project

number

Project name

SP3: Trusted Dairy Industry

Consumer & Community Marketing P265 Effective Brand Management

P266 Maintaining Public Trust

P262 Primary Schools Engagement

P267 Influencer Engagement - Health

P226 Human Health & Wellness - Partnerships and Engagement

Industry Risk and Reputation Management P153 Dairy Industry’s Sustainability Framework / Strategy

P177 Managing Supply Chain, Food Safety and Integrity Issues

P227 Human Nutrition Research & Science

P233 Policy Support for Improving Animal Health & Welfare

P259 Technical Policy Support

P261 Access to Agvet Chemicals

Knowledge & Insights P237 Market Information and Insights

Dairy Australia A nnual Report 2018-2019 81

RECOMMENDED CONDITIONS OF MATCHED AUSTRALIAN

GOVERNMENT FUNDING

Australian Government Rural Research and Development Policy Statement The Australian Government’s Rural Research and Development Policy Statement (July 2012) was released in response to reviews of the rural RD&E system by the Productivity Commission and the Rural R&D Council. It

sets out eight principles that outline what is expected of

RDCs as a condition of receiving government funding.

•

P

rinciple 1 Invest in an R&D portfolio that appropriately balances

long-term and short-term, high-risk and low-risk, and

strategic and adaptive research needs (refer section 3.2).

•

P

rinciple 2 Collaborate, as appropriate, with other RDCs and research organisations in cross-sectoral research (refer sections 2.7, 3.2).

•

P

rinciple 3 Have in place suitably resourced processes to facilitate timely adoption of research results (refer section 3).

•

P

rinciple 4 Use government funding solely for R&D and related extension purposes and not for any marketing, industry representation or agri-political activities (refer section 3).

•

P

rinciple 5 Effectively and transparently communicate with levy payers, industry stakeholders, researchers and the Australian Government (refer annual report and Dairy

Australia’s Performance Report).

•

P

rinciple 6 Publish relevant information on the outcomes of completed research projects in a timely manner (refer

Dairy Australia’s Performance Report).

•

P

rinciple 7 Ensure that, over time, research programs include research that addresses the needs of levy payers in all regions (refer section 3 and Dairy Australia’s Performance Report).

•

P

rinciple 8 Pursue continuous improvements in administrative efficiency (see section 4).

82

OUR COLLABORATION PARTNERS

RDCs AgriFutures

Australian Egg Corporation Limited

Australian Meat Processor Corporation

Australian Pork Limited

Australian Wool Innovation

Cotton Research and Development

Corporation

Fisheries Research and Development

Corporation

Forest and Wood Products Australia Limited

Grains Research and Development Corporation

Horticulture Innovation Australia Limited

Australian Livestock Export Corporation Ltd

Meat & Livestock Australia

Sugar Research Australia Limited

Wine Australia

Cross-agricultural committees National Animal Biosecurity RD&E Strategy

National Animal Welfare RD&E Strategy

Animal Health Australia - Industry Forum

Animal Health Australia - Members Forum

Australian Pastures Genebank Steering Committee

Climate Change Research Strategy for Primary Industries

Managing Climate Variability Program

Council of Rural R&D Corporations

Plant Biosecurity Cross-Sector Strategy

Research and Innovation Committee

Soils Cross-Sector Strategy

Water Use in Agriculture Cross-Sector Strategy

Australian Food and Wine International Trade Collaboration Group

Key investment partners Agriculture Victoria

Austrade

CSIRO

DairyNZ

Department of Agriculture

Department of Foreign Affairs and Trade

Latrobe University

Gardiner Dairy Foundation

NSW Department of Primary Industries

Pastoral Genomics

Pasture Trials Network

Queensland Department of Agriculture and Fisheries

South Australian Research and Development Institute

Tasmanian Institute of Agriculture

University of Melbourne

University of New England

University of Sydney

WA Department of Primary Industries and Regional

Development

International collaboration partners China Dairy Industry Association

Dairy Research Consortium

Global Dairy Platform

Global Sustainability Framework

International Dairy Federation

International Marketing Promotion

Michigan State University (USA)

Sustainable Agriculture Platform

University College Dublin (Ireland)

Teagasc (Ireland)

Dairy Australia A nnual Report 2018-2019 83

FINANCIAL CONTRIBUTION TO CROSS-SECTIONAL COLLABORATION WITH OTHER RESEARCH AND DEVELOPMENT CORPORATIONS

Project Name Collaborating RDCs DA Contribution $

More profit from nitrogen: enhancing the nutrient use efficiency of

intensive cropping and pasture systems

CRDC, HIAL, SRA 250,000

Enhancing the profitability and productivity of livestock farming through virtual herding technology APL, AWI, MLA 135,650

Forewarned is forearmed: equipping farmers and agricultural value chains to proactively manage the impacts of extreme climate events AgriFutures, APL, CRDC, GRDC, MLA, SRA, Wine Australia

50,000

People in agriculture APL, CRDC, GRDC, MLA 34,530

Lifting farm gate profit through high value modular

agroforestry AgriFutures, FWPA 20,000

Phosphorus Efficient Pastures: delivering high nitrogen and

water use

efficiency, and reducing costs of production across Southern Australia AWI, MLA 10,000

Total revenue 500,180

84

Disclaimer

The content of this publication including any statements regarding future matters (such as the performance of the dairy industry or initiatives of Dairy Australia) is based on information available to Dairy Australia at the time of preparation. Dairy

Australia does not guarantee that the content is free from inadvertent errors or omissions and accepts no liability for your use of or reliance on this document. You

should always make your own inquiries and obtain professional advice before using or relying on the information provided in this publication, as that information has not been prepared with your specific circumstances in mind and may not be current after the date of publication.

© Dairy Australia Limited 2019. All rights reserved.

e-ISSN 1839-5708 | ISSN 1449-860X

Dairy Australia Limited ABN 60 105 227 987 Level 3, HWT Tower 40 City Road, Southbank Vic 3006 Australia T +61 3 9694 3777 F +61 3 9694 3733 E enquiries@dairyaustralia.com.au dairyaustralia.com.au

1649.1 | Sep 2019