The business today 2500 Ha – Located Central West NSW 750Ha – Irrigation Crop rotation – Corn, Winter Cereals and Lucerne

2000 milk cows 27 million ltrs milk/year 37 ltrs per cow 3x milking Expansion Plans Dairy Operation

The game plan Supply domestic fresh milk market Value add to feed (land and water resource) Add value through entire production chain Farm operations Logistics Compost / waste to energy Surplus and elite stock Maintain a better margin than our competitors

Family Business – Family Board relying on advisors Recently appointed CEO 55 Employees. Business Structure

Looking into the Future Dairy will become an increasingly complex business We need to understand the things that influence our industry We need to review our enterprise and understand the potential demands and challenges going forward. The nature of these challenges and how we choose to respond will form a big part of what this industry looks like in the future.

Influences on industry performance DriversEnablers Globalisation increasing developing world affluence external internal Bought-in grains and supplements priced off global benchmarks Volatility in farmgate prices for milk Dairy processing technologies enhancing shelf-life and product applications Greater transparency and commoditisation of food/feed markets Greater competition for land and water assets driving values Rising prices but value of milk not gaining in real terms Improved know-how in cow nutrition & feeding Higher compliance costs Greater reliance on bought in grains & supplement feed The internet Outcomes – affecting productivity, competitiveness and sustainability Community demands for animal welfare assurances Trade protectionism from 1980 to 2003 Trade liberalisation since 2004 Development of irrigation water markets Climate change – less reliable and more variable weather Community demands for a sustainable environment Intensification of production (to get more from less) Environmental standards in law Increasing influence of advocacy groups on policy Greater competition for labour Advances in biotechnology Diversity in career options IT and digital technologies Greater mobility of capital Improved animal genetics for better feed conversion A range of interrelated “mega” trends and responses to changing demands, combine to raise the bar. New ownership and investment models

Dairy – A Complex Enterprise Feed utilisation Irrigation resource Water use Genetic quality Effluent management DAIRY FACILITY Pasture/forage production Soil health Fertiliser use Forage conservation Supplement purchase storage Land Herd management People management Water Dairy Herd ROI Milk harvesting Feed costs Other costs & overheads Labour costs Trading income Milk income

Future Demands and Challenges The demands within the dairy enterprise have escalated over time. The graphic below illustrates areas within the farm business environment where demands have increased due to higher complexity of the pressures on the dairying operation. These complexities will continue to be amplified going forward. Feed utilisation Irrigation resource Water use Genetic quality Effluent management DAIRY FACILITY Pasture/forage production Soil health Fertiliser use Forage conservation Supplement purchase storage Land Herd management People management Water Dairy Herd ROI Milk harvesting A stronger focus on people New ownership and investment models + greater competition for capital Need for better cow performance Balancing of environmental priorities along with strict environmental standards Improved Feed Conversion Feed costsOther costs & overheadsLabour costs Trading income Milk income Complex business management Increased demand for automation On farm sustainability initiatives

Looking Forward

A huge driver of on farm productivity. -Genetics, Genomics, Markers -Understanding cow comfort -Balanced TMR feeding -Individual cow management software Improved Feed Conversions

Improved plant varieties New irrigation technologies Humified Compost Waste to energy technologies On farm sustainability initiatives

Dairy Ownership Farms will get bigger as we use scale to remain competitive Corporate money will continue to flow to the sector Ownership horizons may change as these new structures emerge. It appears challenging to align investor interest along side current agricultural returns and traditional management structures. It seems difficult to provide investors with a level of comfort to have them participate in on farm operational risk.

Dairy Automation The increasing competition and cost of labor is leading to the development and adoption of a range of new technologies. Individual cow management software Robotics

A stronger focus on people As farms get bigger we become more dependant on our people Dairy is all about detail New technologies and management practices are demanding higher levels of skills (technical, operational and financial) Increasing levels of compliance are challenging us to improve our human resource management and employee training

Where will we be in 5 – 10 Years Who knows? We operate a marginal business that is constantly evolving. Become more professional and more corporate as we chase scale as a means to reduce costs and deliver a defined product to our customer. More global in terms of our markets and sourcing of information & technology. More integrated with other key markets such as energy, carbon and water.

Closing comments It is an extremely exciting yet potentially uncertain era for Agriculture. What will come of carbon trading? What will evolve in China? When will food security become priority in developed countries? How will the domestic sale of milk play out in the retail market? Can we convince the consumer to pay more for our product? Efficient and sustainable agricultural production is a long-term commitment/ investment in best practice that requires a clear price signal from the market and certainty of government policy. Many Australian Farmers are leaders in their fields and the opportunities to grow rural Australia are huge!

Thank You