Newspaper Analysis Sample

Introduction:

The selected article’s essence can be derived from the factor that Rabobank has predicted a conclusive improvement in the recovery of the present Australian Dairy industry which could be improved by 40 percent in the year 2017-18. The influence of the rise in global production of milk as well as the potential for an increase in the value of exports of the dairy manufacturing industry could be promising aspects for the development of the industry in the future. The article could be reviewed based on risks arising based on the costs of manufacturing and the ambiguities about the timing for the renewal of contracts (Chen & Lin, 2015).

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The rising prices of dairy products could be considered viable contributions to the costs of manufacturing in the dairy industry. The concerns for costs of production in Australia’s dairy manufacturing industry are not only limited to the scope of suppliers but also extend further to the contributions of processors. The prominently interested party that could be identified from the article is Murray Goulburn since it is accounted as the leading dairy product manufacturer. The predictions for growth in the Australian dairy manufacturing industry require the organization to specifically focus on measures to address the loss of milk supply, repositioning the brand in the existing market, and resizing manufacturing operations (Deng, et al., 2017).

Newspaper Analysis Sample

Source: (Iossa&Martimort, 2015)

Economic analysis:

The most common issue associated with manufacturing industries is the estimation of sources for financing. Some of the essential pitfalls that lead to issues about costs of production could be derived from a review of the external and alternate sources of financing that manufacturing enterprises could assume flexibly. An organization in the manufacturing industry has to face considerable limitations from information management, standardization, and alignment which are reflective of potential increases in the costs of production (Forrin, Groot & Macleod, 2013).

Organizations incapable of obtaining external investments could not be able to realize the comprehensive growth potential of the enterprise, funding several business processes, and providing financial assistance to start-ups (Mitchell & Mitchell, 2016). On the other hand, the implications of restrictions on external financing for manufacturing could lead to constrained cash flow alongside limitations on the chances of survival of an organization (Pires, 2013).

Internal financing could also be assumed as a potential contributor to the costs of production in the Australian manufacturing industry. Internal finance is obtained from the working capital, retention of profits, and capital acquired from the sale of assets and is used cognizably in the improvement of short-term growth prospects (Iossa & Apartimort, 2015).

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Therefore the necessity for emphasizing the management of working capital, accounts receivable and payable and the applications for relieving cash from inventory could be observed in the financial flexibility alongside the improvement of the enterprise value of an organization (Nakawuka, et al., 2014).

Another promising factor that can be considered as a profound influence on the costs of production in the manufacturing industry refers to the acquisition of working capital. This problem is encountered prominently by SMEs and on the other hand firms that are associated with high working capital often face the complications of excessive capital stocked in inventory and accounts receivable (Khan & Khan, 2014). The organizations in Australia’s dairy industry must focus on the sources of financing to acquire a competitive advantage in the context of costs of production.

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Recommendation

The above-mentioned financial statistics of the Australian dairy industry describe the growth of the industry per year. In that case, the dairy farmers get a sigh of relief after Rabobank announced the climbing back. This process resulted in profitability along with an increase in the rate of export. The reason behind this growth is supposed to be population growth, a rise in income levels, urbanization, technical innovations, and the change in food habits. Through this, the Rabobank expected a high increase in the Australian capture in the market.

The dairy industry of Australia helps the exporters manage their development and maintenance in the overseas market. As the Australian dairy industry is working forward to maximize the potential returns to the farmers, therefore, it is recommended that there should be a regular monthly update regarding the dairy exports which will provide the proper statistics of exports. Along with that, it is also recommended to the dairy industry of Australia to keep a detailed list of the export dairy market tariffs. In addition, there should be the presence of various alternative sources which will help a lot of SMEs to contribute their part to the growth of the Australian dairy industry. The SMEs should contain factoring services to finance their organizations. The use of debt collection, credit insurance, and the sales ledger administration to get into the schemes that drive the success of the company.

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The factoring services will help the dairy industry in saving time as well as cost during manufacturing the dairy products. It will also provide improved as well as easy fund returns. The dairy industry needs the development of a proper network that will build up quality customers by availing all possible information in this context. Along with that, the economic structure of the Australian dairy industry is also recommended to use debt financing, equity financing, strategic investors along venture capitalists for the growth of the business. All these forms of finance structure will help in managing the growth in the production and export of the Australian dairy industry.

The current players in the Australian dairy industry also need to focus on improving the latest techniques to improve the activities involved in the production of dairy products. They must focus on capital-intensive high-tech dairy farming systems and techniques that can reduce their manual activities and make the process more automated.

The dairy companies operating in the Australian market need to focus on better efficiency of the dairy chains so that it will have a positive impact on their output.

Newspaper Analysis Sample

Figure 1: Average Dairy Farm Profitability Before Tax

Source: (Pires, 2013)

Conclusion

This paper focused on the decision of Rabobank regarding the growth of the Australian dairy industry. In that context, the write-up highlights the financial structure that is acquired and the industry needs to acquire for its growth in the global market. Further, this write-up is prepared to focus on the financial obstacles that the company faces while manufacturing dairy products. Therefore the company can also focus on its budget plan and financial structure as discussed in the recommendation to ignore every possible problem that hinders the growth of the Australian dairy industry. It is because the process will increase the farmer’s margin which results in a financial gain in return heading towards the success of the business. Also, it will motivate many small and medium industries to contribute to the production and export of dairy products which eventually change the statistics of the Australian dairy industry.

One of the key aims of analyzing the Australian Dairy industry is to understand the point of view of Rabobank when it forecasts the improvement in the dairy industry in the continent. The key component that is a challenge for the participants in the diary industry prevailing in Australia includes the acquisition of external investments. Since the dairy industry is mainly focusing on increasing the returns of the farming segment which forms a vital working segment all across the globe, it is necessary to understand the performance of the sector and understand how its productivity can increase over time.

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Certain improvement aspects have been considered in this article which can help in enhancing the productivity of the dairy industry prevailing in Australia. The “Average Dairy Farm Profitability Before Tax” statistics have been included which gives the readers an idea of the past performance of the dairy sector and the average profit that is generated before considering the tax portion.

The main takeaway from the analysis is that the current participants prevailing in the Australian dairy sector need to focus on their source of investments and they also need to try to improvise on their current techniques used in the manufacture of dairy products to increase their productivity and profitability in the market. These improvements can encourage new dairy manufacturers to enter the market and compete with existing players. Thus healthy competition will lead to better performance of the industry in the Australian market. It will improve the position of the Australian economy at the global level.

Based on the gradual population growth all over the world, it has been estimated that the overall demand for dairy products will expand. This provides tremendous scope for the Australian dairy industry to take the market opportunities in their stride and focus on improving their activities and profitability on a global scale.