Consider all milk contracts before signing

Milk processors are required to release their new milk contracts by 1 June. There has been a lot of discussion regarding these announcements and an expectation of a significant increase in milk prices given the increase in production costs, shortage of milk and ability for retail milk price to increase in response to cost increases.

Dairy farmers are in a very strong bargaining position and should utilise this to gain the maximum increase in milk price. This is a fork in the road moment for a lot of dairy farmers deciding whether they should stay in the industry or not. So no time is more critical to gain the highest price possible.

I urge all dairy farmers not to be rushed and explore your options with all processors before signing a contract. Given the milk shortages and cost increase, farmers should expect at least an additional 10c/L. Do not consider signing any contract with less than a 10c/L increase and without exploring all options.

The prices when announced are a weighted average only so you should request an income estimate for your individual milk supply. Be honest and realistic when providing the volume and milk quality parameters for the estimate so it can be as accurate as possible for you to consider.

Please let all your dairy farmer friends know of what they should expect and ensure they also shop around before signing a contract. Also be aware that if you sign a contract that you regret, you have a 14 day cooling off period where you can terminate your contract.

The ACCC has updated its guidance on some key elements of the Dairy Code. The updates provide more detail on the ACCC’s interpretation of the code’s ‘single document’ requirement, arrangements for cooperatives and collective bargaining groups, what constitutes a ‘material breach’, loyalty payments and other bonuses, and the requirement to publish dispute reports.

Eric Danzi – eastAUSmilk Co-CEO