Big Supermarkets Have a Dairying History
Revelations this week that big supermarkets may have been faking their price cuts and specials will come as no shock to dairy farmers.
Australian Competition and Consumer Commission has said they are prosecuting both Coles and Woolworths in the Federal Court. It is alleged that the supermarkets raised their prices on a range of items, and then reduced those prices claiming they were now discounted or on special. The fake discounts kept prices at or above the long-term prices for those items – actually a price increase disguised as a discount.
The ACCC says that the conduct they are taking to court involved 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months, and has provided details of several case studies. These included a $3.50 product having its price increased to $5.00 for 22 days, then reduced to $4.50, and promoted as a price cut.
In response to this news, the Prime Minister has said he will prioritise a new mandatory food and grocery code of conduct and introduce legislation by the end of the year imposing multimillion-dollar penalties against supermarket giants who breach the rules. This new food and grocery code is due to commence in April next year. eastAUSmilk has made several strong submissions to government in support of making that code mandatory, and strengthening it through properly addressing bullying, amongst other changes.
eastAUSmilk is often told by the big supermarkets that they acknowledge the pain caused when they drove farmers to bankruptcy and suicide during the dollar-a-lite milk era, but they say that’s all in the past. They say they’ve changed, but if the ACCC succeeds in their action, it will confirm that the culture of the big supermarkets is the same, and they’ve just shifted targets. In fact, there’s been no review of their business strategies based on the harm they did with dollar-a-litre milk, no update of their internal code of ethics – they’ve just moved on to other ways of making massive profits, and could change strategies again at any time they chose.
eastAUSmilk has called for changes to the Dairy Industry Code to address the impact of big supermarket pricing and margins on the dairy supply chain. The Commonwealth government has promised to begin their review of the Dairy Industry Code in September, but we expect this to be delayed – slightly – because of the reshuffled Agriculture portfolio.
Mike Smith, eastAUSmilk Government Relations Manager
Keeping eastAUSmilk Board Members Busy… and Well Informed
August 30th marks the day for the eastAUSmilk AGM. This year it is being held in Wingham, NSW. Wingham lies in the Manning Valley on the Mid North Coast of NSW.
With over 100 dairy families on the Mid North Coast, the industry is ripe in the area, with many young families making their mark in the industry and ‘having a go’.
Board Members will be treated to a very busy and educational three-day tour of the area, beginning with their arrival in Gloucester, a picturesque town inland of Wingham, for two farm tours. The evening will see Board members meeting with local producers and their families over a meal, whilst patronising a local establishment, and appreciating what local farmers are able to provide.
Day Two is jam packed with four producer meetings on farm, leaving Gloucester early and heading to Wingham for the first farm tour, ensuring that board members are seeing the best of the coast. Continuing the focus on local producers and local produce, lunch will be a local fish co-op, situated just down the road from dairy farm tour number three, treating those who are joining eastAUSmilk to the best local fishery and agricultural produce that the area has to offer.
Day Three the final day on the Mid North Coast with breakfast in gorgeous Wingham, followed by guest speakers before morning tea and the AGM, which is to be held at Wingham Golf Club. The AGM will be followed by networking and discussion over lunch before all start making their way to their respective homes.
All members are warmly invited to attend the Annual General Meeting at Wingham Golf Club at 10:15am on 30 August 2024: a more formal meeting notice will be provided shortly.
Abby McMillan, NSW Member Services Officer
Dairy Plan for Queensland Moves Closer
The advisory group which is guiding development of Queensland’s dairy plan has last week begun the task of looking at all of the feedback received so far and identifying priorities and common themes – issues which must be addressed in the plan, and ideas for change.
This dairy plan is all about growing Queensland’s milk pool, building the economic viability of the industry, facilitating productivity and efficiency improvements, and building confidence in the future of the industry in Queensland.
With eastAUSmilk leading development of the plan, feedback has been received from six district meetings (about 120 people attended all together), discussions amongst advisory group members themselves, and individual discussions with SubTropical Dairy, larger processors, and others. In addition, eastAUSmilk has received emails from several individuals about the problems they see as priorities, and suggesting solutions, and received responses to our invitation for online submissions. Notes of district meetings and other discussions, together with online and email input, have amounted to many thousands of words and over a hundred pages of notes.
The advisory group is made up of representatives from each of eastAUSmilk, SubTropical Dairy, Department of Agriculture and Fisheries, Lactalis, Bega, Norco and DFMC.
Once that group has digested all the feedback and proposals received so far, the next steps will include seeking advisory group consensus on the issues which must be addressed and proposals for change, then trying to reduce them to a smaller number of concrete proposals which will have a real and lasting impact.
The group will then have to weave them into a draft plan.
Once draft documents are ready to put in front of farmers, processors and other stakeholders, we’ll schedule another round of face-to-face consultations including district meetings.
Once that further feedback has been received, the advisory group is expected to modify their draft, and propose a final plan.
There’s more information about the plan on the eastAUSmilk website.
Mike Smith, eastAUSmilk Government Relations Manager
Innovation in managing wet weather
Robert Miller of Narrawilly fame is a fifth-generation dairy farmer from Milton, New South Wales. His family history is in dairy farming in the Milton area of New South Wales since 1859.
The Milton property has been a dairy farm for more than 160 years and was damaged after decades of agriculture. In the past 30 years, Rob has been regenerating the land by planting more than 1000 trees each year, rehabilitating rainforests and creating wetland areas. Being custodians of the land Rob focuses on protecting the habitat and conservation of the land he grazes his cows on. Rob is a true conservationist.
Rob has become a real innovator when it comes to wet weather where 1000mm has fallen in the last 10 weeks. He has applied 3000 tonnes of coal dust waste sourced from the Wollongong steel works (at no cost), to build a temporary feed pad. The coal dust is machine spread and compacted on farm to the size necessary for a feed pad to feed 600 odd cows. The feed pad is 200 meters long x 50 meters wide to help with feed times when other areas on the farm are too wet to graze. The waste is also used as a temporary measure to repair laneways.
Bark chip and ‘clean renovators delight’ (bricks and concrete that would have otherwise gone to landfill) has been utilised on the farm to fill holes created by constant rain. Once compacted and filled with bark chip, this method has become a long term and cost-effective solution to repairing laneways.
Waste from sawmills is used to erect loafing areas which is a cheap way of building loafing areas on the ground for cows to rest. Importantly, loafing areas are built up and are not only on high ground but ground that doesn’t have leaking acquirer and has a rock base. Coarse waste that allows water to drain freely rather than compact is essential. It’s also important for Rob to maintain his feed pads by regularly topping up with sawmill waste.
Rob has come up with a cheap solution to be able to feed while keeping the low-cost pasture grazing system (land generally not suitable to cropping) for his farm to avoid the significant problems of extreme wet. He has shown that spending millions of dollars on infrastructure is not required for those farms that are trying to avoid disaster from extreme wet. All pasture farmers should look at what Rob has done and find ways to cheaply avoid disaster from future normal and extreme wet events.
By Lynelle Rogers, EastAUSmilk and Rob Miller, Milton
Dairy farmer grants available to improve technology uptake on farm
EastAUSmilk has been successful in securing funding through the Department of Agriculture and Fisheries to improve technology uptake on the dairy farm. The first round of grants for the Dairy Farmers Technology Uptake Program (DFTUP) has closed, offering 25% of total tech cost up to a maximum of $15,000 ex GST, per dairy business.
There are two parts to the program, multiple information and training workshops in each dairying region, and provision of financial assistance for technology uptake. The program aims to increase knowledge and adoption of technology to improve labour efficiencies as well as cow health, welfare and fertility. The dates for workshops and training sessions will be announced soon. However, if there is a particular technology you are interested in and want to learn more about, please get in touch.
Grants available to eligible dairy farmers in Queensland which includes eligible items such as:
Autodrafting gates
Automated feeding systems
Cup removers
Auto calf feeders
Drones (spray or fertiliser)
Heat detection collars or ear tags
Precision technology
Mobile app upgrades and towers
Somatic cell count sensors/ in-line SSC detectors
Businesses in general are struggling with labour shortages with businesses located in rural or regional areas, facing bigger challenges due to lack of population density and accessibility. Mechanisation or technology investments on farm looks to not only improve labour efficiencies resulting in less time demanded per job but also improve decision making and enhance business planning.
The addition of technology on farm can provide additional benefits which includes improved herd health management and monitoring. Automated calf feeders, for example, reduce labour and improves overall welfare for the calf, with the option to tailor feeding rates per calf but also maintaining optimal hygiene of the equipment.
Jade Chan, eastAUSmilk Project Officer
Powering towards a Queensland Dairy Plan
The first round of district meetings has been completed on the path to developing Queensland’s Dairy Plan. As well, online input has been opened, and one on one meetings with key stakeholders (like processors, SubTropical Dairy, and more) are well underway.
EastAUSmilk members and others have already shown plenty of interest, with around 120 people attending the various meetings.
Queensland needs an effective dairy industry plan to make sure Queenslanders can drink fresh local milk into the future, that farmers run profitable businesses, and their communities remain vibrant.
Right now, that’s not where we are. We have the smallest average dairy herd size of all states, our farms produce just 45% of the milk Queenslanders consume, we’ve got only 40% of the farms we had in 2011, and too many farmers are struggling to make a decent income.
EastAUSmilk, the three largest milk processors (Lactalis, Norco and Bega), Dairy Farmers Milk Co‑operative, SubTropical Dairy, and Department of Agriculture and Fisheries, make up the Advisory Group steering development of the Plan. They all want to bring the industry together to lift production, increase farmgate profitability and drive efficiencies throughout the supply chain.
With the input from those meetings and online proposals, the Advisory Group will shortly begin drawing out the big themes and big ideas, coming up with the priorities, and drafting the plan. It is expected to cover ways to address that decline, how to make farmer and processor investment and planning decisions easier, actions to build the economic viability of dairy farming and processing and building confidence in the future of the industry.
Once there is a draft Plan, there will be a further round of consultation, including district meetings, to explain what’s in it and why, and get proposals for further change.
The final plan, or a very well-developed draft, is expected by late August. That’s an ambitious timeframe, but we think we can make it happen.
There’s more information about the plan and the process of developing it, on the eastAUSmilk website.
Mike Smith, eastAUSmilk Government Relations Manager
Thanks Colin
Highly respected NSW dairy farmer Colin Thompson passed away last week. Colin and his wife Erina ran an elite Total Mixed Ration (TMR) dairy farm in Cowra. They milked around 300-350 cows in a free stall and averaged around 45L per cow per day. Colin was widely regarded as being one of the top handful of dairy farmers in Australia and was a real gentleman with integrity and a desire to help others.
Colin was a real leader in the industry and was passionate about dairy farming. He was obsessive about doing everything absolutely spot on and this obsession resulted in elite results that many other farmers watched and followed. I knew that Colin’s knowledge and experience would be of great interest to dairy farmers in Queensland. And I knew that dairy farmers in Queensland, especially TMR farmers, could learn a lot from Colin.
As a result, in early 2020 I asked Colin to give presentations throughout Queensland about his farm and journey as a dairy farmer. His farming story impressed a lot of farmers and really blew some away with what was possible. It was clearly not realistic or practical for most farmers to copy everything that Colin did.
Colin was not egotistical re his approach, but rather trying to help farmers find a few things of relevance to their farm to improve their operation. I know a number of farmers made changes as a result of Colin’s grand tour. From small changes like putting in more water troughs near feed pads to spending a lot of money in new concrete silage pits.
Colin had an obsession that cows must have an abundance of clean water to drink at all times. Any time he saw anything but pristine water for cows he would ask me “would you drink it?”. I would always answer no and he would say well neither will cows. I got the message Colin.
Thanks Colin for everything you did to lead the dairy industry and be a farmer that others followed with your farming practices. And to Erina and your family, my thoughts are with you.
Eric Danzi, eastAUSmilk CEO
Queensland Dairying – Profitable and Growing – Industry Voice Needed
Everyone in the Queensland dairy industry is invited to meetings across the state, for input into the proposed Queensland Dairy Plan.
These meetings will be very important in identifying what will be in Queensland’s Dairy Plan.
• Malanda Pub Monday 24 June 6.30 PM
• Maleny Hotel Tuesday 25 June 10.30 AM (note the changed time!)
• Millaa Millaa Pub Tuesday 25 June 6.30 PM
• Oakey RSL Tuesday 25 June 6.30 PM
• Warwick RSL Wednesday 26 June 6.30 PM
• Beaudesert RSL Monday 1 July 6.30 PM
eastAUSmilk is leading development of the Plan, along with the State Government, SubTropical Dairy, Bega, Lactalis, DFMC, and Norco, and these are all members of the project’s advisory group, providing oversight of the plan’s development.
The Plan will be aimed at growing the milk pool in Queensland, building the economic viability of dairy farming and processing across Queensland, facilitating productivity and efficiency improvements, and building confidence in the future of the dairy industry in Queensland.
It will not only identify the major barriers to reducing costs, increasing productivity and profit, and growing the hectares devoted to dairying, but also find ways to sustain improvements in each those areas, which are practical and will be supported by dairy farmers and other stakeholders.
Farmers, processors and others in the industry need to speak up now. This is a big opportunity to ensure a bright future for the Queensland dairy industry, which mustn’t be missed.
If anyone can’t make it to one of the district meetings, they will be asked for input online, shortly, too. If anyone can’t make it to their most local meeting, they should feel free to go to another.
Because the whole industry is being consulted, farmers, processors and others who aren’t members of eastAUSmilk or Australian Dairy Products Federation are welcome. Separate meetings with processors, researchers, and others, will be scheduled, in the near future.
Mike Smith, EastAUSmilk Government Relations Manager
Thanks to the dairy farmers of Wagga Wagga, Blighty and Finley
Last week, my president Joe Bradley and I visited dairy farmers in one our southern most areas around the towns of Wagga Wagga, Blighty and Finley. We were blown away by the reception we received from all the local dairy farmers. A trip to the area was long overdue and prompted by a question by dairy farmer Nina Marshall as to why I hadn’t visited the area yet.
We met with 6 dairy farmers in Wagga Wagga and Tumut including a visit to the farm of Amy and Melinda Hayter. This was an opportunity for Joe to continue his obsession with Brown Swiss cows. The cold conditions in Tumut were a far cry from the Queensland weather Joe and I are accustomed to.
We then moved to the Finley and Blighty areas where we met with around 40 dairy farmers. The willingness of farmers to show us their farms and welcome us to their community was overwhelming. We were blown away by the farms we saw and certainly gave me a new perspective on what is possible in the dairy industry. The scale and efficiency of operations was extremely impressive, and all dairy farmers should visit and learn from these dairy farmers.
The farmers really appreciated the opportunity to gather and talk with their fellow dairy farmers which is something they have not done for years. Clearly for many of the farmers they felt like they were the forgotten dairy farmers of NSW being so isolated from other farmers.
The massive drop in milk prices announced on 3 June was the major talking point as was the dumping of some farmers by their processors. We all hope that prices lift or there will clearly be a lot of farmers cease especially for those whose contracts expired in June.
A very special thanks to Ruth and Neville Kydd for hosting Joe and I. it was great to finally see what I have heard Ruth talk about for many years. The Kydds run a very impressive operation and are rightfully highly respected by their local farmers. The Kydds are due to open their new 80 stand rotary in early July (we hope for Ruth’s sake) to go with the two 50 stand rotaries they already have. The rumour is that if the electricity isn’t hooked up in time the dairy will be powered by Ruth’s pedal power.
Eric Danzi, eastAUSmilk CEO
Lower Prices will be a Disaster for Farmers and Milk Production
It is extremely disappointing to see opening prices announced this week down by around $1-$1.50/kg milk solids (8-11c/L). Processors, via their representative body ADPF (Australian Dairy Products Federation), have been talking down farm gate prices for the last year.
The vast majority of Australian milk is sold domestically including around a third going into milk bottles. So it is hard to understand the obsession of some milk processors and ADPF on exports and using this to drive down farm prices.
Farmers in Victoria and other areas which are on 1-year contracts will bear the brunt of lower milk prices in addition to the very dry conditions in Victoria and other areas.
Most dairy farmers in Queensland and NSW are on 2-5 year contracts that do not expire until at least mid next year. So in the short term prices will not change for most of our farmers. However, the lower prices announced will send a shiver down the spine of dairy farmers everywhere. Any farmers who are off contract need to shop around and compare prices from all processors.
If prices do not increase significantly in the next month before contracts are finalised, then milk production will fall massively in the next year and almost certainly fall below 8ML nationally. Processors will get their way to drive down price, but production which will likely never recover. Farmers need confidence in the industry and this will only occur if processors commit to stop dropping prices.
This is a ridiculous and dangerous outcome, driven by short-sighted decision-making amongst processors. It was just six months ago that a Commonwealth Parliamentary report on food security said dairying is in trouble and needed a stand-alone strategy to build reliability of supply, and here are the processors, led by Australian Dairy Products Federation, already actively trying to cut milk supply in the interests of delivering excess profits next year. If the Commonwealth adopts that report, they’ll have to work out what to do about this bad behaviour.
Joe Bradley, eastAUSmilk President
Dairy Plan for Queensland
EastAUSmilk has secured funding from the Queensland government for development of a Queensland dairy plan. We see this as a first step towards development of the long-proposed Northern Dairy Industry Plan, which would eventually cover parts of New South Wales as well.
On top of the state government contribution, each of eastAUSmilk, Bega, Lactalis, DFMC, and Norco, have committed funds.
The project requires eastAUSmilk to engage industry stakeholders, in developing a plan that will be led by industry and be consistent with both the Northern Dairy Industry Plan, and the Australian Dairy Plan.
We intend to move fast and are looking to have a draft plan by the end of August.
The objectives of the project include growing the milk pool in Queensland, building the economic viability of dairy farming across Queensland, facilitating productivity and efficiency improvements, and building confidence in the future of the dairy industry in Queensland.
A Project Advisory Group has been established, and includes representatives from eastAUSmilk, Subtropical Dairy, Department of Agriculture and Fisheries, Bega, Lactalis, DFMC, and Norco. Their first meeting should be in the next week or two, after which Queensland’s dairy farmers and other industry stakeholders will find they are being asked to contribute their creativity and suggestions.
This is a big opportunity to ensure a bright future for the Queensland dairy industry, and we must not miss it.
In the plan, we need to not only identify the major barriers to reducing costs, increasing productivity and profit, and growing the hectares devoted to dairying, but also find ways to sustain improvements in each those areas, which are practical and will be supported by dairy farmers and other stakeholders.
There will be extensive consultation with eastAUSmilk’s Queensland members, as well as other industry stakeholders. Meetings will be held in each of eastAUSmilk’s Queensland districts, and there will be opportunities to provide online feedback.
By Mike Smith, eastAUSmilk Government Relations Manager
New Biosecurity Tax Gets Deducted
Dairy farmers should be pleased to know the Commonwealth Government’s proposed Biosecurity Protection Levy is dead and the legislation has been withdrawn by the government.
On 10 May, the multi-party Senate Standing Committee on Rural and Regional Affairs shocked the agriculture sector when it recommended the Levy legislation should be passed, but by Wednesday 15 May, it was clear the proposal would be defeated by a mix of Opposition, Greens, and crossbench Senators. This came after extensive lobbying and advocacy from a wide range of farmer organisations.
The proposal was founded on a fundamentally wrong view of agriculture: the proposition that farmers were in some fashion special beneficiaries of the biosecurity system, and therefore should pay more.
As eastAUSmilk said in our submission on the proposal: agricultural producers are not beneficiaries of the biosecurity system, any more than is the importer of a wooden chair which has borers in it. Rather, like others in the community impacted by biosecurity incursions, agricultural producers are the victims of lax importers. To characterise them as in some fashion special beneficiaries is to base a policy on unsafe foundations.
We also noted that dairy farmers – indeed, many producers – are price takers and cannot pass on additional costs, nor can they absorb additional costs. The proposed levy was therefore seen by farmers as a proposal to reduce everyone’s income, without any kind of income test.
Any proposed agriculture reforms will be made much better by early and genuine consultation with the industry, and we remain ready, willing, and able to engage with the Agriculture Minister Murray Watt, the Commonwealth Government more generally, and public servants, on necessary or desirable change.
When it comes to what is really needed in the biosecurity area, past reviews by the Inspector General of Biosecurity have demonstrated a lack of efficiency, transparency, and accountability in the biosecurity system, and eastAUSmilk believes these are things the government should address first, in consultation with industry and the community. Significant reforms to biosecurity governance, funding, disease categorisation, surveillance and detection, diagnostics and vaccine development, compliance and continuous improvement should all be on the agenda.
By Mike Smith, eastAUSmilk government relations manager
Mary Basin Water Plan
The latest Mary basin water plan was released last week after 3 years of development. Several Mary plans have been developed in the past 20 years with new elements added each time. Most importantly for dairy farmers in the Mary valley, this plan has converted previous area based licences into volumetric licences.
During the first half of the plan’s development, farmers were not fully engaged in the process. Many farmers probably didn’t understand how important this plan is for their farm and the need to be critically involved. When the draft plan was released in February 2023, many farmers were not happy with the allocations they were given and needed assistance. eastAUSmilk got involved and we engaged Ian Johnson to help as he had done a few years before in the Upper Burnett area.
A lot of work was required to figure out what had happened including the negative impact of each member. In the end, eastAUSmilk helped all our members develop individual applications relating to their farm to justify a reasonable water allocation. This work resulted in most of our members getting a good allocation from the plan. Some farmers still do not have a reasonable allocation and are looking at options of what to do next.
I encourage all farmers to take the development of water plans extremely seriously. When they are being developed in your area, get heavily involved and if you are an eastAUSmilk member ask for our help immediately. And if you ever notice something on your licence or water bill that doesn’t look right ask for help.
Unfortunately in the past, government has done things like dictate baseless volumetric allocations and have consequently been unwilling to change them. If this happens to you, complain immediately and well before a plan is developed. This happened to a farmer in the Mary who is being forced under the plan to live with less than half the water he requires on a farm.
Eric Danzi, eastAUSmilk CEO
Codes and Competition on Agenda
EastAUSmilk has in the last week held multiple meetings with Commonwealth public servants and politicians to discuss the Dairy Industry Code, Fruit and Vegetable Code, competition policy, and the needs of the dairy industry.
In Canberra and in Brisbane, Chief Executive Officer Eric Danzi and Government Relations Manager Mike Smith met with senior officials from Treasury and from the Department of Agriculture, Fisheries and Forestry, as well as the Assistant Minister for Competition Charities and Treasury, Dr Andrew Leigh.
While eastAUSmilk has made substantial submissions to several of the inquiries currently underway into the behaviour of major supermarkets, we needed to understand where the multiple reviews of supermarkets are going, and what the next steps are likely to be. Also discussed were both the recent eastAUSmilk submission on the review of the Dairy Industry Code, and what comes next for that review.
Everyone we spoke with was very keen for information about how the market really operates, rather than dry economic theory, and we were able to provide many examples of anti-competitive behaviour and bullying, along the supply chain.
We also invested time, in some of our meetings, in explaining why farmers are demanding change in the priorities of Dairy Australia, and discussing some pressing research and extension needs which are not being addressed.
In light of these discussions, eastAUSmilk has responded to the recent Interim Report of the Review of the Food and Grocery Code, by calling for more detail on how big supermarkets must change to eliminate bullying and retaliatory behaviour towards suppliers, reshaped our call for supply chain margins to be monitored, and tackled the need for the uncompetitive outcomes of national pricing and preferential pricing for private label products to be addressed.
Department of Agriculture, Fisheries and Forestry told us that once they have fully digested the submissions made in response to their recent Dairy Industry Code discussion paper, they will be making recommendations to Government about the scope of the full second review of the Code, and how it will be conducted. They have not yet fully examined and evaluated those submissions, but Minister Murray Watt recently committed that the second review will fully commence in September this year.
By Mike Smith, eastAUSmilk Government Relations Manager
Keeping Up the Pressure for Supermarket Reform
EastAUSmilk has been making submissions on behalf of dairy farmers to the many inquiries into supermarkets which are currently under way.
We’ve been very pleased with the response to our submission on reforms to the Food and Grocery Code.
While the Review’s interim report supported making the Code mandatory and addressing the issue of retaliation against suppliers and producers in the Code, we still have work to do to get more from the Review, and we must ensure the Commonwealth government supports the Review’s recommendations.
While it is in the interests of dairy farmers that the relations between supermarkets and milk processors, covered by the food and grocery code, are better and fairer, we’re also looking closely at what is done about retaliation – it might be a useful consideration for the current review of the dairy code.
EastAUSmilk’s President Joe Bradley and Government Relations Manager Mike Smith supplemented our written submission, with an in-person appearance before the Queensland Government’s Parliamentary Select Committee inquiry into supermarket prices, on Monday 29 April. Anyone interested in Queensland history might be interested to know the Committee hearing was in the old Legislative Council Chamber at Parliament House – unused much of the time since the abolition of the Legislative Council 102 years ago.
Joe and Mike were at pains to stress that the market in food and grocery is as defective as it was in dairy, and that if the market isn’t operating properly, you won’t get a sustainable balance between supply chain margins, consumer price, and product quality, citing the Australian Competition and Consumer Commission’s assessment of both markets. They told the Parliamentary select committee that Queensland should support the changes being proposed to the food and grocery code.
The eastAUSmilk submission, focussed on the impact on regional suppliers and producers, of the national pricing policy of major supermarkets, but Joe and Mike ran out of time to discuss this during the hearing. They did speak briefly about the national food security review by the House of Representatives Standing Committee on Agriculture.
Members of the Select Committee listened closely and asked smart questions – they had clearly read the eastAUSmilk submission.
The Committee is due to report by 31 May 2024.
By Mike Smith, eastAUSmilk Government Relations Manager
Senate Inquiry looks at Supermarket Behaviour
EastAUSmilk President Joe Bradley appeared before the Senate Select Committee Inquiry into Supermarket Prices on 13 March, following the submission we made in February. Since then, the Committee has heard from other industry bodies including Australian Dairy Products Federation, consumer groups, government departments, small business organisations, individual businesses, and, of course, the big supermarkets.
The big supermarkets are both now on record as being supportive of a mandatory Food and Grocery Code, which is positive. However, in their evidence to the Senate Committee, both Coles and Woolworths denied any problems with their pricing, purchasing, behaviour, and culture, in spite of the very clear findings in the Interim Report of the Emerson Review of the Food and Grocery Code.
Whistleblowers and former industry insiders spoke at length about the tactics used by supermarkets to maximize profits, including predatory pricing, unfair contract terms, imposition of fees and charges on suppliers, bullying, use of private label brands to block branded suppliers, and pressuring suppliers to lower prices. Many allegations were made about the way the big supermarkets bully and retaliate against suppliers, including threats of contract termination, reduction in orders or shelf space, exclusion from promotions, imposition of additional costs or penalties, delayed payments, or payment terms changes, blacklisting or exclusion from supplier lists, and pressuring other business partners.
These allegations are entirely consistent with the submissions made by eastAUSmilk to the Senate Committee, and also to the Emerson Review of the Food and Grocery Code.
There have been improvements by some retailers in recent years, especially by those retailers including Coles who now have a significant number of direct suppliers. EastAUSmilk knows many of our members have excellent relations with supermarkets for whom they are direct suppliers, which is definitely positive.
Both supermarkets received a grilling by the Committee, particularly the outgoing Woolworths Chief Executive Officer Brad Banducci. Unfortunately for Mr Banducci and Woolworths, his performance at the senate hearing was poor. His inability to answer a large number of simple questions frustrated the Chair, who threatened Mr Banducci with jail several times for failing to answer these questions.
In and around the hearings, various proposals have been advanced to reign in the abuse of their market power by big supermarkets. Some of those suggestions were to legislate to give the government the power to force big retailers to be broken up into smaller units, to legislate to require supermarkets to stop buying up plots of land in order to block competitors setting up nearby, and of course a range of measures designed to stop bullying and reprisals by supermarkets.
The Senate Committee inquiry was supposed to wrap up last week but is now considering whether to seek evidence from several large multinational food manufacturers such as Coca-Cola and Nestlé.
By Mike Smith, eastAUSmilk government relations manager
Dairy Code Review Moves Slowly Forward
Over objections from eastAUSmilk, the Commonwealth Government deferred the second review of the dairy industry code, so it is now to be completed by late 2026 instead of late 2023.
They’ve started that review with a discussion paper, asking for input to Department of Agriculture, Fisheries and Forestry by last week, on eight previously-identified issues.
EastAUSmilk already had a list of issues to raise, and most of them fitted within the eight listed by DAFF. However, we refuse to be limited by other people’s priorities, in the Dairy Code matters we raise on behalf of members. In the end we advanced 28 separate propositions to do with our list of issues and DAFF's eight.
It’s a bit hard to identify the ultimate origin of each of their eight issues, but some have clearly come from milk processors who want to weaken the Code.
The eastAUSmilk submission called for monitoring of margins through the whole supply chain, better prepared income estimates for farmers and reconciliation of those estimates against actual earnings, long term contracts to have no less than the year one price in subsequent years, minimising milk swaps between processors while they are used to keep prices low, a requirement for bargaining in good faith and full disclosure when settling milk supply agreements, and preserving the cooling off period. And many more!
Overall we were clear that there is still an imbalance between processors and farmers in the market, and that Code needs strengthening rather than weakening.
What happens now? DAFF say they will consider submissions, then consult with industry about the conclusions they reach. Once that’s done, they will collate stakeholder feedback, and make recommendations to the government. The outcomes of this process will guide the rest of the Code review, which will look at the whole the Code, not just these eight topics. The Minister for Agriculture, Fisheries and Forestry Murray Watt has committed to commencing that process by September this year.
By Mike Smith, eastAUSmilk government relations manager
It’s Showtime!
Last week I visited the Sydney Easter show with my president Joe Bradley. It was my first opportunity to visit the show and I was interested to see what it was like after hearing so much about it. The show is very impressive and a great legacy from the Sydney Olympics from 24 years ago. There is so much space throughout the whole venue and so many great facilities.
The dairy pavilion is also very impressive being so large and comfortable for both cows and farmers. Also, for members of the public to see where their milk comes from. The milking shed was quite remarkable and allowed the public to comfortably watch cows being milked in a real modern herring bone dairy without getting in the way of farmers and the cows. The judging area being adjacent to the dairy pavilion also made it very easy for all, although some rain on the final day of judging caused a slight inconvenience.
The quality of the cows was impressive, and the international judges noted the improvement in the quality of animals over the past 5 years including for the Brown Swiss breed. I am a complete novice when it comes to judging the quality of cows, but I’m sure my Italian friend Angelo speaks with authority when he states this.
It was also great to meet so many dairy farmers and have many discussions with them about the challenges facing their futures. It would have been great to speak to more farmers, but the demands and stresses of showing cows means that I didn’t have that opportunity with all farmers.
I look forward to one day returning to the easter show. More importantly, I look forward to greater mixing between NSW and Queensland dairy farmers at future events including the Sydney show and Ekka.
By Eric Danzi, eastAUSmilk CEO
Dairy Symposium
On 22 March, a national dairy symposium was held in Melbourne. Almost 100 people attended included myself, the eastAUSmilk president Joe Bradley and a range of people from industry, government and unions. The key issues in the dairy industry are restructuring the dairy industry, increasing profits leading to growth and prioritising Australian dairy products.
Restructuring the dairy industry was the key outcome from dairy plan and nothing has been done on this front except QDO merging with Dairy Connect to form eastAUSmilk. This has caused massive frustration for dairy farmers who want duplication and waste removed and outcomes for dairy farmers. This was the focus of a farmer forum before the main symposium and the need for change was extremely clear to farmers and their representatives. Unfortunately, this issue was barely touched on during the main forum.
Minister Watt committed to seriously considering proposals from the industry to restructure the industry. Given the minister overseas Dairy Australia, no meaningful restructuring is possible without his approval. He has the power to lead or block change in the industry.
There was some discussion re increasing profitability and production and a commitment from the minister to explore this further. Key issues to drive profit and production including increasing the price and fixing market issues relating to the retail sector. The 7 retail inquiries must lead to meaningful change not be swept under the carpet. Improving pastures is critical for farmers in Queensland and NSW where we have lagged behind over the last 50 years. Restructuring the industry to effectively focus on farmer profits and production is key.
Australian dairy products must be prioritised in the eyes of consumers. It is hard to understand why countries who heavily subside their industries are able to dump products into Australia.
If the dairy symposium is to be of value, then rapid progress must be made on the real issues facing the dairy industry. If not, the decline will continue and it will be another talk fest with no outcomes for farmers.
By Eric Danzi, eastAUSmilk CEO
EastAUSmilk presents to the Senate
After eastAUSmilk made a submission to the Senate Select Committee on Supermarket Prices, we were invited to make an in-person submission to their public hearings. The Senate Committee was established by The Greens to look at market concentration, competition, prices and margins, and frameworks to protect suppliers. These are obviously of great interest to our members.
eastAUSmilk President Joe Bradley spoke with the Committee by phone link on 13 March, and it was clear Senators had read our submission, and had many questions for Joe about the issues raised in our submission, and other submissions.
We also provided the Committee with a copy of the submission eastAUSmilk made to the Emerson Review of the unenforceable and useless Food and Grocery Industry Code.
eastAUSmilk members know supermarkets have enormous influence on farmgate prices, which is why we have made submissions to several of these inquiries. It is clearly in the interests of eastAUSmilk members, and the dairy industry a whole, for the relationship between supermarkets, all of their suppliers, and the whole supply chain, to be cleaned up.
In our written submission and Joe’s evidence, we stressed the need for the Food and Grocery Industry Code to be made mandatory and for supply chain margins to be monitored, and Senators raised claims of intimidation of suppliers by supermarkets. eastAUSmilk’s submission to the Emerson Review addressed that issue extensively, because the more we talk with milk processors and other supermarket suppliers, the more they open up about their fear of ruining their businesses if they speak up themselves.
In many respects, our submissions to these reviews and inquiries speak on behalf of processors and others, because they don’t dare do so themselves. eastAUSmilk is doing their jobs for them, because getting these issues addressed is so important for the wellbeing of members and the future of the dairy industry.
Other topics covered in Joe’s discussion with the Senate Committee included the lack of competition in fresh food supply, the mental health impact on farmers of prolonged underpayment, the reducing milk pool and dairy herd, and supply chain unreliability vs. local sourcing.
Let’s see what the outcome is!
By Mike Smith, eastAUSmilk Government Relations Manager