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
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
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
The Present and Future for eastAUSmilk
As the son of a dairy farmer, I was brought up with an awareness of the day-to-day issues affecting this industry. From when I was able to attend our local branch meetings, I have always been actively involved in our organisation. Firstly, as a member, then delegate, branch president, district councillor and board member to now president of eastAUSmilk.
I enjoy being actively involved and hopefully at the end of the day I am helping make a positive difference for our dairy farmers. One thing that I do know for certain is that if we don’t have organisations like eastAUSmilk, to fight on our behalf, our dairy industry would be in a seriously worse off state. Whether it was the dollar a litre fight with the supermarkets or the now compulsory dairy code of conduct we have in place, or the many week to week issues that our organisation fights on our behalf. For example, just recently the Processors organisation has been approaching the government saying that the Dairy Code of Conduct needs to be substantially changed to allow them to reduce the price paid to farmers. Also, with the recently announced government enquiries into the supermarkets, we as farmers (not just dairy farmers) know very well the problems with trying to get anything near a realistic price for our products under the current system.
As President, I am often told that it is my task to talk the industry up. My response is fairly simple. If us as dairy farmers, are making a real sustainable living on our farms and (God forbid) even a return on our investment, that is when the industry will talk itself up.
In Australia, total milk production peaked a number of years ago at just under 12 billion litres. This year the forecast is around 8 billion litres. Australia is now a net importer of dairy products. I repeat, Australia is now a net importer of dairy products. If these facts and figures don’t bring a reality check to government and consumers, I don’t know what will. The government and banks especially need to rethink how we can finance young people to get them into the industry. If they genuinely want a dairy industry, then their approach and response need to change dramatically.
I would encourage all dairy farmers, if you are not already, to become members of eastAUSmilk, so that we can work positively together for our industry.
By Joe Bradley, eastAUSmilk President
Joe Bradley the new eastAUSmilk President, Tim Bale and Waylon Barron Vice Presidents
Joe Bradley was recently appointed to replace Matt Trace on the eastAUSmilk board. He also took over Matts position as president of eastUSmilk. Tim Bale and Waylon Barron were both elected vice presidents.
Matt has left the eastAUSmilk board due to potential conflicts it would create in his new role on the Australian Dairy Farmers (ADF) board. This is unfortunate but understandable. Matt has done an outstanding job as president of eastAUSmilk, and it has been impressive to watch Matt grow and develop his statesmanlike approach in the role of president and chair.
Matt will be lost to the board of eastAUSmilk but will be very useful to eastAUSmilk and our dairy farmer members in his new role at ADF. Anyone who knows Matt is well aware that he is a determined person who loves a fight and will be forthright and strategic in achieving outcomes for dairy farmers.
EastAUSmilk is very lucky to be able to replace Matt with Joe as president. Both are extremely capable and determined leaders who are passionate about dairy farming. I’m sure that Joe will do a fine job as president of eastAUSmilk. Joe is from Dayboro just north of Brisbane and is a person I have looked up to since joining the dairy industry and have regularly sought his advice and assistance. This is another occasion where Joe’s leadership was needed, and he is willing and able to step up.
Tim Bale is from Stewarts River near Port Macquarie in NSW. Tim has recently joined the eastAUSmilk board but has immense experience in many roles both within and outside the dairy industry. He is well known for central to the establishment of the farmers owned brand with Woolworths. Tim’s experience and knowledge will be invaluable to eastAUSmilk as vice president.
It’s also great to see Waylon Barron step up as vice president. Waylon is from the darling downs region in Queensland and is one of many dairy farmers who have become involved in eastAUSmilk over the past 6 years. He started on the darling downs district council, came onto the board just over 2 years ago and now has stepped up as vice president. Waylon is a very switched on and respected dairy farmer who I’m sure will adapt quickly to the role of vice president.
Congratulations to Joe, Tim and Waylon.
Eric Danzi, CEO eastAUSmilk.