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
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
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
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
Everyone’s Talking about the Big Supermarkets
Last week, the Queensland government announced a Parliamentary Supermarket Pricing Select Committee, chaired by Member of Parliament Tom Smith, whose Bundaberg electorate is one of Queensland’s biggest food bowls. The Committee is to look at impediments to fair pricing, including impediments to the profitability of primary producers, and report by 21 May 2024.
As well as the current consultation about the Dairy Industry Code there are now seven inquiries under way, all looking at the bad behaviour of big supermarkets.
eastAUSmilk members know supermarkets have enormous influence on farmgate prices, which is why we have made submissions to several of the 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.
We’ve made submissions to the Senate Select Committee on Supermarket Prices and to the Food and Grocery Code of Conduct Review, and the Australian Competition and Consumer Commission has also commenced an examination of the pricing practices of the supermarkets and the relationship between wholesale, including farmgate, and retail prices – our submission to them is due in early April.
The Food and Grocery Code of Conduct is voluntary, which means it isn’t applied properly nor enforced, so in our submissions we’ve been saying it should be mandatory, like the dairy code. We’re also urging that margins up and down the supermarket supply chain need to be monitored.
We discovered during our submission research that processors are terrified to raise complaints or problems with supermarkets, because they fear retaliation, so we’ve also urged that retaliation needs to be directly addressed in these reviews. Because we know the processors, and many other supermarket suppliers, won’t raise bad behaviour in their submissions to these inquiries for fear of retaliation, we have made a point of doing that work for them. If the retaliation issue is addressed, arising from any of these supermarket reviews, we would expect that the dairy code and industry will see the issue similarly addressed for dairy farmers.
By Mike Smith, eastAUSmilk Government Relations Manager
Dairy Code Review – Farmers Urged To Make Submissions
Department of Agriculture, Fisheries and Forestry has announced commencement of preliminary consultation on the coming review of the Dairy Industry Code, and eastAUSmilk is urging dairy farmers to make a submission before the 15 March deadline.
Information about the consultation process can be found here https://haveyoursay.agriculture.gov.au/industry-comments-on-the-operation-of-the-dairy-industry-code. You can download a discussion paper, and 8 focussed questions, from that web page.
eastAUSmilk has warned farmers this is a narrow consultation, focussing on eight issues of concern raised in the first (2021/22) review of the code by DAFF, and not all of their concerns can be addressed this time around. Those eight issues are reflected in both of the downloadable documents.
While many dairy farmer concerns can be raised in the context of these eight questions, not all can be. eastAUSmilk’s submission will make clear that consideration of a narrow range of issues, based on feedback in 2021, is not a good enough review of the code a further three years down the track.
eastAUSmilk is concerned that, somehow, DAFF came away from the 2021/22 review claiming everything was generally satisfactory with the code, and seem to have been unaware of the many and widespread concerns of eastAUSmilk members. Certainly, since that review, many other concerns have been raised with eastAUSmilk by members.
Included on the list of issues to be raised are the need to make suppliers a secured creditor, control or prohibition of milk swaps by processors which are used to undercut pricing, minimum price for later years needs to be at least the year one price, further barriers to processor collusion, final contract terms rather than initial terms need to be made public.
Individual dairy farmers are urged by eastAUSmilk to have their say via the above feedback page, and also to let eastAUSmilk know what concerns have been raised. Anyone making an online submission will be emailed a copy of their submission, and that can be forwarded to Mike@eastAUSmilk.org.au.
Mike Smith, eastAUSmilk government relations manager
Commonwealth Program Working for Dairy Farmers
Dairy farmers in New South Wales and Queensland are making good use of a new Commonwealth technology subsidy program. The On Farm Connectivity Program will subsidise dairy farmers (and others) to take advantage of connected machinery and sensor technology, up to 50% of the cost. Up to $30,000 can be claimed by each farm business.
Queensland dairy farmers Karen and Gary Wenzel have been funded under the program, and love it. He says he’s invested $40,000 in smart collars, with 50% of the cost covered by the new program.
Karen and Gary intend to use the collars to manage their artificial insemination program, but also to remotely monitor cattle heat, and the health of individual beasts and the herd.
They said making the purchase required very little effort, just a discussion with the collar supplier, Semex, and are urging their fellow dairy farmers to take up the opportunity.
Farmers must purchase through approved suppliers, only, and suppliers will complete the application and forward it to the Government, on behalf of each producer.
EastAUSmilk is aware of other dairy farmers with similar positive stories to tell.
Project guidelines set out a long list of products which can be purchased, and including livestock monitoring technology such as smart tags and collars, and many other things as well including drones and smart gates. More details are here at On Farm Connectivity Program including program guidelines and lists of approved suppliers.
EastAUSmilk urges dairy farmers to make an application as soon as possible: when the bucket is empty the program expires, so farmers need to get in right away! We checked in with the Government just before Christmas and there were still program funds available, but the Government says it is a one-off program and the only chance for this kind of subsidy.
Interested dairy farmers should contact Semex or eastAUSmilk for more information.
Mike Smith, eastAUSmilk Government Relations Manager
EastAUSmilk and Government: 2024
EastAUSmilk’s engagement with governments will be just as active in 2024 as it was in 2023.
We need to make sure the Commonwealth and the states fulsomely implement the recommendations of the Food Security Inquiry and commit to a dairy industry package that builds sustainable incomes and milk production.
Early in the year we’ll be making a submission to the Senate’s inquiry into the misuse or market power by major supermarkets, and making clear that many of the problems in the dairy industry are based around supermarkets undermining industry viability.
Queensland will have an election on October 26, and we’ll want all parties to commit to policies and programs which build dairy industry viability. We’ll hope to see a taste of that in the 2024 Queensland State budget, too, and an acknowledgement of the issue from New South Wales and the Commonwealth.
During 2024, we expect the Commonwealth to start the process of reviewing the Dairy Industry Code, and we will be advocating major and urgent improvements.
New South Wales has a Dairy Industry Plan, and we will continue discussing the need for such a plan across Queensland’s dairying industries, with the Queensland Government, as we also discuss the Northern Dairy Industry Plan with both New South Wales and Queensland governments.
EastAUSmilk has already made a submission about the Queensland State budget 2024, and we will be doing the same for the Commonwealth and New South Wales.
We might have had a reprieve from drought, but we need to press those three governments about the deficiencies in their respective drought programs.
Bobby calf/dairy beef solutions remain a priority in our engagement with all three governments, and we’re awaiting feedback on recent proposals.
We’re hoping current negotiations with the Queensland government, to facilitate on-farm tech training and uptake bear fruit early in 2024.
… and early in 2024 eastAUSmilk will engage with the Commonwealth to ensure they adopt the recommendations of the Commonwealth Parliament’s Food Security report, and implement them properly – particularly the rescue package for the dairy industry.
Mike Smith, eastAUSmilk government relations manager.
EastAUSmilk and Government: 2023
It's been a busy 2023, and a challenging environment, for eastAUSmilk’s relations with governments. March saw a Labor Government in New South Wales, and a new Agriculture Minister in Tara Moriarty. Federally, Labor started 2023 still early in their term, their first time in Government since 2013. In Queensland, the Labor government started and finished the year thinking closely about the October 2024 State election – fortunately the reshuffle under new Premier Miles saw stability with Mark Furner keeping the agriculture portfolio.
We’ve engaged actively with all of the relevant Ministerial offices, and hosted Queensland Minister Furner on a dairy farm visit, and Commonwealth Treasurer Chalmers and Minister Watt likewise.
During the year, eastAUSmilk has dealt with, or continues to deal with dozens of issues:
We’ve made strong representations about beefing up the Dairy Industry Code.
EastAUSmilk supported the prohibition of unfair trading practices in a submission to the Commonwealth.
Coles’ proposal to acquire two Saputo processing plants saw us raise many concerns with the Commonwealth, New South Wales, and Queensland governments, and we will continue.
We’ve discussed the failed implementation of the National Dairy Plan’s priority number one – major industry reform – with those same governments and will continue to press them.
Our immediate past President has been very involved in development of the Norther Dairy Industry Plan, and we’re continuing to engage with the New South Wales and Queensland governments about it.
EastAUSmilk was very disappointed there was nothing much for dairy farmers in any of the Queensland, New South Wales, or Commonwealth budgets in 2023, and we’re looking for better outcomes in 2024.
We’ve pressed those three governments about the gaps in their respective drought programs and come up against a lazy economist’s’ response time and again, that coping with drought should be part of normal farm business, and farmers shouldn’t need government support.
Bobby calf/dairy beef solutions have been on the agenda for just about every discussion with government, and we’re awaiting feedback on research proposals.
EastAUSmilk has pressed governments to facilitate technology uptake by dairy farmers, and there’s currently a Commonwealth government program offering just that, and negotiations with the Queensland government too.
We opposed the Commonwealth’s ridiculous Biosecurity Protection Levy, and the New South Wales government’s slashing of Coastal Harvestable Water Rights.
And just as the year ended, two things:
The Commonwealth Parliament’s Food Security report landed, proposing a rescue package for the dairy industry – we’ll be looking for the government to adopt the report and recommendations, and implement them properly.
And, the Senate has initiated an inquiry into the misuse or market power by major supermarkets – we’ll need to make a submission by February 2024.
Mike Smith, eastAUSmilk government relations manager.
Saputo acquisition by Coles
As reported previously, eastAUSmilk and other players in the dairy industry, have made multiple submissions to the Australian Competition and Consumer Commission urging that they attach conditions to the acquisition by Coles of two Saputo milk processing facilities, in Laverton (Victoria) and Erskine Park (New South Wales).
Our concern was twofold – one, that an integrated supply chain would give Coles unprecedented powers, and two, that the acquisition could, over time, substantially reduce competition for fresh milk, to the detriment of farmers. eastAUSmilk made it clear the industry needs more milk processor competition, not less.
As well as with ACCC, eastAUSmilk has repeatedly raised these issues with Commonwealth, New South Wales and Queensland governments.
ACCC initially released a Statement of Issues in July 2023 identifying preliminary concerns about Coles’ bargaining position in the dairy supply chain, and the potential for reduced competition for raw milk.
The ACCC has now rejected the proposition that the acquisition would reduce competition, and that they need to intervene. No conditions have been placed on the acquisition. The scope for ACCC to intervene was always narrow, restricted to the marginal impact on competition of the acquisition, and issues such as the community having ongoing access to locally sourced fresh milk, regional community resilience, fairness between big business and small, and so on, cannot be considered by ACCC.
On Wednesday 6 December, eastAUSmilk CEO Eric Danzi, and Government Relations Manager Mike Smith, discussed the Commission’s conclusions with ACCC Deputy Chair Mick Keogh.
ACCC concluded the acquisition is unlikely to result in a substantial lessening of competition over the next 5 years, and noted Coles’ conduct with dairy farmer suppliers is covered by the mandatory Dairy Code of Conduct and their interactions with processors is covered by the voluntary Food and Grocery Code of Conduct. They use the 5-year timeframe because they cannot predict industry conditions further ahead than that, with sufficient confidence.
They will release a statement of their reasons, probably early in the new year. eastAUSmilk will consider if there are further options open to us, to protect dairy farmers from negative outcomes of the acquisition. We hope other processors can use these developments to increase competition for milk supply, in the Sydney region.
Mike Smith, eastAUSmilk Government Relations Manager
Are Dairy Farmers Still Droughted?
eastAUSmilk has been chasing public servants in the Commonwealth, New South Wales and Queensland governments, and their Ministerial offices, to stress drought issues and drought response inadequacies.
This week, there’s good drought news for dairy farmers in most parts of Queensland and New South Wales. Tim Bale, near Taree, says the rain is ideal and “it’s a late spring”; Paul Newland in Malanda says everything has turned green overnight; Waylon Barron, just south of Toowoomba, reports widespread rain has stimulated furious summer planting; Kay Tommerup, near Beaudesert says her pigs will need to learn to swim.
With recent good rains, city dwellers may be mistaken and think all is now great for farmers everywhere, but they would be wrong.
Our members are cautioning that while recent widespread rains are a welcome relief, not everyone has had enough rain to make a difference. Most are also saying that without decent follow-up rains in the next couple of months, any pasture or feed growth promoted by November rains will be too limited to make a great difference.
In many cases, watercourses have flowed only a little, and dams have not filled, which means irrigation water access may not be much improved.
Every bit of advice from the experts says farmers must plan for drought and build their resilience. Our members have been investing time and money in their drought planning, and have incurred costs, along with the stress of a very dry 2023. While few had begun actively destocking before the rain, many had been letting herd size shrink, opting to keep numbers low, and trying to source feed to see them through the summer. Most have been unable to grow fodder to see them through to winter rains, and will still have to buy feed to supplement whatever they can now grow following November’s rains.
Feedback from members is making it very clear that circumstances are very different from region to region, and between localities, which makes it important that government policymakers are stopped from trying to make policy on the basis of the overall or average industry situation.
eastAUSmilk is going to keep on talking with government at every level about the ongoing need to ensure policies and programs reflect a full understanding of the true and diverse circumstances of farmers, and the possibility that recent rains could turn out to be not a real reprieve, but false hope.
Mike Smith, eastAUSmilk Government Relations Manager
New Dairy Industry Leadership
EastAUSmilk’s constitution requires that Directors (Board members) are nominated by the District Committees across New South Wales and Queensland, from amongst dairy farmers who are themselves District Committee members, which is a good way to ensure the organisation keeps close to grassroots members.
When long-standing northern New South Wales dairy farmer Peter Graham move north into Queensland, his director position became vacant – Peter’s contributions to the organisation have been invaluable, and much appreciated, and eastAUSmilk is sorry to see him go.
However, in his place, the Northern New South Wales District Committee has nominated a most able replacement, Tim Bale from Stewarts River near Taree in New South Wales, and he’s now been appointed a Director by the eastAUSmilk Board.
Congratulations, Tim!
EastAUSmilk has a total of six Directors – one from each of the district committees in New South Wales and Queensland.
Peter has also been Vice-President of eastAUSmilk, and this appointment also lapsed when he ceased to be a Director. A new Vice-President will be appointed at the next Board meeting.
Further congratulations go to dairy farmer and entrepreneur Kay Tommerup, who has just been elected Vice-President of Queensland Farmers Federation, the peak body representing most of Queensland’s agricultural industries. Kay has been on the Queensland Farmers Federation board for two years, representing eastAUSmilk interests. She’s from Kerry, in the Scenic Rim, and is a Director of eastAUSmilk.
National Ag Day
Dairy farmers around Australia celebrated National Ag Day each in their own way. Kay Tommerup, with daughter Georgia and son Harry, joined Queensland Farmers Federation at Reddacliff Place in the Brisbane CBD, encouraging passers by to sample dairy products, and chat about the industry. Taste-testers wanted to know where the products are made, where the farms are located, and where they can purchase products for themselves.
Mike Smith, eastAUSmilk Government Relations Manager
Government and Ministerial Meetings
eastAUSmilk’s recent round of meetings with government departments and Ministerial Offices has seen government better understand the situation of dairy farmers, but no big leaps forward.
Drought is the big issue we’ve talked about with each of the Commonwealth, New South Wales and Queensland governments, pressing them on the need for more direct assistance than is currently available. While eastAUSmilk supports governments focusing on building farm business resilience, cutting such programs as freight subsidies doesn’t make sense until resilience is further embedded.
We’ve also stressed that drought is here already – even the farmers who aren’t yet droughted are planning to follow their neighbors in de-stocking, stockpiling and sourcing fodder from other areas, and generally preparing for the worst.
We’re proposing to governments a multi-faceted approach to resolving the bobby calves/dairy beef issue, starting with investigating the extent of the problem: how many are using sexed semen and where, what stops sexed semen uptake or changing to dairy beef breeds, how many bobby calves are there annually, what has been the experience with dairy beef breeds, and more. Once we have a better handle on the size and shape of the issue, we’ll be better able to pursue relevant solutions.
The same round of meetings included Australian Competition and Consumer Commission and focused on the status of Dairy Industry Code review. We pressed how important it was for the Code to move with the times, address newly discovered problems, and rebalance negotiating power between farmers and milk processors. We’ll be collating initial code amendment suggestions and providing them to Department of Agriculture, Fisheries and Forestry in the near future, to ensure they are aware of the scope we see necessary for the review.
When talking with the Commonwealth, we also repeated our rejection of the so-called Biosecurity Protection Levy, and noted we’ll be making a submission to the Treasury review of unfair trading laws.
Mike Smith, eastAUSmilk government relations manager.
Dairy farmers and drought
EastAUSmilk is becoming very concerned about the impact of drought on dairy farmers in Queensland and parts of northern New South Wales.
The Bureau of Meteorology predicting below average rainfall through most dairy farming areas in Queensland and in north-eastern New South Wales over the next three months, and we’re getting reports from members that this year’s rainfall in some areas has been less than during the Millenium drought of two decades ago.
While recent rain in parts of New South Wales near Bega has eased conditions somewhat, they’re not out of the woods by any means.
If conditions like that continue, many dairy farms will experience great difficulty keeping herds alive, and the morale of dairying families will be once again crushed by circumstances beyond their control. That’s to say nothing about the likely financial consequences for those farms and their local communities.
Many are yet to fully recover from the devastating impact of dollar-a-litre milk, the last drought, and the last floods. An extended drought, without necessary government support, will be the last straw for some.
While eastAUSmilk backs the move by governments to support farmers to build their drought resilience, this drought has come too soon for that resilience to have built up, and too soon for financial and advisory supports to be removed.
We’re making representations to each of the New South Wales, Queensland, and Commonwealth governments to be ready with appropriate financial supports, as well as advice and other assistance, for drought-stricken farms.
Governments in the two states have historically had different approaches to programs of assistance to farms hit by drought, and the weather patterns are predicted to be quite different between most of New South Wales and Queensland, both governments need to understand the need to support their farmers and communities to outlast this drought.
Mike Smith, eastAUSmilk Government Relations Manager
Bobby Calves and Dairy Beef on the agenda
EastAUSmilk have been closely considering how best to assist farmers in managing the issues and opportunities around bobby calves and their unsaleability, having already raised this issue with the New South Wales, Queensland, and Commonwealth governments.
We recognise that properly addressing the issue will entail a multi-faceted approach. EastAUSmilk is investigating a package of programs which would include training in the use of artificial insemination and sexed semen, incentives for dairy farmers to make the shift (some of the equipment can be quite expensive and sexed semen can be twice the cost of unsexed), and advocacy by government to dairy farmers of its uptake including defining the economic benefits.
Research into the optimal dairy beef breeds, considering geographic location and herd genetics, will help to ensure the program’s longevity and success. Farmers considering adopting sexed semen into their herd management system would have access to relevant data enabling a move to a more valuable and saleable animal. Evaluation of alternative, more consistent markets, and how they could be established, will also be key to the success of the program.
However, before embarking on a comprehensive program such as this, we must be sure we are working with facts. EastAUSmilk is looking to survey our members to collect a range of relevant information including the extent to which they produce bobby calves, use artificial insemination, and use sexed semen. This data will also provide further evidence on the current roadblocks preventing the uptake of dairy beef, and the option of using artificial insemination and sexed semen.
EastAUSmilk is committed to providing leadership and innovative thinking to allow dairy farmers to take the lead in finding and managing sustainable solutions to this issue.
Mike Smith, eastAUSmilk government relations manager
Kay Tommerup, eastAUSmilk board member
Biosecurity Levy – Coming to a Dairy Farm Near You?
The Federal Labor Government’s 2023 budget included what they are calling a Biosecurity Protection Levy, to contribute to the cost of biosecurity measures. The government’s proposition is that, because farmers are the beneficiary of biosecurity measures, they should contribute. It will be set at 10% of the 2020-2021 agricultural levy rates.
The government has called for submissions by 6 October 2023 about how the levy is to be introduced, but stressed they are not open to submissions rejecting it, and not open to major modifications.
eastAUSmilk is in the process of developing their views about how they respond to this narrow ‘invitation’. Other agricultural industry bodies are also considering their response, and it is clear some will reject the whole idea and will oppose the new impost.
This is not a levy. It is a fee, charge, excise, or tax and should be accurately labelled as such. This point is not merely semantic. The existing levy system collects funds for industry purposes, is overseen by industry representative bodies, and is generally supported by the agriculture sector. The Biosecurity Protection Levy will, on the other hand, be funnelled into consolidated revenue, will not necessarily be spent on biosecurity initiatives of relevance to industry, and there will be no industry oversight.
The Government’s own levy guidelines set out how a levy is introduced and managed, and this new budget measure is introduced in a way not countenanced by those guidelines.
eastAUSmilk is consulting with Australian Dairy Farmers, and with Queensland Farmers Federation and their affiliated organisations, in developing a response.
Mike Smith, eastAUSmilk Government Relations Officer