Legislative Protections Afforded, Legislative Protections Achieved
The announcement by Fonterra Australia that it has settled its class action with over 350 dairy farmers closes a period of uncertainty and distress for many impacted.
The payment by Fonterra of $25M, without admission of liability, to be paid to those impacted by their actions in 2016, will provide small comfort to those who lost far more at that time, including the loss of trust in Fonterra as their processor.
Yet positives did arise from the ashes of the claw back of the farmer's milk price by Fonterra and the then Murray Goulburn.
The Mandatory Dairy Code of Conduct was introduced as a result of the lobbying of dairy industry bodies.
It has proved to be vital in helping to restore trust, openness and transparency between dairy farmers and their processors.
The Code will be celebrating its 3rd anniversary in January 2023, and it has grown organically over the past years, with oversight by the ACCC.
Since its commencement, it has continued to provide a strong platform for dialogue to achieve oversight of the milk supply agreements that were provided by processors to their suppliers.
The Code required that milk supply agreements had to be negotiated in good faith, be drafted in plain English and prohibited retrospective clawbacks as evidenced in 2016 amongst other safeguards.
Many farms are family owned and are small businesses. They are therefore afforded legislative protections against those who may be considered more powerful in their dealings.
The federal government has recently enacted unfair contracts protections for small businesses, which passed federal parliament on 27 October. The legislation is intended to ensure more competition and better prices.
By their very nature, many family-owned farms are small businesses.
The definition of a small business has been extended to be businesses with less than 100 people (from 20 people) or less than $10M turnover in the last income year.
Penalties have also been substantially increased for unfair contract terms that are found by the courts to be included in standard form contracts.
The Act provides businesses 12 months to review and amend their standard form contracts to comply with the legislation otherwise higher penalties can be imposed by the court.
Under the Competition and Consumer Act, penalties for businesses may be, whichever is the greater:
• up to a maximum of $50M; or
• three times the value of the "reasonably attributable" benefit obtained from the conduct, if the court can determine such a figure, otherwise if the benefit cannot be determined, 30% of adjusted turnover during the breach period.
For an individual, the maximum penalty will increase from $500,000 to $2.5M.
These changes have been supported by agricultural bodies such as the NFF and the ACCC.
As like the Mandatory Dairy Code, these changes will need to be monitored and amended as required to ensure that they provide the best available protection to small businesses.
President of NFF Fiona Simson has correctly identified that further work will be "needed to be done to ensure competitive markets in our food supply chains."
"The unfair contract terms laws are vital to protect consumers and small businesses against terms in these contracts that take advantage of this imbalance in bargaining power. We are pleased that these laws have been strengthened," ACCC Chair Gina Cass-Gottlieb said.
Where market power is abused by those in stronger bargaining positions, advocacy bodies like eastAUSmilk will highlight these abuses to government to seek appropriate redress.
We will watch closely as these changes come into effect and eastAUSmilk will lobby for further changes, if needed, to ensure dairy farms remain sustainable within the dairy value-chain in their relationship with processors and supermarkets.
Shaughn Morgan, Co-CEO eastAUSmilk
eastAUSmilk - time for member’s involvement
The first anniversary of the amalgamation of Queensland Dairyfarmers Organisation and Dairy Connect in forming 'eastAUSmilk' occurs on 1 December.
It has been an exciting 12 months under the guidance of Matt Trace and the members of the interim board and interim district councils.
The values that underpinns the organisation, as highlighted by the 'AUS' in the name, being 'Advocacy, Unity and Service', have provided a positive and collaborative way in bringing together dairy farmers from two states under one umbrella.
As has been said, unity of numbers and unity of purpose provides the foundations of a strong and united organisation enabling it to effectively advocate before government and other stakeholders within the dairy value chain.
With the terms of the current members of the interim board and district councils coming to an end on 31 December, eligible members of eastAUSmilk are encouraged to consider standing for their district council and/or for the board.
Nominations are now being received until Sunday 13 November and you may obtain a nomination form for your district council and/or for the board from Lynelle Rogers by emailing her on ea@eastausmilk.org.au or by phone (07) 3236 2955. Alternatively, you may download the nomination form(s) from the eastAUSmilk website at https://www.eastausmilk.org.au/board-and-district-councillor-nomination-forms
If more nominations are received than positions available in either the district councils or the board, then elections will be held to determine those who will be elected.
The board of the eastAUSmilk recently amended the boundaries of the 6 District Councils to ensure inclusivity of the members within the two States, which are now:
• the Northern – Central Qld District;
• the Burnett - Gympie - Moreton Qld District;
• the Scenic Rim – Lockyer Valley Qld District;
• the Darling Downs Qld District;
• the Northern NSW District (North Coast - Mid North Coast – Lismore - North Inland); and
• the Southern NSW District (South Coast - Sydney basin - Inland).
Involvement of the members in the democratic process of any industry association is vital for its well-being and corporate governance. I encourage you to consider becoming involved within your organisation.
If you have any questions, please feel free to contact your representative interim board member whose contact details may be found at the eastAUSmilk website or by contacting the office.
Shaughn Morgan, Co-CEO eastAUSmilk
More positive times for dairy industry
The dairy industry has had many tough times over recent years. There was the drought that kept going, followed by devastating floods, ongoing wet and muddy conditions, and a massive increase in the cost of inputs.
However, in recent months there have been some significant positives. Although there has been some rain, weather conditions have generally been better in most regions over recent months. Hopefully this continues and we have a normal wet season coming up.
The cost of inputs has stopped rising rapidly and have fallen for some inputs. The price of some inputs including urea increased again after falling considerably. Hopefully, we can see a steady fall in key inputs including fertiliser, fuel, and grain over the coming months.
The milk price increased substantially in July and most farmers would likely receive between 85c and $1 per litre this year. This is a historically very high milk price and with a softening in input costs would lead to decent profits for most farmers.
So, what has been the impact of the changes on dairy farmers? Some farmers have still ceased dairying in recent months but the mass exodus that we saw, especially during the drought, has ended.
There are an increasing number of farmers spending money on their farms given the more positive times currently and expected in the future. Some farmers are buying cows in an attempt to rebuild herds and increase milk production to take advantage of higher prices. There are an increasing number of farmers investing in capital on their farms both machinery and sheds.
Many farmers are investigating whether to make large changes to farm infrastructure to make their farms more resilient to future weather events (both flooding and droughts). This would be a very large capital investment for most farmers so many are wanting more certainty over future milk pricing before making such huge investments.
There are more positive signs for the industry. Most farmers want clear commitments from processors to increase milk prices to at least $1/L in the next year and maintain the 15C/L for new milk for at 3 years. These clear signals will be required for farmers to pull the trigger on substantial investments leading to large increases in production. I expect that the potential new entrants to the dairy industry are wanting the same before investing.
Eric Danzi, Co-CEO eastAUSmilk
Kay Tommerup appointed to QFF board
Kay Tommerup is a dairy farmer from the Beaudesert area who recently joined the board of eastAUSmilk. Kay has considerable skills in a range of areas which she has used to diversify her dairy farming business over the years with her husband David. The Board and senior management of eastAUSmilk believe Kay’s skills and enthusiasm would be useful not only for eastAUSmilk but also QFF (Queensland Farmer’s Federation). As such, eastAUSmilk has appointed Kay as our QFF nominated Director.
I fully expect that Kay will use her skills and experience to assist and lead QFF forward over the coming years. I expect all at QFF will value Kay’s input and inspire QFF to move forward as an organisation.
It is vitally important for QFF to work in partnership with government to achieve outcomes for farmers and government. Developing partnership programs with government is a key area that we need to further enhance to ensure that farmers flourish in the new world. I expect Kay to be of great value in developing and implementing these partnership programs in many areas including water, natural resource management and animal welfare. In addition, addressing government red tape restrictions on farmers and industry marketing are key skills of Kay’s that I expect to be utilised by QFF to help achieve outcomes for all farmers.
QFF undertakes a range of activities on behalf of eastAUSmilk and farmers which often go unrecognised. In addition to the key areas above, QFF is very active in a range of areas including water management and pricing, natural resource management, biosecurity, and labour.
Good luck to Kay in her new role. I look forward to watching her help lead QFF forward over the coming years to ensure that QFF delivers new and innovative outcomes for all QFF farmers.
Eric Danzi, Co-CEO eastAUSmilk
Milk comes from dairy cows not plants
Dairy farmers and their families are grateful for the ongoing strong support of Australian consumers for fresh nutritious milk, which is a staple of their food basket.
This is demonstrated by the continuing demand for fresh milk by supermarket customers.
Dairy Australia's Human Health and Nutrition Policy Manager, Melissa Cameron, in her recent presentation to the eastAUSmilk Annual Forum, indicated that 98% of households continue to regularly purchase milk.
She went on to say that 82% of households also agree that it's important to support the Aussie dairy industry.
Indeed, dairy milk provides 9 nutrients essential to human health.
Milk also contains other nutrients including B vitamins for energy, vitamin A to help maintain a healthy immune system and calcium and vitamin D, both of which work to build bone strength.
It is for these reasons that our peak advocacy body Australian Dairy Farmers (supported by the State Dairy Organisations and based on the empirical data and evidence provided by Dairy Australia) advocates for the importance of 'truth in labelling' in dairy produce.
Iconic dairy terms such as ‘milk’ should be safeguarded from misuse. This is especially so with the increasing acceptance of plant-based drinks as a 'milk substitute'.
Non-dairy alternatives generally had filtered water added to their plant base and were fortified with calcium and a range of other minerals and vitamins.
In some cases, key minerals and vitamins were not naturally present in these plant-sourced drinks. Nutrients were added to these products to try to mimic the composition of dairy milk.
Hence, the nutritional differences between dairy milk and plant-based alternatives are self-evident and 'truth in labelling' should occur now.
In the USA, the National Milk Producers’ Federation characterises such labelling as a misappropriation of ‘traditional dairy terms’ and says that ‘food labels should clearly and accurately identify the true nature of the food to the consumer’.
These non-dairy businesses should not be permitted to represent their products as something they are not.
Thus, the Government should act now to implement the many recommendations put forward over the past years and ensure that dairy milk is afforded the protection that the name 'milk' deserves.
Dairy farmers who work from before dawn to well after dusk each day deserve no less.
Shaughn Morgan, co-CEO eastAUSmilk
Annual Forum and Annual General Meeting 2022 - A Reflection
The Board and members of eastAUSmilk were grateful for the hospitality afforded to them by the people and dairy farmers of the Northern Rivers when the advocacy body held its recent Board Meeting, Annual Forum and Annual General Meeting in Lismore.
We were pleased to support the community as it continues its rebuilding of its township within its region, after the devastating impact of the floods.
The members were provided with 2 policy updates from experts in their fields on the preparedness to prevent foot and mouth disease and other biosecurity risks from reaching Australian shores (www.daf.engagementhub.com.au/animal-disease-preparedness) as well as the high nutritional value of dairy as against plant-based alternatives (www.dairy.com.au/health/nutrients).
Both presentations were well received, and copies of the speaker's PowerPoints may be obtained by emailing shaughn@eastausmilk.org.au
In 2 further addresses, the CEO of Norco, Michael Hampson, reflected upon the importance of collaboration within the dairy industry while CEO David Inall spoke about the activities of our peak industry body Australian Dairy Farmers.
The current Board also agreed to the timetable for the upcoming Board and District Councils to replace the interim members. Information will be made available in October for the nomination process and elections to be held so that the elected members can commence their tasks on 1 January 2023.
To stand for elected office, join eastAUSmilk and become an active member of your industry association. Further information regarding membership may be obtained from Lynelle at ea@eastausmilk.org.au
In his Presidential Address, Matt Trace, spoke about the positive messages from the FairGo Dairy Logo campaign within the dairy industry and the natural disasters that NSW and Queensland have encountered over the past 12 months.
The resilience of the agricultural sector to such adversity is to be applauded.
Expressions of thanks were also extended to former President (and current ADF Board member) Brian Tessmann as well as former Board members Joe Bradley and Gary Wenzel who all stepped down since the 2021 AGM.
The Board, District Councils and staff look forward to continuing to lobby and advance the cause of a strong, vibrant, and sustainable dairy industry in the northern States in the months and years ahead.
Shaughn Morgan, co-CEO eastAUSmilk
eastAUSmilk – accountability and growth
At the heart of every industry body is its members.
Members provide the guidance to the elected officials in undertaking their duties and policy direction for staff to advocate on the many issues that the members confront on a daily basis.
In that regard, eastAUSmilk is no different to any other organisation whose task is to safeguard the interests of their members.
Part of that democratic process is the holding each year of the Annual General Meeting where the members are provided with a 'health' check on their organisation.
They are able to ask questions of their Chairperson and seek confirmation from members of the Board. It is not just an expectation but a statutory requirement for such meetings to occur.
It is in essence the accountability that members not only want but need.
On 30 August, eastAUSmilk will be holding its AGM at the Lismore Turf Club, starting at 1pm. It will be preceded by the Annual Forum where member updates will be provided, and topical policy issues will be presented and discussed.
One of the major issues that dairy farmer members have raised with their Board members in recent times is that of biosecurity and in particular the safeguards that are in place to prevent 'foot and mouth disease' and 'lumpy skin disease' from taking hold in Australia.
We are pleased that at the Forum, representatives of QLD DAF and NSW DPI will address matters relating to biosecurity and where members can raise questions that they may have.
As well, Melissa Cameron from Dairy Australia will provide information regarding the nutritional benefits of dairy milk as against plant-based alternatives. This is topical given the continuing public discussion regarding 'truth in labelling' and its importance to dairy farmers and consumers generally.
Updates will also be provided by the CEO of dairy cooperative Norco, Michael Hampson, and the CEO of Australian Dairy Farmers, David Inall.
The Annual Forum will be from 9.30am for a 10am start and is open to members and dairy farmers generally.
Additionally, the day will also be an opportunity to mix informally with other members, dairy farmers, directors, and staff.
Through such interaction, the vitality of eastAUSmilk can be maintained and allowed to grow organically.
The Board of eastAUSmilk looks forward to welcoming you to the Annual Forum and AGM on 30 August at the Lismore Turf Club.
Shaughn Morgan, Co-CEO eastAUSmilk
Fairgo Dairy a raging success
Five years ago Shane Knuth from KAP led a campaign to get fairer prices for Queensland dairy farmers. As a result of this, the labour government funded the Fairgo Dairy project for QDO. The aim of this project was broadly around solving the problems of the dairy supply chain by specifically focusing on consumers and the retail sector given the negative impacts of $1/L milk on the dairy supply chain.
QDO utilised the funding to do a range of things. Most importantly, we ran a concerted consumer focused marketing campaign to destroy $1/L. This was an extremely successful campaign which started in late 2018 and gained tremendous consumer support and gained the attention of major media outlets Australia wide. In addition, retailers and politicians were acutely aware of what we were doing and became actively involved.
As a direct result of our campaign, $1/L milk ended in February 2019 thanks to Woolworths deciding that the time was right to lift their price to $1.10/L. A domino affect followed and all retailers matched Woolworths and milk processors were then able to lift their brand prices as well.
Fast forward three and half years to today and the retail milk price for retail brands is now $1.50-$1.60 a litre. $1/L is now buried in the past and will never return. Over the next year, further retail price increases will occur and a price of $1.70-$1.80 is expected to be the norm later this year or early next. The future is now much brighter for dairy farmers and processors around Australia.
None of this would have happened if Shane Knuth didn’t fight for a fair price for Queensland dairy farmers and if Minister Mark Furner didn’t fund the Fairgo Dairy project. All dairy farmers should be very grateful to Shane and Mark so thank you on their behalf.
Eric Danzi, co-CEO eastAUSmilk
A new Era for QLD and NSW Dairy Farmers
1 December 2021 was a significant day for dairy farmers in Queensland and NSW.
On that day, Queensland Dairyfarmers Organisation and NSW based Dairy Connect came together to form a single dairy farmer organisation representing Queensland and NSW under the united badge of eastAUSmilk.
These two industry advocacy bodies represented their members (and the dairy industry generally) over many years of public service.
Each organisation took leadership roles across a broad spectrum of policy issues, ranging from the introduction of the Dairy Mandatory Code of Conduct through to the demise of $1/L milk.
Yet like most Industry bodies, it was proving difficult to arrest the decline of dairy farms with the resulting decrease in milk production. This has become even more evident over the past decade and has been an ongoing trend since deregulation of the dairy industry in 2000.
By joining together, our two bodies could represent a greater number of dairy farmers before government and stakeholders, as well as providing an enhanced service to our dairy members.
Under the chairmanship of Matt Trace and ably supported by his Board, each representing one of the 6 District Councils, eastAUSmilk has proudly continued the strong traditions of its august past but always looking to the future.
The Board recently farewelled Gary Wenzel and he was thanked for his support of eastAUSmilk.
As with farming succession, the Board is pleased to welcome 6th generation Kerry Valley dairy farmer Kay Tommerup to the Board. Her family's dairy farm can proudly trace its history to 1874.
More information about Kay may be found at www.tommerupsdairyfarm.com.au
With an eye on the future of eastAUSmilk and dairying in Queensland and NSW, the 2022 AGM will be held on 30 August at the Lismore Turf Club. The Board and members are looking forward to visiting the Northern Rivers. Formal notification and further information will be sent to members shortly.
If you wish to become a member of our vibrant industry association, please visit www.eastausmilk.org.au where you can learn more about eastAUSmilk and become a part of our future direction.
Shaughn Morgan, co-CEO eastAUSmilk
More Action Needed to Halt Risk of FMD
Australian livestock farmers and the industries and communities that underpin them are facing an economic and social crisis that will cripple their livestock farms should foot and mouth disease reach Australia.
The economic consequences would be devastating for livestock producers. It is estimated that our red meat exports would be immediately hit with losses valued at $15 billion and it would take years to return to markets that will be lost.
The impact on farmers and their families will be crippling. Farmers have been through devastating droughts, floods and bushfires over the past years and for many, the effects of a FMD outbreak would see them leave the industry in even greater numbers than in recent years.
This would result in a further reduction in fresh milk production, which is already falling throughout Australia.
Supermarket customers will see an immediate reduction in the availability of Australian dairy and meat products on the supermarket shelves and prices will be higher.
FMD in cows is a painful disease that causes blisters in their mouths and results in cows being euthanised. The UK outbreak in 2001 resulted in 6 million animals being killed. The impact on our industry will be far greater.
Overall, the financial impact of an uncontrolled outbreak in Australia would be approximately $80 billion over 10 years.
With FMD on Australia’s doorstep, over the past months the federal and state governments, in conjunction with peak agricultural bodies, have been discussing ways to enhance our biosecurity to prevent FMD from reaching our shores.
Campaigns have been undertaken to educate overseas travellers, particularly to tourist hotspots with FMD such as Bali.
However, this is not enough. Paying compensation to affected farmers would never replace the true value of their cows. They need to ensure that their farms are FMD safe.
It is not inevitable that FMD will arrive in Australia. Those who express this view are wrong and it must not be accepted.
Instead, much more must be done to prevent FMD from reaching our shores.
The Government must immediately reconsider imposing travel restrictions to areas that are close to Australia and which are FMD infected. This may only be needed for a short period of time but it will enable those nations to vaccinate their cows and thus control the outbreaks.
The announcement by the Federal Government to introduce 'sanitation foot mats' for incoming travellers from infected countries at all airports is welcomed but other shoes being carried by passengers must be inspected and disinfected as necessary. This is a further extension but is an inexpensive and effective solution.
We introduced harsh restrictions to halt COVID over the past years, we must do likewise to stop FMD and to protect our livestock industries. The risk is too great – more needs to be done now.
We will regret it if we do not do so.
Shaughn Morgan, co-CEO eastAUSmilk
Retail milk prices going up, but retailers and Dairy Farmers slow to move
Farmgate milk prices moved up significantly on 1 July with farmers receiving between an extra 15 and 20c/L. This was long overdue and reflects the increase in cost of production rather than giving farmers a significant profit. In future years, the price will need to continue to increase to allow farmers to make a reasonable profit or milk production will continue to decline.
At the retail level, prices started to move soon after 1 July as expected. Pauls moved very quickly to $4.00/L in both Coles and Woolworths stores and Norco also moved quickly to $4.10/L. These increases were as expected and in line with increases in farmgate prices.
However, no other retail milk prices have moved. Dairy Farmers are still at $3.55 in both Coles and Woolworths. Woolworths milk is still only $2.60 as is Coles milk. Farmers Owned is still only $3.20, which is lower than the $3.40 it was earlier in the year.
It would be expected that Dairy Farmers will lift to around $4/L but it is unclear when. Dairy Farmers owner Bega would be losing significant money selling at $3.55/L given the cost of purchasing milk off farmers has increased so significantly on 1 July.
Surely Coles and Woolworths will lift the price of their milk to at least $3.00/L but more likely $3.20/L in the coming weeks. This is not only in line with increases in farmgate prices in Queensland, but very similar increases in farmgate prices Australia wide. There is no justification for retailers leaving prices at $2.60 which is clearly a level at which retailers would be losing money. It is unclear whether retailers are in fact the ones taking this loss at present or whether the processors that package their milk are being forced to take a loss until retail prices move.
What is the impact of those brands, including Coles and Woolworths, not lifting their prices? These brands would be taking market share off those brands that have lifted prices. This is extremely bad for those negatively affected brands. Whether this is a conscious decision or not, those brands that haven’t lifted prices need to do so immediately to ensure that the dairy industry, both farmers and processors, can make a profit and remain viable.
Eric Danzi, Co-CEO eastAUSmilk
Has the dust settled on the milk supply contracts?
There has been a real frenzy of activity across Australia in the past month with all processors attempting to secure milk. Milk production is down across Australia and all processors are short of milk. There have been daily announcements re milk price increases, and this may continue in early July.
In Queensland, the last price increase announcement was by Bega (and DFMC) on 1 July although many are unaware of this. Of the 3 major processors Bega (and DFMC), Lactalis and Norco it would appear that Bega (and DFMC) are now on average paying the most for milk at over 88c/L. Lactalis is around 1c behind and Norco probably 2-3c behind on average.
However, averages mean very little and as I have mentioned continuously over the past few months every farmer coming off contract need to get income estimates with the same realistic assumptions off all processors to see who is paying the most for their farm.
There are still likely to be some farmers who change process during July. Some will exercise their 14-day cooling off period as processors continue to change prices. And some farmers will utilise the ability to supply uncontracted for 30 days before making a final decision.
So, as it stands now, how many farmers will change processor in Queensland this year? At least 10 farms will and probably closer to 15. This probably only represents about 10% of all farmers in southern Queensland who are off contract and can move processor. Although this is not insignificant, it is a disappointing outcome since many other farmers would be able to get a higher price by changing processors but for whatever reason have chosen not to do so.
If you haven’t checked your price with other processors, please do so today. Even if you have signed a contract, if it was within the last 14 days you can get out of that contract to sign with someone else paying a higher price, so it is not too late.
Eric Danzi, Co-CEO eastAUSmilk
Dairy farmers need 90c/L to continue dairying
All major milk processors released their new milk contracts on 1 June. All processors announce significant increases in prices as expected with increases between 9 and 12c/L except farmers owned that has announced only a 5 c/L increase. All processors now pay between 80 and 85c/L on average.
Of the 3 major processors, Norco announced a potential 12 c/L increase which will see an average perhaps around 84 c/L. Lactalis announced a 9c/L with an expected average price around 81-82 c/L. DFMC who supply Bega announced a 10.5c/L increase that will see them average around 83c/L in southern Queensland. DFMC is expected to average around 81c/L in North Queensland in north Queensland.
Are farmers excited by the price increases? No. Will this be enough to stop exodus of farmers from the industry? No. The cost increases from fertiliser, chemicals, fuel and purchased feed over the past year are likely to more than swallow up the price increases. And the ongoing wet and muddy conditions will continue to hamper production and milk quality.
There are likely to be further increases during June and there needs to be. To get farmers excited and profitable again prices need to average at least 90c/L. anything less than this will see the exodus from the industry continue.
Farmers have time before they need to sign so do not sign anything yet. Get quotes from all processes to see who pays you the most since there will be significant variations between processors for individual farmers. Make it clear to processors that you need more to stay in the industry.
There is no spare milk in Australia to send to Queensland, so processors need Queensland milk. Processors need to demand money in the retail sector to remain profitable and pay farmers 90c/L or the spiral of falling milk supply will continue.
Eric Danzi – eastAUSmilk Co-CEO
Federal Labor Government – a new beginning or continuing decline?
With a newly installed Federal Government comes newly appointed Ministers who will be briefed by their policy advisors. The public service and departmental heads will provide briefings as to how their policies can be implemented. With it, industry bodies will seek meetings to put their member's views forward and ensure their positions are given appropriate consideration.
During the election, agricultural policy was announced in the broad brush but as always, the 'devil is in the detail'.
Labor have announced changes to the agricultural visa scheme. They intend a renewed focus towards to the Pacific to increase farm labour.
Promises have been made to increase biosecurity funding to help prevent Lumpy Skin & Foot and Mouth diseases breaching our borders, with the continuing outbreaks in Indonesia. Diseases which threaten livestock industries.
These holistic issues are of most immediate concern to farmers, especially within dairy and we welcome these commitments.
However, other immediate matters also need to be considered and addressed.
Dairy Australia's latest situation and outlook report highlights the increasing input costs that dairy farmers are facing. Fertiliser, fodder, fuel and grain prices doubled in price over the past 12 months, placing undue pressure on dairy farmers to continue to survive within the dairy industry. Dairy farmers on the Atherton Tablelands, for instance, are facing some of the highest fodder costs with an average of $350 a tonne for pasture hay.
These harsh imposts are contributing to the decline in the number of dairy farmers across the dairy States, especially where the farm-gate price being received is not equal to their costs of production. Hence the real need for supermarkets to increase the price of home-brand milk to a minimum of $2/L. In turn, processors must guarantee to pass these gains back to the farmers in their milk price.
The Labor election commitment to convene a dairy symposium is a positive and proactive step.
It will enable the dairy industry to consider ways in which to stop the decline of dairy farms and provide solutions to ensure a future for generation of dairy farmers to come.
The symposium will enable dairy representatives, from dairy farmers to supermarkets, to address a vast and complex number of issues which were identified in numerous recent parliamentary and ACCC reports. These include the dairy mandatory code, input costs, 'truth in labelling', market failure to name but a few of the issues.
The symposium may not be the panacea, but it will help crystallise the ongoing issues and the way in which we need to find a collaborative solution. Otherwise, the dairy industry we know today, which itself requires strong positive change, will be very different to the industry that will or will not exist in the future.
Shaughn Morgan – eastAUSmilk Co-CEO
Consider all milk contracts before signing
Milk processors are required to release their new milk contracts by 1 June. There has been a lot of discussion regarding these announcements and an expectation of a significant increase in milk prices given the increase in production costs, shortage of milk and ability for retail milk price to increase in response to cost increases.
Dairy farmers are in a very strong bargaining position and should utilise this to gain the maximum increase in milk price. This is a fork in the road moment for a lot of dairy farmers deciding whether they should stay in the industry or not. So no time is more critical to gain the highest price possible.
I urge all dairy farmers not to be rushed and explore your options with all processors before signing a contract. Given the milk shortages and cost increase, farmers should expect at least an additional 10c/L. Do not consider signing any contract with less than a 10c/L increase and without exploring all options.
The prices when announced are a weighted average only so you should request an income estimate for your individual milk supply. Be honest and realistic when providing the volume and milk quality parameters for the estimate so it can be as accurate as possible for you to consider.
Please let all your dairy farmer friends know of what they should expect and ensure they also shop around before signing a contract. Also be aware that if you sign a contract that you regret, you have a 14 day cooling off period where you can terminate your contract.
The ACCC has updated its guidance on some key elements of the Dairy Code. The updates provide more detail on the ACCC’s interpretation of the code’s ‘single document’ requirement, arrangements for cooperatives and collective bargaining groups, what constitutes a ‘material breach’, loyalty payments and other bonuses, and the requirement to publish dispute reports.
Eric Danzi – eastAUSmilk Co-CEO
Farmers need at least a 10c/L increase on 1 July
There have been massive increases in costs in the dairy industry over the past year as there have been across the broader economy. Large increases in the cost of fertiliser, fuel, chemicals and labour has had a substantial effect on the cost of producing milk both for farmers and processors. On top of this, many dairy farmers (and processors) have been very badly affected by flooding and continual wet weather putting further pressure on profitability.
So what does all this mean? From a farmer perspective, it means that for the majority of farmers cost have probably gone up by between 10 and 15c/L.
There continues to be farmer exodus from the industry on a weekly basis and there are no signs of this slowing down without a major shift in price. Production across Australia is down by 3% so far this financial year and processors are desperately short of milk.
Dairy farmers are not whinging for more money knowing that they will still continue to produce milk. Dairy farmers on mass are waiting to see what price increases will be offered before deciding whether to continue producing milk. There are plenty of attractive options for dairy farmers now besides just continuing to produce milk for little or no margin. The returns from beef are extremely strong and there is the opportunity to grow and sell crops rather than feed them to cows. Options to sell or lease farms are also attractive.
It is very positive to see some processors paying additional money to farmers in May and June this year in light of the substantial financial pressures on farmers. However, a 5c/L increase on 1 July would not even come close to what is required.
The bottom line is that if farmers don’t receive at least another 10c/L, it is very likely that the shortage of milk will increase. And it is much harder and more expensive to attract farmers back into the industry then keep them there by offering an attractive price to stay.
Eric Danzi - Co CEO, eastAUSmilk