Milk processors fail to fund Dairy Australia, but farmers urged to pay more
Australian dairy farmers are being called on to pay 20 per cent more in levies to Dairy Australia, while processors pay nothing.
Milk processors have failed to deliver on their promise to help fund Dairy Australia, just as farmers are being asked to vote on lifting their $32 million levy contribution to the peak research and development body by 20 per cent.
On May 3 last year the Australian Dairy Products Federation – representing Fonterra, Bega, Saputo, Norco and a dozen other companies – stated they were thrashing out a deal to pay DA for the first time, based on a “due diligence project” to understand the value of its R&D to them.
But when asked last Friday if the due diligence report had been completed and what funds processors were committing to DA, ADPF’s media consultant told The Weekly Times “industry is still working through their approach, so it’s not the right time”.
Southwest Victorian farmer Bernie Free, whose herd produces five million litres of milk a year and already pays DA about $20,000 annually, said “if it’s not the right time for processors to be doing the right thing, then it’s not the right time for us to be raising our (DA) levies.”
Processors are also refusing to budge on paying southeast Australian farmers more than $7-$7.30 a kilogram of milk solids, despite Fonterra lifting its New Zealand suppliers’ price to an all-time record $8.61/kg of MS (NZ$9.20) last week.
A Fonterra spokeswoman said at this stage the company was sticking to its scheduled review of pricing in Australia.
This comes as the industry’s Dairy Levy Poll Advisory Committee, which included a ADPF processor representative, has recommended farmers vote for a 20 per cent increase in their DA levies, via a poll that opens on February 24.
The Levy Poll Committee has also given farmers the option of voting for no change in the levy rate or an increase of 15 or 25 per cent, but ruled out letting them vote for a cut in DA’s levy rate.
As it stands all Australian dairy farmers must pay 2.8683 cents a kilogram of their earnings on butterfat and 6.9914c/kg on protein to DA, which adds up to $3600 to $3700 for a million-litre dairy farm, producing 78,000kg of solids each year.
A 20 per cent levy increase would push a million-litre farm’s annual DA contribution into the $4320 to $4440 range.
United Dairyfarmers of Victoria president Paul Mumford said processors needed to “put their money where their mouths were” when it came to sharing in the cost of DA’s work, which delivered benefits right along the supply chain.
“There’s a strong expectation on farmers to increase the levy,” Mr Mumford said. “But the processors now need to pay.”
Australian Dairy Farmers president Rick Gladigau failed to respond to requests for comment however fellow ADF director Ben Bennett said “the clock was ticking down on the levy poll and processors needed to come to the table”.
The processor funding commitment to DA was one of the few concrete steps towards industry reforms that was salvaged from the $2.1m National Dairy Plan, under which processors promised to “facilitate and promote opportunities for collaboration and co-investment” along the supply chain.
EastAUSmilk farmer lobby group vice-president Graham Forbes said that if DA wanted more money, “then it’s time processors kicked it in, because they’re getting a free ride at the moment”.