ABC Mid North Coast NSW Radio
Lactalis milk price offer
Listen to Peter Graham and Eric Danzi talk about the initial price offered by Lactalis - click on the link below:
ABC Radio – the segment starts at 12:24:45pm to 12:34:45pm
Source: Elly Bradfield, 30 May 2023
Media Release: Lactalis Australia found to have breached Dairy Code of Conduct
The Federal Court has found Lactalis Australia Pty Ltd (Lactalis) breached the Dairy Code of Conduct by failing to meet some of its obligations in relation to the 2020-21 milk season, in court proceedings brought by the ACCC.
The Code commenced in 2020 to address systemic transparency issues and bargaining power imbalances between dairy farmers and processors.
“This is an important case for the ACCC as these are the first proceedings we have instituted under the Dairy Code of Conduct, and the decision is a win for dairy farmers who generally have limited bargaining power in their dealings with much larger processors,” ACCC Deputy Chair Mick Keogh said.
The Court found that Lactalis breached the Code when it failed to publish its milk supply agreements on its website by the Code’s deadline of 2pm on 1 June 2020, and instead required dairy farmers to sign-up through a web portal to receive them by email.
The Court also found that Lactalis breached the Code by publishing and entering into agreements that allowed them to unilaterally terminate the agreement in circumstances that did not amount to a material breach. In particular, Lactalis was permitted to unilaterally terminate the agreement when, in their opinion, the farmer had engaged in “public denigration” of processors, key customers or other stakeholders.
However, the Court dismissed the ACCC’s allegation that Lactalis had failed to publish genuine non-exclusive milk supply agreements by requiring farmers to supply a minimum of 90 per cent of their monthly milk production, which the ACCC alleged would have the effect of prohibiting most farmers from supplying milk to another processor. The Court found that Lactalis’ subsequent publication of this agreement met the Code’s requirement for the publication of a non-exclusive agreement.
The Court also found that Lactalis did not fail to meet the Code’s “single document” requirement, which is intended to provide a single source of farmers’ obligations, to provide farmers with certainty regarding the content of their agreement.
“Farmers need to have access to timely information when making decisions about which processor to supply milk to,” Mr Keogh said.
“In breaching the Code’s requirement to publish its milk supply agreements by the deadline, Lactalis made it harder for farmers to compare milk prices and contract terms across different processors.”
“This case should serve as a reminder to all dairy processors that failure to comply with the Code may result in ACCC enforcement action, including court proceedings, with serious consequences,” Mr Keogh said.
A hearing on relief, including penalties, will be held at a later date.
Background
Lactalis is one of Australia’s largest dairy processors and purchases milk from over 400 dairy farmers across all Australian states. The company produces a wide range of dairy products across a number of brands including Pauls, Oak, Vaalia and Ice Break.
The Dairy Code (the Competition and Consumer (Industry Codes—Dairy) Regulations 2019) came into effect on 1 January 2020. It is a mandatory industry code regulating the conduct of farmers and milk processors in their dealings with one another.
Under the Dairy Code, a processor must, by 2:00pm on 1 June each year, publish on its website one or more standard form milk supply agreements; and, for each standard form milk supply agreement, a statement setting out the circumstances in which the processor would enter into the agreement.
For every exclusive milk supply agreement a processor publishes, a processor must also offer a non-exclusive supply option to farmers.
The Dairy Code requires processors to only purchase milk under a milk supply agreement. All agreements must comply with the code by meeting a number of key requirements, including:
specifying a minimum price paid for the milk;
consisting of a single document;
specifying quality and quantity requirements, including testing procedures; and
specifying the circumstances in which parties may unilaterally terminate the milk supply agreement – for processors to unilaterally terminate, the circumstances outlined must involve a ‘material breach’ by the farmer.
The publication obligations of the Dairy Code apply to all processors with an annual aggregated turnover of $10 million or more in the previous financial year.
Source: ACCC, 16 September 2022
Lactalis provides opening prices, Saputo silent ahead of dairy season start
Lactalis is the latest processor to provide its opening prices but one big player is staying silent on the sidelines
Opening prices are edging closer to $9 per kilogram milk solids as competition for suppliers heats up ahead of the mandatory dairy code of conduct deadline next week.
Lactalis is the latest processor to provide its pricing start to the season, with an average weighted price of $8.80 per kg milk solids for northern Victoria.
Under its flat milk payment system, Lactalis is offering $8.65 per kg milk solids to existing and potential suppliers in western Victoria, Gippsland and Tasmania.
Meanwhile, a seasonal price of $8.50 per kg milk solids is being offered as well in western Victoria and Gippsland.
Lactalis national milk supply manager Paul Lorimer did not rule out changes to pricing as the clock ticks down to the June 1 deadline, set out by the federal government’s code of conduct.
“We recognise that milk is in high demand and we will monitor price developments over the coming weeks to ensure we remain competitive,” Mr Lorimer said.
Lactalis recently acquired the Jalna yoghurt brand, which operates a Melbourne processing plant with 90 employees.
“(Jalna) is a great business and a strong brand and (the acquisition) will provide new growth potential. We are seeking additional milk to support this growth,” Mr Lorimer said.
Out of Australia’s big three processors, Saputo is the only major player not to provide an opening price with less than a fortnight to go before the code deadline.
Saputo management have been contacted by The Weekly Times for comment.
Earlier this month, Fonterra opened with an weighted average farmgate milk price of $8.25 per kg milk solids for the 2022-23 season.
Bulla was the first processor out of the 2022-23 starting blocks, confirming in March an opening price of $7.40 to $8.00 per kg milk solids.
Bega was the second processor to join the fray last month with an opening milk price in the range of $8.20 to $8.60 per kg milk solids.
Social responsibility push for dairies
Lactalis International, the largest dairy processing company in the world, hopes to have all of its milk suppliers around the globe signed up to its CSR project by 2025, he said.
DAIRY processor Lactalis wants farmers supplying it with milk, including Western Australian farmers supplying Harvey Fresh, to join its global Corporate Social Responsibility (CSR) project.
Three of its 14 Harvey Fresh suppliers are already part of a pilot CSR project to collect and analyse detailed data on their farming operations, Lactalis Australia's WA supplier relationships manager Carl Dinkelmann told last week's Western Dairy Spring Forum at Bunbury.
Lactalis hopes the other 11 in WA and the remainder of its Australian suppliers will voluntarily join the CSR project - once it is formally launched nationally in January - to have their farms independently audited at least once under the program within the next four years, Mr Dinkelmann said.
Lactalis International, the largest dairy processing company in the world, hopes to have all of its milk suppliers around the globe signed up to its CSR project by 2025, he said.
Currently, the CSR project collects data from dairy farms across 11 countries which produce 76 per cent of the global "Lactalis milk pool", Mr Dinkelmann said.
He explained the CSR project collected data on a range of dairy farm operational areas, with the ultimate aim of establishing best practices for its milk suppliers to enhance sustainability, minimise greenhouse gas emissions and preserve water resources, while improving animal welfare and food safety.
"(Lactalis) global have launched the project to reduce our environmental footprint, strengthen our positive social impacts and better answer to the increasing expectations of our clients and civil society," Mr Dinkelmann said.
"The idea is to try and get an indication of (greenhouse gas emission) outputs across the (dairy products) supply chain.
"It's not so much a carbon program, but an environmental program that is also looking at animal welfare, which is a huge part of our industry."
Mr Dinkelmann said there are two components to the project for Harvey Fresh and other Lactalis Australia dairy farmer suppliers who sign up.
One is an onfarm audit requiring farmers to complete an animal welfare questionnaire and allow an independent inspection and assessment of their operation and herds.
The second requires the farmer to input a broad range of farming operational data onto a dairy module of the Cool Farms Tool digital platform which has a greenhouse gas emissions calculator as part of it.
The Department of Primary Industries and Regional Development also recommends the same digital platform be used by other farmers to self-assess their operations' likely greenhouse gas emissions.
"The onfarm assessments will look at things like is there enough water available (for cows to drink), how many troughs do you have, animal comfort including things like back scratchers - there are some farms that have them in holding yards coming into the dairy," Mr Dinkelmann said.
"They will also look at the condition of holding yards and the dairy.
"Then, on the sustainability side, it (CSR program) will be looking at your whole farm - dairy platform, pasture area, annual cropping program, how many trees you have in paddocks, energy consumption and whether it is from renewable sources, recycling of water and supplementary feeds."
Part of the interest in supplementary feeds was to determine whether they contained products like soybean and palm oil - responsible for modern mass deforestation to grow them as cash crops and blamed for contributing to global warming, he explained.
Lactalis's CSR program has already run for several years in France, the United Kingdom and Ireland - where farm employee health and safety and quality of 'work life' are also audited aspects of dairy farm operation - and some of the typical animal welfare questions farmers there answered were shown to the forum.
Animal welfare sample questions included about udder health, cows' productive lifetimes, mortality, use of growth-promoting substances, use of antibiotics and use of animal-derived protein in feed.
For calves the sample questions covered colostrum intake, fibre in feed, castration of male cattle, disbudding or dehorning and tail docking.
Onfarm audit assessments required inspection of a sample of lactating and dry cows, comprising 7-25pc of a herd, depending on herd size, an assessment sample shown to the forum indicated.
Observations to be recorded during assessments include human avoidance behaviour, body condition, cleanliness of yards and cowshed, lameness and skin changes.
Mr Dinkelmann said Lactalis Australia had already appointed a local independent assessor for the regular onfarm audits required by the CSR program after it is officially launched.
He indicated the data would be collected, processed, consolidated and used anonymously to try to establish national and international average performance indicators and to compare national and international statistics for "pools" of Lactalis supplier farms.
The intention was also to identify "priority onfarm sustainability topics" Lactalis could discuss with its supplier farmers and to "communicate best practices and related impacts" to suppliers, Mr Dinkelmann indicated.
"We will send all the information to France," he said.
"They will analyse all this information, they will break it down into individual countries, they will look at countries compared to each other, different farming systems and eventually information on what can be addressed onfarm will filter back to our farms here."
Mr Dinkelmann then joined DPIRD senior development officer Mandy Curnow and Murdoch University associate professor Fran Hoyle in a panel session on carbon accounting and farm greenhouse gas emissions.
The forum was told that while carbon dioxide (CO2) was the main greenhouse gas of concern in relation to global warming, farming in general and dairy farming in particular produced volumes of far more volatile greenhouse gases in methane and nitrous oxide.
One tonne of enteric methane (from cow burps) had the equivalent environmental impact of 28t of CO2 and 1t of nitrous oxide (produced by working the topsoil, spreading nitrogen fertiliser and from animal manure) had the same impact as 265t of CO2, forum guests were told.
While WA's CO2-equivalent (CO2e) annual greenhouse gas emissions from energy production had increased from about 35 million tonnes in 1990 to more than 80mt in 2019, agriculture's CO2e greenhouse gas emissions had reduced from about 12mt a year to about 8mt a year over the same period, they were told.
Of WA's agricultural CO2e greenhouse gas emissions, enteric fermentation (cow burps again) was the clear major source, but it had generally been in decline since 2005 because of reducing stock numbers.
Over the same period, the next major source of WA agriculture's CO2e greenhouse gas emissions, soils - but still producing less than half of enteric fermentation volumes - had remained about the same, allowing for annual variation for better seasons like this one when more area is cropped, figures presented to the forum showed.
Last year the six WA shire council areas which produced the most greenhouse gas emissions from agricultural cattle were Albany, Esperance, Busselton, Manjimup, Harvey and Augusta-Margaret River.
Rabobank's head of sustainable business development and previously its national farm support manager, Crawford Taylor, told the forum that consumer attitudes were changing and regulatory oversight of farming was increasing.
Global investors will increasingly require transparency on sustainability risks and availability and cost of capital will incorporate environmental, social and governance (ESG) standards criteria, Mr Crawford said.
Access to future markets or barriers to market could also be determined by ESG standards and globally "agri-corporates" were increasingly adopting ESG objectives, he pointed out.
"Supply chains need to adapt, innovate - including inside the farm gate," Mr Crawford said.