Will Albanese’s Labor government offer dairy new beginnings?
DA's latest Situation and Outlook report highlights the increasing input costs dairy farmers are facing.
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 announced changes to the agricultural visa scheme and a renewed focus towards to the Pacific to increase farm labour.
Promises have been made to increase biosecurity funding to help prevent lumpy skin and foot and mouth diseases breaching our borders.
These holistic issues are of most immediate concern to farmers and we welcome these commitments.
However, other immediate matters also need to be addressed.
Dairy Australia's latest Situation and Outlook report highlights the increasing input costs dairy farmers are facing.
Fertiliser, fodder, fuel and grain prices have doubled in price over the past 12-months.
These harsh imposts are contributing to the decline in the number of dairy farmers, especially where the farmgate 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 a litre.
The Labor election commitment to convene a dairy symposium is a positive step.
The symposium will enable dairy representatives, from dairy farmers to supermarkets, to address the vast issues which were identified in recent parliamentary and ACCC reports.
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.
Source: Queensland Country Life – written by Shaughn Morgan co-CEO eastAUSmilk, 4 June 2022
Federal Government commitment to a Dairy Symposium and Digital Dairy Platform announced
The commitment by the Federal Minister for Agriculture David Littleproud to hold a dairy symposium after the upcoming Federal election is welcomed by eastAUSmilk.
This announcement followed on a meeting between the President of eastAUSmilk, Matt Trace, with the Deputy Prime Minister Barnaby Joyce at a recent dairy farmer meeting at Muswellbrook NSW in early April where Matt raised with the DPM the holding of a dairy symposium.
Minister Littleproud also met with dairy farmers at Singleton NSW on 20 April with eastAUSmilk Vice President Graham Forbes and during an interview on the NSW Country Hour later that day, discussed the importance of a dairy symposium. You may listen to the interview at ABC Country Hour
Barnaby Joyce convened the 1st dairy summit after the 2016 federal election which brought together dairy stakeholders to consider issues confronting the industry due to the collapse of Murray Goulburn and the then clawback of dairy payments to dairy farmers.
The time was right for a look back over the past years since the initial dairy symposium in August 2016 and to determine what has occurred since that time and find out what has worked and what needs further review.
In reference to the symposium, Matt indicated that the dairy industry needs to find further solutions to the issues that confront those players within the dairy value-chain, particularly given the market failure within the industry and which was highlighted in the ACCC's report into the dairy industry.
The development of the dairy mandatory code of conduct, which can trace its beginnings to the 2016 dairy symposium, was the beginning of the restoration of trust and transparency in the relationship between the dairy farmer and processor.
Further discussion needs to now occur around the relationship of the supermarket within the dairy value chain.
Co-CEO of eastAUSmilk, Shaughn Morgan, has indicated that the Code has a few more steps to enhance its ability to provide the trust and transparency required.
The dairy symposium provides a place for that to occur.
The Federal Minister for Agriculture has also announced today the development of a digital platform to assist dairy farmers being provided with up-to-date information regarding value, price and other relevant dairy data.
The development of this digital platform in conjunction with the Dairy Code and the Milk Value Portal are beginning to provide dairy farmers with a suite of dairy products that will assist them in addressing the many varied issues that they are confronting daily.
This will also lead to further discussion of supermarkets being subject to the Dairy Code given the apparent 'inadequacy' of the Food and Grocery Code to provide appropriate oversight of supermarkets and their relationships with fresh food suppliers.
With the announcement and commitment today by Minister Littleproud, eastAUSmilk looks forward to being a part of providing the solutions with the other dairy bodies to stop the decline of the number of Aussie dairy farms and in finding a way to rebuild the strength and resilience of dairy farmers generally.
End of Woolies Milk Drought Levy
During the height of the drought in 2018, supermarket chain Woolworths led the way and introduced a drought 'levy' to support dairy farmers during that difficult time. Industry dairy bodies like eastAUSmilk supported this initiative and applauded Woolies and their CEO Brad Banducci for leading the way.
The levy was intended to be a temporary measure and to support dairy farmers and their families who were facing difficult financial times, with farm-gate prices that were (in many instances) below the cost of production.
This extra payment for their nutritious milk ensured that many dairy families did not need to sell or leave their farms and were able to continue to support their local rural and regional communities.
Woolworths have announced that the 'on pack' drought levy label will be removed from their 2L and 3L milk in the coming months, while "the additional 10 cents per litre will continue to flow through to farmers until the end of the milk year".
The processors (and their dairy farmer suppliers) who are directly impacted by this announcement are Bega, Fonterra and Lactalis. Their decisions will directly impact upon the way this announcement is perceived and the long-term impact it will have upon the dairy value-chain.
Lactalis has indicated to their dairy farmer suppliers that they will continue to provide this payment as part of their farm-gate price until June 2022 while continuing to review and monitor for the price to be included into the future. Their farmer suppliers will not be 'out of pocket' for this period and will continue to receive this amount. This is a positive statement and the other processors will hopefully follow and make similar assurances.
While the current dairy conditions are generally positive, there still remains significant issues confronting the dairy industry. This includes issues associated with market failure that have not been addressed and which were highlighted in recent reports such as those published by the ACCC. These matters continue to be of concern to the industry value-chain generally.
There is the further impact that increasing input costs are having upon the farm and the farm gate price (you need only refer to the increasing cost of fertiliser and diesel, which have doubled in price over the past 12 months).
The drought levy increase that retailers provided to dairy suppliers was an important component to ensure the on-going viability of many dairy farms over the past years. Assurances from processors (such as that given by Lactalis) that dairy farmers monthly milk cheque will not diminish in actual terms will be vital.
This will also be a test for the Mandatory Dairy Code and the 'good-faith' provisions that are a part of the negotiations between the processor and their suppliers.
It has been suggested that the Code should also be extended to include retailers and this may be a time for such discussions to be reconsidered. With the upcoming Federal election, there may be no better time for matters such as this to be raised.
Questions such as how the dairy industry can remain viable for future generations of dairy farmers needs to be addressed and the timing of the Woolworths announcement may provide that opportunity.
Be assured though that dairy farmers will continue to provide fresh milk so that the community can continue to buy nutritious milk and dairy products from their supermarkets and the dairy cabinet.
Shaughn Morgan – eastAUSmilk Co-CEO