Woolies drought package call leaves unresolved dairy issues hanging…

Woolworths today announced that it will end its dairy producer drought payment program on 30 June leaving a number of industry issues unresolved, according to advocacy group eastAUSmilk.

EastAUSmilk President Matt Trace said the extra drought levy payment was intended as a temporary measure when it was introduced in 2018.

It has played an important and beneficial role for dairy farmers since its introduction and this benefit should be acknowledged.

"Importantly, Woolworths has stated that they will provide more "timely support for farmers through existing milk purchase arrangements" with the development of a "new mechanism" if extreme conditions that occurred in 2018 should arise again. We look forward to being a part of any discussions that improve the response time to address such critical issues when they arise," Matt Trace said.

"While the retailers drought levy provided support for many dairy farmers during difficult financial times during the past years, there remain a number of challenges that the industry faces that need to be addressed and resolved.

"The farm-gate price may be improved for many dairy farmers but others continue to face financial and on-farm pressures," Matt said.

The processors who currently supply milk to Woolies for their home-brand label are Bega, Fonterra and Lactalis.

“Lactalis has indicated in a letter to their dairy farmer suppliers that they will continue to provide this payment as part of their farm-gate price until June 2022 and they further stated that the payment will continue in the coming seasons for Queensland dairy farmers and likewise in other States," eastAUSmilk Vice President Graham Forbes said.

"This is a positive announcement by Lactalis and it is hoped that other processors will make similar public announcements.

"However, substantial challenges to the long-term sustainability of the dairy industry remained on the radar.

"In recent years the issue of ‘market failure’ continues to be of concern within the dairy industry and which has been highlighted by the ACCC in its published reports," he said.

"There is also the on-going negative impact that increasing input costs are having on farm-gate prices, such as the spiralling cost of fertiliser and diesel, which have doubled in price during the past 12 months.

EastAUSmilk Co-CEO Shaughn Morgan said that the timing of the announcement by Woolworths will allow the 'good faith' provisions of the Mandatory Code to be tested, especially as the new milk year commences.

"It is vital that future generations of dairy farmers be provided with a strong basis to grow their dairy farms and ensure long-term sustainability, with the Code assisting in maintaining that viability.

"The Federal election also provides an opportunity for the Government and Opposition to commit to supporting dairy farmers through progressive election promises that will ensure growth within the dairy industry through, for instance, enhancing the Mandatory Code.

"EastAUSmilk looks forward to having those discussions with the relevant Ministers and staff in the coming weeks and months as the Federal election draws near," Shaughn concluded.

Matthew Trace, President, eastAUSmilk

Graham Forbes, Vice-President, eastAUSmilk

Shaughn Morgan, Co-CEO, eastAUSmilk