Retailers must do the right thing by dairy farmers

Oct 08, 2018

For nearly a decade, dairy farmers have been wearing the pain caused by discounted products, whether it’s $1 per litre milk or cheap cheese.

I remember when the first $1 per litre products went on supermarket shelves on Australia Day, 2011 and the outrage caused by the resultant “milk wars”.

Prior to this marketing campaign, the last time milk was $1 per litre was around 1992. But in 2018, it’s impossible to live on a wage set at 1992 levels.

Now there is momentum to turn things around and give value back to the dairy supply chain.

Some supermarket chains have announced plans to help drought-affected dairy farmers.

Woolworths plans to introduce a special range of milk priced at $1.10 per litre in mid-October. Homebrand 2L and 3L milk products are currently on shelves for $1.10 per litre until the drought-relief milk product launches.

Coles is now selling its 3L Own Brand milk products for $3.30, with the money collected to be distributed back to farmers via a fund with an application process.

Both have been upfront about the fact that their initiatives are only short-term measures that aren’t intended to solve the problem of discounted dairy products.

As President of Australian Dairy Farmers, I represent farmers all across the country. Many are calling me asking how they are eligible to receive a fair price from either of these plans.

The problem with both plans is that many regions of Australia affected by drought with high production costs impacting thousands of dairy farmers, yet most of those farmers won’t be able to claim a benefit from either initiative.

Coles has encouraged any dairy farmers to apply for a grant through their fund, but those in drought-declared areas will be given priority, while

Woolworths intends to distribute the extra 10c from their drought-relief milk back to farmers via their processor.

While I support measures that see farmers paid a reasonable price for their hard work and dedication, I must ask, “Is this really the best we can do?”

Certainly ADF and our state dairy farmer organisations believe all dairy farmers must see a benefit from any increase in retail milk prices.

Farmers put tireless effort and resources into producing a quality product. And it leaves a deep and lasting impact to see your hard work sitting on a supermarket shelf for less than the price of water.

This pricing practice is not viable and we urgently need a shared solution to assist in building the long-term sustainability of Australian dairy farmers.

Ultimately, we must push for a permanent end to discounted dairy products, whether it’s $1 per litre milk or cheap cheese.

There is a groundswell of support for farmers hit hard by the drought and supermarkets have the best opportunity to scrap their discounted dairy products right across the breadth and depth of the dairy cabinet.

The supermarkets know what farmers want. They know what they deserve. It’s now time for them to take a big step forward and do the right thing by ending this pricing practice.

But until that time comes, I encourage the public to help dairy farmers by continuing to buy branded dairy products.

- Terry Richardson, ADF President

Time for young dairy representatives to step forward

Sep 13, 2018

I was in Canberra last month and witnessed first-hand the political turmoil that rocked the federal Government and which ultimately led to a change of Prime Minister.

Ironically, I was accompanying a group of young dairy industry professionals as part of the Developing Dairy Leaders Program, run by Marcus Oldham College with support from Australian Dairy Farmers and Dairy Australia.

The aim of the program is to expose the next generation of dairy representatives to industry advocacy and the Australian political process.

What they received was a valuable bonus lesson: leadership is everything.

Many of these young farmers had never visited the “bush capital” and had little understanding of how Canberra operates. For them, it was eye-opening to be caught up in the feverish atmosphere that engulfed the city during those four days.

But the leadership lesson is transferrable to the dairy industry, which we all know has struggled with its own leadership issues in recent years.

We talk a lot about unity. We talk about creating the mindset of one team, one dream. But at some point, these words lose their value if we fail to act.

The young dairy professionals I accompanied last week were in fierce agreement that unity is the vital element to ensuring a successful dairy industry.

This sentiment was reinforced by Agriculture Minister David Littleproud, who told the group that if they want to be taken seriously and influence federal politicians to achieve real outcomes for the dairy industry, the sector first needs to show leadership.

I have written before about the fractured state of the dairy industry. Our differences have become pronounced. Too often, we think only about the interests of our individual regions, instead of common ground that could provide a national, tangible benefit for dairy farmers.

This makes it difficult for political decision-makers in Canberra to understand which policies are likely to have the greatest benefit for farmers. Politicians love an industry that brings to them solutions instead of problems. But instead we have an industry too concerned with its internal issues to agree on solutions to the many problems we face.

As we saw in Canberra, this situation can have many consequences but won’t lead to outcomes.

The question is usually posed on social media: why can't dairy advocacy groups work together on behalf of farmers? The simple answer is there's no reason why we can't.

ADF, as the national peak organisation for dairy farmers, is the group responsible for taking solutions to Canberra and asking the federal government for its support in enacting these measures. To be effective, we need constructive input from farmers across the country who want to ensure a secure and prosperous future for the dairy industry.

Hopefully, this means you. We need you to join your state dairy farmer organisation and join the cause. Contribute your ideas and help us maintain a sustainable dairy industry.

- Terry Richardson, ADF President

Dairy Code of Practice must address key concerns

Aug 03, 2018

Farmers want protection. They want to know that if they have a contract dispute with their processor, there is a mechanism in place to ensure their interests are safeguarded. They want certainty that there will never be another milk price crisis.

The dairy code of practice which has been in place now for just over a year was the industry’s response to address the power imbalance between farmers and processors. Before the code was introduced in July last year, farmers had little protection against practices used by some processors.

The performance of the code of practice was reviewed by the Australian Competition and Consumer Commission (ACCC) in its dairy inquiry.

Despite recommending that the industry proceed with a mandatory code, the competition watchdog acknowledged the significant effort it took to implement the voluntary code and the positive impact of the code on current-year (2017/18) milk contracts.

But the risk for farmers remains the same and if success is to be measured solely by the strength of the code to eliminate risk, the current code needs strengthening. Some processors are not signatories to the code and there are no penalties enforced for breaches.

How does this prevent a repeat of the milk price crisis? Farmers can take their business elsewhere if their processor isn’t a signatory to the code. But this is a problem in regions with only one monopoly processor. It is not a viable solution and the risk is that suppliers could once again be forced into hardship should the milk price crash.

The ACCC report noted that the current code does not include a mechanism to resolve disputes between farmers and processors – a key difference with the voluntary Food and Grocery Code of Conduct, which introduced an independent adjudicator to resolve complaints.

If a revised code is to provide adequate protection for farmers, it must have binding sanctions for non-compliance and independent management oversight – including reporting and review – of code conditions.

The ACCC report generated considerable discussion around the benefits of a mandatory code. They argued that a mandatory code would eliminate this risk for farmers, providing them with greater protection and paving the way for increased farm investment and processor competition.

But there are still many unknowns that must be investigated before the industry can proceed with a new version of the code.

The dairy industry will wear the burden of paying for administering a mandatory code. Despite media commentary suggesting the cost would be negligible, it is a requirement of the federal Government’s Cost Recovery Guidelines that those affected by the code must pay for its administration.

Part of the code of practice review process is that we assess the potential benefits of a mandatory code to farmers against the expected costs to farmers.

If the decision is made to proceed with a mandatory code, the impact must be fully understood. It will be extremely difficult to reverse the decision if a mandatory code doesn’t operate as farmers expect it should.

We understand the desire for quick action, but farmers should expect their national representative body to conduct this review in a considered and comprehensive manner.

At the end of the process, regardless of the outcome, this will be a significant step with long-term ramifications for the industry, so we must get it right.

It is vital that farmers have the best information available to them and it is our job to provide that guidance and clarity as we are committed to working on improved contractual arrangements for farmers and rebuilding confidence in the industry.

United we stand, divided we fall

Jul 05, 2018

It’s not news to say that the Australian dairy industry is highly fractured. Divisions exist all along the supply chain, often for historical reasons.

We should acknowledge the impact of the challenges of the last few years - the bargaining imbalance between different sections of the industry, volatile markets reflected in farmgate milk prices, adverse seasonal conditions, and other factors outside farmers’ control.

While there has been hardship for many, this environment has facilitated a culture of blame and negativity, which now permeates the industry and could have destructive consequences.

It is doing none of us any favours to attack our own. Our focus must be on working together to rebuild our industry.

Every step along the value chain depends on strong relationships, based on trust and confidence, the value of which we only know when it’s lost.

Much has been made of the trust deficit engulfing our industry. It has been broadly acknowledged that trust has been lost right across the supply chain. But we cannot let anger describe us. We simply cannot allow the industry to implode.

Tough questions bring forward new options. Cynicism leaves us closed to new ideas. There is always be room for differences to be expressed. But this process must be constructive.

It is vital that we find a way to cooperate, share knowledge and support each other - bring together our considerable capacity for optimism and resources to face the future. Only through sharing our experiences can we truly understand and regain trust in our industry.

Unfortunately, this is common advice which is rarely followed. It is sad to note that the Australian dairy industry traditionally has failed to stick together during difficult times, when unity is most important. We cannot let this vicious cycle of negativity continue.

We have a lot to be proud of as an industry. Our achievements are significant, but imagine how effective we could be as a cohesive, united industry? That’s how we have an impact. That’s how we influence decision makers.

We need to show our unity of purpose, shared belief and passion for the dairy industry. None of us by ourselves has an answer to what may be sought, but unity brings an open, honest, and shared discussion about the challenges faced by our friends, neighbours, or the broader industry.

If we cannot deal with challenges as an industry, there is a real problem. We need unity, collaboration and support if we are to affect change. If we don’t have farmers sitting at the table, we lose the opportunity to help ourselves and influence the future for others

How can we expect government to help us if we can’t first help ourselves? Government doesn’t want us to dump our problems on them. They want us to seriously consider solutions that they can implement to benefit industry.

It’s time to stop being part of the problem and start contributing to the solution. Share your pride in the work we do and value the need to contribute to industry development. Acknowledge the belief others have shown in us through investment and a shared desire for a sustainable industry.

Join a local branch of your state dairy farming organisation, bring forward your ideas and help rebuild a strong and vibrant dairy industry.

Engage with industry leaders at all levels. They need to hear from you. Reach out with respect and ensure they have an opportunity to walk with you and share your issues.

Be tough on issues but also respectful to our friends and others who are taking action on your behalf.

Our industry depends on our ability to unite.

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