Good news for farmers

Dec 02, 2016

ADF has long-advocated for change to tackle big business misusing its power and reducing competition in markets.

Yesterday, the last day of Parliament for 2016, Treasurer Scott Morrison announced the introduction of the s46 ‘effects test’ legislation 2016 into the Federal Parliament.

The introduction of an effects test is in line with competition policy around the world – Australia will be joining the clear majority of developed nations who already have established effects tests.

The provision, which will be included in section 46 of the Competition and Consumer Act 2010, will address the current unequal distribution of market power and encourage transparency to the benefit of producers, consumers and retailers.

The considerable amount of work, investment, planning and risk required to produce, transport, process, distribute and deliver a perishable product, fresh milk, on a daily basis is not reflected in the current discounted price of dairy by major retailers.

Supermarket discount tactics are directly affecting market supply and demand functions, effectively blocking processors from being able to provide necessary stronger prices to farmers to stimulate milk production.

We are looking forward to the ‘effects test’ legislation being passed early next year.

Another major development that occurred in Parliament yesterday was the resolution of the backpacker tax.

ADF have consistently said that we believe it is reasonable for backpackers to pay some tax, but 32.5 per cent was too high.

Led by National Farmers Federation (NFF), ADF and our state member organisations have lobbied for a decision over the past 18 months and we can honestly say it is a huge relief.

The impact of months of indecision have been felt across the dairy sector. What we really need now is to get the message out there that backpackers are welcome on our farms and they will receive a fair tax rate for their work.

We thank the NFF and our members for their hard work to get this across the line. We know that this has not been easy and the process was long, however, we adapted and united as an agricultural industry to secure a deal which benefits farmers, backpackers, tourism and regional communities.

It is important to note that although we are small team at ADF, we remain committed to driving strong policy to transform the way our industry operates for the better.

David Basham

ADF President

 

Not All Bad News

Nov 11, 2016

The American people have spoken and made their choice. It is amazing how things can change overnight. President Elect Trump’s victory in the United States presidential election has created a little bit of a stir in Australia and around the world.

Australia has an open economy and we are heavily reliant on exports. We depend on international stability and open borders to drive our economic growth. If Mr Trump’s views, which were expressed during the election campaign are realised, then the world trade environment is in for a very bumpy ride.

The Turnbull government promised that the ratification of the Trans Pacific Partnership (TPP) would deliver valuable new markets for Australian dairy. It was an ambitious pact that would have covered nearly 40 per cent of the global economy and solidified US leadership in the Asia-Pacific.

While Mr Trump’s election win has made the ratification of the TPP less likely, it is not all bad news for Australian dairy.

In fact, this election could open Australia to new opportunities and strengthen economic ties with countries in ways we never thought possible.

The China-Australia Free Trade Agreement (ChAFTA), ratified almost a year ago is a partnership that has the potential of becoming even stronger.

Australian Dairy Farmers (ADF) lobbied hard and strong for this once-in-a-lifetime deal and was closely involved in the negotiations.

Our dairy exports to Greater China have increased 46 per cent over five years, making it our largest dairy market export by volume and value. Import values have increased by almost 65 per cent year-on-year from approximately $456 million in 2014/15 to over $750 million in 2015/16.

The first half of 2016 saw the value of Australian dairy exports double. China’s market for Australian consumer goods has become much more sophisticated, with strong sales growth from supermarket chains and convenience stores. A growing middle class of roughly 300 million people want what Australia offers. Our industry’s ability to benefit China with safe, healthy, reliable sources of quality dairy products is essential for us in the long term.

China remains the largest importer of dairy products and it is still growing. About 16 million babies are born each year in China, and with the relaxation of the one child policy, that number is projected to beyond 20 million annually in coming years.

Over the long term, ChAFTA means more jobs across the Australian dairy industry both on farm and in processing plants. It will provide our industry with the confidence it needs to invest for a strong future.

Whatever transpires from the policy direction of a new US President and administration, the Australian dairy industry and Australian Government will do everything possible to ensure any changes in direction on US trade policy does not adversely impact the gains we have won for our dairy products access to markets.

The dairy industry’s long term growth will come from our ability to bounce back and make the most of the all the opportunities that are presented.

David Basham

Acting ADF President


 

 

Moving in the right direction

Nov 04, 2016

Over the past two weeks we have seen an 11 per cent rise in global dairy prices. This has been the highest since July 2014. Historically low for much of 2016, prices have finally started to increase. It is a really positive sign that things are looking up for us.

As an industry we have been under intense pressure and with that intense scrutiny. The events of this year has given ADF the opportunity to really cement our working relationships with state members - QDO, NSWFarmers, SADA, TFGA, UDV, WAFarmers, and industry partners such as Dairy Australia and Australian Dairy Products Federation.

Continuing to work together will give us the know-how and resilience to support dairy farmers to overcome adversity and thrive in the long term. These things will only happen if there is buy-in from industry and a willingness from key stakeholders to hear each other out to develop solutions together.

The industry wide proposed code of practice on contractual arrangements with farmers is an ideal starting point to get things moving in the right direction. It has been a long process and a major breakthrough for the entire industry to ensure future milk supply agreements are balanced, fair and transparent. ADF is expecting to have a near final document by the end of November.

As you may be aware Dairy Australia has just released their forecast for full-year, national milk production for this season.

The current projections indicate that national milk production is down by 6-8 per cent for the 2016/17. However, these projections are in direct response to the extraordinary period the industry has gone through given the low farmgate milk prices, tight margins and extremely wet conditions across southeast Australia.

The last five months of wet weather has been challenging for many farmers. Yet, there are some really positive outcomes. Pasture growth will keep production costs down well into December. Many dairy farmers can reduce the cost of production by saving on surplus feed and water prices in Northern Victoria will remain under $100 per megalitre well into 2017.

While dairy farmers are still managing the here and now, our attention is firmly on the future sustainability and profitability of the dairy industry. ADF is working towards addressing volatility to safeguard the future of our industry.

David Basham

Acting ADF President

 

 

Setting the Foundations for Long Term Solutions

Oct 28, 2016

Earlier this week, ADF spoke at the Senate Economics References Committee inquiry into Australia’s dairy industry.

We discussed a number of key historical points and highlighted long term solutions we believe will relieve some of the pressures faced by our dairy farmers.

Through consultation with our state member organisations, we proposed a number of solutions:

- The development of the Code of Best Practice on milk supply contractual agreements to ensure transparency and fairness in milk price arrangements

- To ensure that the ACCC review identifies and investigates sharing risk along the supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry and the effect of world retail prices on profitability

- Incorporating an effects test to show the impact of anti-competitive behaviour

- The implementation of a world dairy commodity pricing index and educational program for farmers to better understand the impacts of the world market price and impact on the domestic market

We reiterated the fact that although the dairy industry has gone through a difficult time, we are a resilient industry with a long, sustainable future ahead and our profitability depends greatly on the continued support of the Australian public.

Which takes me to my last point. The proposed 50 cent milk levy.

Yesterday evening I took part in an extended interview with a major TV network. On several occasions I stated that ADF did not support a levy being applied to drinking milk (50 cents or otherwise).

The 20 cent quote came from a completely different part of the interview (which was not aired) yet edited in a way that was out of context with the questioning. I said, it would be good if Coles were to increase the price of $1 milk by at least 20 cents.

Media does not always represent the facts and important messages can get lost in the push for ratings and dramatic intrigue.

We have contacted Channel 7 News to clarify that the impact of its editing together two different part-answers to two different questions has effectively contributed to misleading Australian consumers.

It is unfortunate when these things happen. Incorrect information leads to confusion in a time when we need open and transparent messaging. Our priorities have always been to work to strengthen the dairy industry’s foundations so we can achieve long term stability.

To get through this difficult period the industry needs strong leaders with one voice.

ADF together with our state member organisations believe a united vision is the key to achieving positive outcomes going forward.

David Basham

Acting ADF President


 

 

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