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

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


 

 

Keeping our dairy farmers competitive

Oct 21, 2016

Competition laws are about to change. Australian Dairy Farmers (ADF) has lobbied hard for these changes and worked with many different organisations to represent the needs of farmers.

Since January 2011, Coles and Woolworths have continued to cause unnecessary worry for farmers by devaluing products in the supply chain. Milk was the first weapon of choice in their discount war as it was a household staple and something that consumers were emotionally attached to.

However, milk is not the only dairy product that has been devalued in the price war. Other Australian staples such as cheese, yogurt and butter have also seen a significant price drop that further provokes an already besieged industry.

After almost six years of unsustainable pricing, consumption of dairy in Australia has dropped. Data collected by Dairy Australia clearly shows that cheap dairy has failed to deliver on the major supermarkets claim that lower prices will increase consumption. Their marketing strategy has resulted in millions of dollars being taken out of the value chain, which has impacted severely on many dairy farmers.

The battle for the hearts and dollars of Australian consumers has distressed the dairy industry, threatened small shopkeepers and prompted a Senate inquiry.

In mid-March, the federal Senate launched an investigation into dairy pricing and whether Australia's supermarket giants engaged in anti-competitive practices.

ADF was at the forefront on advocacy and policy demanding change in an industry that caused unnecessary financial pain and worry for farmers through the devaluing of dairy as a product.

The senate inquiry resulted in the Australian Government issuing a draft amendment to the Competition and Consumer Act 2010 outlining a number of changes ADF has been pushing for.

Most significantly, the draft Bill enables the introduction of an ‘Effects Test’ into Australian competition law. The effects test is a logical tool in the Australian Competition and Consumer Commission’s (ACCC) kit bag that most other developed countries in the world have.

ADF has long-advocated for change to tackle big business misusing its power and reducing competition in markets. There is no silver bullet to fix the imbalance of market power that dairy farmers experience, however ADF, together with our state members, are continuing to fight for farmers.

Even though this is an ongoing issue, we are still pushing for the major supermarkets to raise the price of dairy to a sustainable level. This will ensure a fair price for everyone along the supply chain.

David Basham

Acting ADF President

Competition policy at a cross roads

Jan 25, 2016

January 26, 2016 marks five years since Coles’ supermarket dropped the price of its home brand milk to $1 per litre, igniting a price war with Woolworths that reduced the value of milk to an unsustainable level.

Australian Dairy Farmers (ADF) has continued calls for the Federal Cabinet to adopt stronger misuse of market power laws to foster a more competitive business environment.

ADF President, Simone Jolliffe said there have been important breakthroughs for competition policy since 2011.

“The introduction of the Food and Grocery Code, which included a large number of ADF’s recommendations, was a constructive first step toward fostering a more competitive business environment.

Further to this the Australian Government’s support for key recommendations from the Harper Review of Competition Policy is extremely positive,” Mrs Jolliffe said.

“ADF also welcomed the announcement in the Agricultural Competitiveness White Paper of $11.4 million over four years to boost the ACCC’s engagement with the agriculture sector including a new Agricultural Engagement Unit.”

However, Mrs Jolliffe said the industry would continue to advocate for improved transparency regarding the impact of retailer actions on suppliers. ADF also continues to advocate for the regulating bodies to have the power to prevent predatory pricing in future. 

“ADF also strongly supports the Harper Review’s recommendations for any updated competition and consumer law to include an effects test,” Mrs Jolliffe said.

“Addressing the misuse of market power is crucial in determining the Australian dairy industry’s future profitability and sustainability.”

Mrs Jolliffe encouraged consumers seeking to show their support for farmers to “buy branded”.

“The more branded milk we buy the more money stays in our dairy value chain. By keeping these dollars in the value chain dairy has the capacity to reinvest in industry research and innovation – which helps to strengthen our farmers, improving their efficiency and prospects of long term sustainability.

Buying branded means investing in choice for consumers on our supermarket shelves and in the future of our dairy farmers. This Australia Day – show your support by buying branded.

 

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