It is a win win situation

Oct 07, 2016

Collaboration is the key to get us where we need to be. Our industry relies on all the elements to operate effectively. Farmers need processors and vice versa – so the solutions require all of us to come together to ensure a positive future. It is a win win situation.

It is one thing to constantly pick apart the industry to highlight the problems, it is another to actually work together to bring about real solutions to ensure this never happens again.

Last week the Australian Dairy Farmers held an important meeting with state dairy organisation presidents and processors to address a range of contractual issues which farmer organisations have been trying to address and rectify for 15 years.

During the meeting we discussed a range of topics including the difficult circumstances of farm gate price reductions, the introduction of new legislation on unfair contracts which comes into effect in November and the outcomes from the August Symposium held by Deputy Prime Minister, Barnaby Joyce.

This meeting provided an ideal opportunity for the dairy industry to unite and develop a voluntary industry wide code of practice on contractual arrangements with farmers.

The code will include:

  - greater transparency in contracts and supply agreements

  - ensuring a pricing formula or a price setting mechanism is clearly defined within a contract

  - ensuring pricing adjustments to farmers throughout a contract are clearly defined and that there will be no retrospectivity

  - while acknowledging step ups do occur and step downs have occurred in severe circumstances, a principle should be incorporated into contracts which clearly outlines that as much notice as possible is necessary if a step-down has to occur

  - ensuring farmers should receive all payments that accrue over the term of a contract or supply agreement – the final payments of a contract should not be contingent on the farmer being a supplier when, for example, the June payment is made in mid-July

  - ensure that where a processor has a contracted volume limit or a different price for volume above a particular level then exclusivity of supply to that processor must not occur

  - ensuring there is a clearly defined mechanism for giving notice of termination of a contract

  - ensuring there is a clearly defined mechanism of how contract terms and conditions can be modified and the farmer having the right to a negotiated variation, not simply a request from the processor.

Incorporating these principles into a code of conduct will give farmers, or their representative, the opportunity to have a contract or supply agreement which is truly negotiated and not simply an agreement which is a “take it or leave” it approach to farmer’s milk supply arrangements.

The ADF together with the state member organisations have worked hard since the crisis unfolded to ensure future milk supply agreements are balanced, fair and transparent. It has been a long process to get to this stage and a major breakthrough for the entire industry.

State dairy farmer organisations have been working to achieve these improvements for many years. By having a national organisation which is well resourced the States can achieve things together that would be impossible to achieve on their own.

We plan on finalising the draft code as soon as possible, ahead of the new legislation and before the Australian Competition and Consumer Commission inquiry into the dairy industry is finalised next year.

Now more than ever, the dairy industry needs to remain focused and united in its goals to achieve a shared vision of improving the profitability and sustainability of dairy farmers and the entire dairy industry in Australia.

David Basham

Acting ADF President

 

 



Reviews of supply contracts, pricing system underway

Jun 17, 2016

Dairy farmer representatives on the ADF Markets, Trade and Value Chain Policy Advisory Group (PAG) gathered in Melbourne this week to discuss a range of measures to establish a fairer, more transparent dairy market.

Simplifying supplier contracts and agreements featured heavily and methods to make them simpler and more transparent. Further to this the lack of transparency regarding milk pricing, and its ability to be retrospective is unacceptable and must be addressed.

The PAG also reviewed the methods to give clear, independent and credible market and price signals to dairy farmers and how this might be practically applied to the Australian dairy market.

Providing farmers with the right tools and resources to manage the opportunities and risks associated with a fluctuating dairy market was also a focus to help bolster the industry’s resilience in the long term.

Significantly, the meeting agreed upon the need to modernise the Australian industry’s pricing structures and contracts to recognise the complex operating environment that farmers face, to better balance financial risk along the supply chain. ADF is working with all state members, levels of Government and industry to achieve these endeavours.

ADF continues to press for the release of the full dairy support package as soon as possible and will update farmers as soon as this information is released.

We have had a couple of operational changes at ADF in recent weeks, with the resignation of ADF CEO Benjamin Stapley announced yesterday. The ADF Board has already taken steps to ensure that the role of CEO is well served in both the short and long term.

Contact has already been made with former ADF CEO John McQueen, now an industry consultant, to step into this important leadership role on an interim basis while the recruitment process is completed. Mr McQueen steps into the role as early as Monday morning and there will be a smooth, effective transition so no time is lost in fulfilling ADF’s mission to lobby for a stronger future for Australian dairy farmers.

These are unprecedented times and we need to ensure we have the right leadership balance to effectively address these issues, while not losing sight of other priorities important to building farmers long term sustainability.

The small team at ADF, remains committed to driving strong policy to transform the way our industry operates for the better.

Many farmers have been calling our offices in recent weeks seeking advice, assistance and information on what ADF is doing on their behalf. We encourage you to keep connecting with ADF to ensure we effectively represent your interests.

 

David Basham

Acting ADF President

March 2016 President's Message

Apr 04, 2016

2016 is proving to be a challenging year for dairy farmers. Australian Dairy Farmers (ADF) recently visited members in New South Wales, South Australia and Western Australia, and across the country farmers are confronted with low milk prices, increased input costs, and dry weather conditions.

This continued volatility is a reminder of how dependent farming is on a lot of things which are outside our control.

Dairy farmers are realists and they are resilient business operators. Adaptability has become critical to successful dairy business ventures. Realistic solutions frequently involve working to address the issues we can control, while also accepting that some things are outside our reach. What those solutions look like will differ from one business to another.
 
The Sustainable Farm Profitability Report produced by the Australian Dairy Industry Council and Dairy Australia last year provides some useful tactical management advice to help safeguard businesses during this challenging period.
 
Through our discussions with both State and Federal Governments ADF continues to advocate for a more competitive business environment, and ensure access to the resources essential to dairying. Dairy industry advocacy has seen vital progress of late with the introduction of an ‘effects test’ as well as a review of the proposed ‘backpacker tax’ and bringing in more flexible water policy. These are important achievements that will help deliver a more profitable and sustainable industry in the long term.
 
Dairy Australia also has important resources to assist in preparation and recovery from different conditions. Services provided by programs such as the Tactics for Tight Times provide a good vehicle for analysing the individual business and developing solutions.
 
Integral to this future is ensuring we protect what matters, by working to safeguard the health and wellbeing of our workforce. In recent meetings, both processors and farmers have highlighted this issue as crucial to the future of our industry. I look forward to identifying ways in which our industry can support our people’s physical and mental wellbeing with many of you at the Australian Dairy Industry Council’s Business Breakfast in April.
 
With the ongoing challenges our industry faces exacerbated by drought and tough seasonal conditions, I encourage you all to look out for one another and provide assistance where you can.

 

Simone Jolliffe

ADF President

2016 PAG meetings in full swing

Mar 31, 2016

Australian Dairy Farmers’ (ADF) Policy Advisory Group (PAG) first round of meetings took place in March, identifying priorities for the election year with in depth discussion about issues continuing to affect farmers’ productivity and profitability.

Markets, Trade and Value Chain PAG Chair, Adam Jenkins said the group has come back refreshed and invigorated about the next 12 months of work.

“2015 saw considerable progress in the Markets, Trade and Value Chain policy focus area, with the implementation of the China-Australia Free Trade Agreement as well as developments in Competition policy which will foster a stronger business environment for farmers,” Mr Jenkins said.

“Yet the conditions are always volatile for dairy, and we must continue to find ways to build an even more competitive marketplace for farmers to ensure they can be productive and profitable.”

To set the scene for the key policy issues ahead, Rabobank’s Michael Harvey presented the Markets PAG with the outlook for 2016-17. PAG Chair, Adam Jenkins, said addressing technical barriers to trade will continue to be a focus of the Markets PAG this year.

On the natural resources front, the Natural Resource Management PAG discussed key issues for the year ahead. A focus of the meeting was the industry’s climate change policy, with discussions at the meeting engaging both the Climate Change Authority and Minister for Environment, Greg Hunt’s office respectively.

Water policy will also remain a major focus for 2016. PAG Chair, Daryl Hoey said 2016 is ‘crunch time’ for the Murray Darling Basin Plan.

“Despite the challenges it is faced with, the Murray Darling Basin is a region filled with opportunity for Australian dairy,” Mr Hoey said.

“We need the government to make sound, well-considered decisions to ensure the viability of dairy businesses in this region can continue long into the future. This remains a top priority for the Natural Resources PAG for the year ahead.”

ADF has five policy focus areas, each with a dedicated PAG comprised of elected farmer members. These groups are led by a farmer appointed Chair, working in collaboration with ADF policy officers to discuss priorities and strategic direction.

PAGs recommend policy settings to ADF via the National Council and also act in an advisory capacity providing feedback to Dairy Australia, state dairy farmer organisations (SDFOs), and other bodies like the National Farmers Federation and the Australian Dairy Products Federation.

Stay tuned to the ADF Update for more information about ADF’s PAG meetings as they roll out over 2016.


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