Explaining the Dairy Levy Poll

Jan 24, 2017

 

Today, it was announced that there will be no change to the dairy levy.

This decision was made by the Levy Poll Advisory Committee (LPAC), whose core role is to make recommendations regarding the level of farmer levy funding to support the long-term research, development and extension strategy for the dairy industry.

It is important to note, per the ‘Explanatory Statement’, issued by Authority of the Deputy Prime Minister and Minister for Agriculture and Water Resources that the changes may provide Dairy Australia with savings of up to $1 million every five years, which could be re-directed towards research & development, plus marketing and promotion activities for the benefit of the dairy industry, including dairy farmers.

Given the announcement of the LPAC decision, there will likely be some opposition to the recommendations. Therefore, it is important that there is a good understanding of the process which formed the LPAC and what could happen as a result of the recommendation.

Background

During 2015, there was a levy poll review process undertaken to consider the requirement for Dairy Australia to hold a levy poll every 5 years.

That process led to a recommendation to levy payers to change the regulations and form the LPAC, which would undertake a review of levy funded activities and make recommendations to industry on whether a levy poll to change the levy rate was required.

Levy payers voted in late 2015 to accept the proposed changes to the levy setting process. New regulations to give effect to the changes were signed by the Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce in late December 2016.

The LPAC was convened several times in the second half of 2016 to consider whether a levy poll should proceed in 2017 as was required under the previous regulations. These LPAC meetings were based on draft regulations which were expected to be signed off late in 2016.

Australian Dairy Farmers and Dairy Australia, under the new regulations process, were required to provide the LPAC with a joint paper and recommendation on what should happen with the levy rate. The joint recommendation was for no change in the levy rate.

The major piece of information available to inform farmers will be the LPAC report which gives an outline of the work it did, what information it used in arriving at its recommendation(s), who it consulted with, its assessment of the value of the DA levy, etc.

Set up and composition of the LPAC

The six initial members of the LPAC were nominated by Australian Dairy Farmers, Dairy Australia and the Australian Dairy Products Federation. The initial members formed a selection panel that proceeded to select up to nine milk producer levy payer representatives who applied to become members of the Committee. All levy payers were invited to apply for one of the nine levy payer positions.

All the details around this are on the Levy Poll Advisory Committee web site – www.dairylevypolladvisorycommittee.com.au

What happens next?

As required by the new regulation requirements, the Chair of the LPAC - John Lawrenson, is required to advise Dairy Australia’s Chair and Minister Joyce, of the decision of the Committee. This happened this week, along with the media statement issued by the LPAC.

Dairy Australia has 14 days from receipt of the decision of the LPAC to advise all levy payers of the outcome.

Any levy payers wishing to oppose the LPAC recommendation and propose an alternative option can initiate a petition.

Levy payers who are Group A members of Dairy Australia and who together represent 15 per cent of total levies paid in the previous financial year, will have 75 days to lodge a petition with Dairy Australia, requesting a levy poll to be held and specifying their proposed levy option.

If there are one or more petitions which each represent at least 15 per cent of the total levies paid, then Dairy Australia will be required to hold an Extraordinary General Meeting (EGM) at which Group A members of Dairy Australia will have the opportunity to vote to either proceed or not proceed with a levy poll.

If the resolution to hold a levy poll is passed at the EGM, Dairy Australia must present the petition and the results of the vote to the LPAC within 14 business days after the resolution is passed.

The LPAC must also request Dairy Australia arrange a levy poll as soon as reasonably practicable and must set out the levy options proposed by the petition and may set out any other levy options which LPAC proposes. LPAC has an ongoing role in the conduct of a levy poll including, but not limited to, information to be provided to levy payers to use in determining their voting intention.

In the event of no petitions which represent 15 per cent of total levies paid within the 75-day period, the levy rate remains unchanged and there will be no Levy Poll.

What could happen

During the last levy poll, there was a reasonable percentage of farmers who voted for a zero levy, so it is not unreasonable to expect there will be one or more groups who will organize a petition to have a levy poll with a levy rate less than currently applies, or set to zero.

To guarantee the fair and democratic rights of all levy payers who are the Group A members of Dairy Australia, ADF believes it was important that provision was made in the new regulations to ensure there was a process to allow different views among farmers to be considered.

Whether a petition reaches the full 15 per cent threshold to trigger a EGM of Dairy Australia Group A members will be the issue.

If there is a need for an EGM because of one or more petitions to Dairy Australia, then ADF will need to be clear about why it recommended, jointly with Dairy Australia, that the levy rate should remain unchanged.

This will be a process ADF must manage during the leadup to a required EGM of Dairy Australia but may also need to be engaged in the debate during the 75 days in which a petition can be presented.

To read the explanatory statement of the Legislation, visit https://www.legislation.gov.au

For further information regarding the Dairy Levy Poll process review, visit www.dairylevypollreview.com.au


John McQueen

Interim ADF Chief Executive Officer


 

Changing of the guard

Dec 22, 2016

As you may have heard, David Basham stood aside as ADF President last week for a period of three months. His decision to run for the Seat of Finniss in the South Australian State Government came about quite suddenly, we wish him every success with his campaign.

Another announcement was the appointment of Terry Richardson to act in the role of ADF President. Terry Richardson jointly operates a dairy farm with his family in Deans Marsh, south west Victoria, where he has lived since 2004 and has a 550-milking herd.

Terry was appointed as an Australian Dairy Farmers Business Director in November 2015 and was the logical choice for acting President due to his background and experience.

Holding several positions in the dairy industry, both in New Zealand and Australia, he was a director of Kiwi Co-operative Dairies for seven years as well as a dairy consultant with Agriculture New Zealand. After moving to Australia, he joined his local UDV branch and was later appointed to the South West Regional Extension Committee. He was previously Chairman of Warrnambool Cheese and Butter Company and has been a director of the company for eight years, a role he still holds.

There has been some talk in media circles that Terrys position at the Warrnambool Cheese and Butter Company is a potential conflict of interest.

The ADF Board asked Terry to act as the ADF President during the period of leave David has taken from the ADF Board. Members of Boards of most organisations can occasionally have circumstances where there could be a possible conflict and the important thing is that the Board members recognise the possibility of conflict and manage it accordingly.

This year has presented unprecedented challenges for the entire dairy sector. ADF has remained focused on laying strong foundations that builds resilience rather than leaving farmers vulnerable and we will continue to advocate strongly on their behalf.

The events of 2016 have 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.

This season has been one of the kindest seasons we have had in many years. The extended season of grass growth has improved bottom lines and with world market prices continuing to strengthen over the second half of the year, things are looking much better for the future than they were mid-year.

May 2017 treat everyone in the dairy industry better than 2016 and we wish everyone a Merry Christmas and a safe, prosperous New Year.

Australian Dairy Farmers

 

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


 

 

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