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.
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.
Acting ADF President
Sep 09, 2016
Recent data on global dairy prices shows a positive rise that looks as if it might continue.
The average price in the Global Dairy Trade auction overnight rose by 7.7 per cent. This followed two consecutive rises in the past month, with a 12.7
percent increase in prices at the most recent auction, while the important whole milk powder (WMP) price rose by 3.7 per cent.
These results have driven the index to an 18 month high.
Analysts are predicting further rises in the global milk price which suggests that the worst might be behind us and we may start to see some stability return to the global milk supply. This will hopefully occur through rebalancing of supply and demand due to cut backs in EU production, intervention buying of SMP (skim milk powder) in Europe and increased buying in China.
Although these increases are nowhere near enough to return to sustainable prices it is pleasing to see that prices are on the rise and things may be looking better in the long term.
Unfortunately, the most optimistic scenarios see the market turning in any meaningful way in the first quarter of 2017.
As dairy farmers we have a limited capacity to manage the market price so it is important to always focus on what we can manage, remain aware of industry risks and maintain a low cost production system so we are in a better position to weather any storms.
While we are an industry that has been under intense pressure, we are also an industry that has the know-how and resilience to overcome adversity and thrive in the long term.
ADF, together with our state members, is continuing to fight for farmers. Even though we won’t be able to solve all of the issues farmers are facing, we are working to relieve some of the pressures to create change to ensure that an unfair share of the risk in the value chain is not taken by the farmer and that recent events in the industry don’t happen again.
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.
While we wait for the uptick in prices we must remember that we are a resilient industry with a long, sustainable future ahead and our profitability depends greatly on the continued support of the Australian public.
It is important to remind the community that dairy farmers – regardless of the challenges they face are good business people, who care for their cows, work to enhance the well-being of their people and that every efficiency we make on farm has ties to minimising our impact of the environment.
To view the global dairy price index [click here]
Acting ADF President
Aug 26, 2016
The symposium was held yesterday in Melbourne and both the Australian Dairy Farmers CEO John McQueen and myself attended.
Firstly, I would like to thank the Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce for organising and chairing the
symposium as well as other government officials who were in attendance.
I would also like to thank our state members - QDO, NSWFarmers, SADA, TFGA, UDV, WAFarmers and industry partners for their work prior to the symposium which gave us the opportunity to narrow our message down to focus on four important key areas.
Lastly I would like to thank the processors and retailers who were at the symposium to hear from concerned farmers, owners of small businesses and people who produce a quality product that many people in Australia rely on.
For me, the symposium provided an opportunity for the dairy industry to have an open discussion with key stakeholders to address the challenges facing the Australian dairy industry.
Our main points include no $1 milk, no late season drop in milk price, fairer contracts, commodity milk price index with an educational program and critical need for farmers and manufacturers to find the solutions rather than depend on government.
These points illustrate the need by industry to ease the pressure placed on farmers by having to accept an unfair share of the risk and possible financial fall-out. We believe in greater transparency and look forward to working with the government on establishing the commodity price index tool which will help tip the balance back to the farmer.
Since 2011, we have said that the $1 milk devalues the product by taking substantial value out of the supply chain and has to stop if we are going to maintain a sustainable industry. There needs to be greater fairness in contracts and we have committed to working with processors to ensure all contracts comply with the unfair Contracts Legislation that begins on November 12, 2016. Also, the situation in Western Australia needs to be addressed immediately as we don’t believe it’s right that nine farmers may not have anywhere to take their milk.
In response, Minister Joyce urges the need for industry to work together to better balance risk along the dairy supply chain, especially when it comes to managing the effects of lower world prices. He wants to see improved Farmgate returns for dairy farmers, an openness in milk price arrangements and fair and transparent milk supply contracts; plus, the development of a commodity milk price index which he committed up to $2 million in government funding to establish. Also, for industry to find a compromise to the $1 milk situation otherwise he will need to take action and push for an immediate solution.
However, he also acknowledged that these things will only happen if there is buy-in from industry and a willingness from key stakeholders to hear each other out and develop solutions together.
A surprise announcement made by Minister Joyce at the conclusion of the symposium advised that Treasurer Scott Morrison has request the ACCC to undertake an inquiry under Part VIIA of the Competition and Consumer Act 2010 providing the Commission with powers to obtain information from the entire value chain. What this means is the ACCC has been given extra investigatory powers to undertake the inquiry, with the authority to dig deeper than it would have been able to in a market study. The inquiry, which will begin in November, will investigate 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.
Yesterday’s dairy symposium delivered on Minister Joyce’s election promise to get key stakeholders together to address challenges facing the Australian dairy industry and discuss ways to improve the industry’s prospects going forward.
One of the ways the Coalition Government is delivering assistance to dairy farmers is with a $579 million support package to help manage through the current low price environment. The funding been allocated to four main areas including access to Dairy Recovery Concessional Loans, Farm Household Allowance (FHA), the Rural Financial Counselling Service and an additional $900,000 for Dairy Australia to roll out ‘Tactics for Tight Times’ one-to-one farm business advice.
If you have any questions relating to whether you are eligible for the concessional loans, the government has released a dairy question and answer section on their website (click here). However, we suggest that you also contact a financial counsellor or the relevant state delivery agency as they will be able to help you with information and the application process.
Acting ADF President