Lessons learnt from the Senate Inquiry

Feb 09, 2017

Last week ADF were asked to speak at the Senate Inquiry in Shepparton, Victoria.

Before it was our turn, we listened to a number of dairy farmers from the region offer valuable insight into an industry that has seen its fair share of hard knocks.

Centred around a few general themes, the dairy farmers talked about having greater transparency between processors and suppliers, contract fairness, and a lack of faith with industry body leadership.

Firstly, we believe that the dairy industry needs improved contracting arrangements between farmers and processors; greater transparency through earlier and clearer pricing signals for farmers; and less risk for farmers and more balance in risk along the supply chain.

In relation to greater transparency, ADF is in the final stages of completing the draft Code of Practice. We have worked in consultation with our state member organisations, farmers and processors, and the ADIC to develop a Dairy Industry draft Code of Practice for contractual arrangements to help ensure greater transparency and fairness in milk supply and pricing. This will also minimise the chances of what happened in April/May last year being repeated.

ADF believes that it is important that contracts are fair, simple, realistic and easily understood by both parties ensuring there is more balance for farmers along the supply chain. The Code of Practice will help ensure that supply agreements and contracts comply with the Unfair Contracts law that came into effect on 12 November 2016.

This unfair contracts legislation extends existing protections against unfair contracting practices and is a practical step, that when coupled with the dairy industry Code of Practice, will provide dairy farmers with fairer and more transparent contracts.

ADF will continue to work with farmers, processors and our industry bodies to build a system that builds resilience, rather than leaving farmers vulnerable.

Lastly, while it is important to acknowledge the things we do well as an industry it is also important to recognise the things that we could do better. The farmers have spoken and we have listened.

While we are busy working on and achieving important outcomes for farmers, a lot of work goes on behind the scenes that we don’t often communicate to our members well enough. We hear this and are endeavouring to do better.

It’s also important to note that the ACCC Inquiry into the Dairy Industry has started. If you are a dairy farmer and can attend one of the public forums the ACCC needs to hear from the ‘horse’s mouth’. The key issues to be considered in the Inquiry include competition between milk processors, the effects of private label products and pricing, contractual practices, availability of price, global markets and key factors influencing the profitability of dairy farms.

 

The next public forums will be held on:

  • Tuesday 14 February 2017, Traralgon, VIC
  • Monday 27 February 2017, Warrnambool Golf Club, Warrnambool, VIC
  • Tuesday 28 February 2017, Shepparton Golf Club, Shepparton, VIC
  • Thursday 16 March 2017, Mercure Sanctuary Golf Resort, Bunbury, WA
  • Monday 20 March 2017, Hahndorf Football Club, SA
  • Wednesday 22 March 2017, Burnie Golf Club, Camdale, TAS

 

For more information and to register your interest please visit https://consultation.accc.gov.au/compliance-enforcement/accc-dairy-inquiry-farmer-consultation-forums/

John McQueen

Interim ADF Chief Executive Officer

 

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


 

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

 

 



ADF appoints incoming CEO, Benjamin Stapley

Aug 18, 2015

On 5 August 2015, Australian Dairy Farmers (ADF) announced the appointment of Mr Benjamin (Ben) Stapley as its incoming Chief Executive Officer (CEO).

With a strong background in member advocacy, stakeholder engagement, policy development and media management, Mr Stapley comes into the role after two years as Director of Policy and Regulation at the Plastics and Chemicals Industries Association (PACIA).

Mr Stapley’s expertise in developing and executing strategic advocacy and communications activities will ensure that ADF continues to be a strong advocate for Australia’s dairy farmers. Prior engagements have included leading policy, regulatory and advocacy programs for Australia’s chemical manufacturers and importers, and for Australia’s agricultural chemical suppliers. Mr Stapley brings particular experience in government relations with extensive networks within the Government and bureaucracy central to ADF’s interests.

Previous roles with the Commonwealth Government saw Mr Stapley work closely with industry stakeholders to reform and streamline Australia’s management systems for environmentally hazardous chemicals.

“ADF is pleased to welcome Ben and I, along with my fellow Directors, National Council and staff look forward to working with him to continually improve the sustainability and profitability of farmers across all dairying regions,” ADF President, Noel Campbell said.

Mr Stapley has also attained qualifications in both Law and Architecture.

“Australia’s dairy farmers have a very bright future and I am proud to be given this opportunity to work with the ADF Board, staff and farmers to help deliver a vibrant, profitable and sustainable dairy farming sector in Australia,” said Mr Stapley.

ADF Interim CEO Dr Clive Noble, who took on the role as a short term break from his consulting business, will continue in the position until 26 August, and Mr Stapley will commence on 1 September 2015.

Mr Campbell thanked Dr Noble for his contribution and service to ADF during his time as Interim CEO and wished him every success in his future endeavours. 

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