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


 

With the election over, it's time to get things done

Jul 15, 2016

After ten days of vote counting, this week Australian Dairy Farmers (ADF) congratulates the Coalition Government on its re-election.

As an industry, dairy has enjoyed a constructive relationship with the Coalition throughout its previous term, and we look forward to continuing that spirit of this engagement.

With the election behind us, promises made can now be translated into concrete action.

Although the ministry will not be sworn in until next week, ADF has already met with the Department of Agriculture’s advisors to progress the roll out of key support measures announced in the Dairy Support Package. In particular we continue to highlight the urgency in providing immediate access for all affected farmers to Concessional Loans and the Farm Household Allowance support.

Importantly, concerns raised by farmers who have been working to access these measures, including by share farmers, are being taken seriously and will continue to be progressed with the government.

We will continue to work with the Coalition and the opposition to address other key priorities for the dairy industry also, including implementing an effects test to better balance market power throughout the supply chain, invest in rural research and development to build resilience, ensure secure access to sustainable water resources and support a national strategy to address technical barriers to trade.

Over the coming weeks, the ADF policy advisory groups will continue to meet in Melbourne to cement our priorities for the new government. Building industry resilience, as well as addressing the lack of transparency throughout the supply chain are on our agenda.

July has begun the same way June came to an end - with wild weather and floods challenging many dairying regions and low milk prices meaning revised budgets and planning across all farms.

As we work together to weather these storms we must remember that we are a resilient industry with a long, sustainable future ahead. Our profitability and therefore resilience as an industry depends greatly on the support of the Australian public.

We must continue 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 wellbeing of their people and that every efficiency we make on farm has ties to minimising our impact of the environment.

David Basham

Acting ADF President

Collaboration key to dairy success

Jul 09, 2016

With the official announcement of last weekend’s election yet to be made, the dairy sector (like the rest of the nation) is watching very closely and working to ensure that all political parties understand our priorities. Whatever the outcome, it is essential that stability reigns – effective policy formation and clear action to overcome challenges will be otherwise impossible.

Australian Dairy Farmers (ADF) has made clear its priorities for the next government – extend and streamline access to the concessional loans and Farm Household Assistance for all affected farmers, create a safer, more resilient workforce, ensure secure sustainable access to water resources and above all, address the imbalance of market power within the dairy supply chain.

It’s good to see that all parties have recognised the importance of supporting our farmers through the current challenge, as well as committing to developing innovative solutions to building long term sustainability of our industry.

However, it is concerning to see some are still calling for a fresh milk levy – an unworkable solution. If a fresh milk levy was imposed, it would potentially result in farmers who supply domestic markets subsidising their export market oriented counterparts. This is not a workable solution.

There are also potential difficulties associated with such a levy breaching Australian Competition and Consumer Commission regulations as well as potential issues with the World Trade Organisation.

The fundamental issue our farmers continue to face is that they wear the bulk of financial risk in the dairy supply chain. We need a practical and viable solution to increase transparency in the way the milk pricing system works and to simplify milk contracts to ensure the volatility of the market is better balanced along the supply chain.

This week UDV and ADF met with farmers in South West Victoria – to hear concerns, answer questions and build feedback about the current supply chain into our policy work. This is one of many meetings ADF will continue to participate in throughout the year, to ensure we are effectively representing farmers’ interests.

The discussion was robust. Overall, the consensus in the room was that trust has been broken and we need to find a way forward.

The challenges faced by farmers in Western Australia due to processor decisions reinforce the sector as a whole is enduring tough times – no state is immune.

Collaboration is what will get us to where we need to be. Our industry relies on all the elements to operate effectively. Farmers need processors and vice versa – so the solutions will require input from all parties.

Beyond this the public and the government ignore us if we do not operate as one. If we have a hung parliament, dairy will need parliamentary champions to advocate our policy priorities and the industry must work together to feed them that case.

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

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