June President's Message

Jun 30, 2016

Opening milk price announcements made this week by Murray Goulburn and Fonterra have once again, reinforced the need for improved transparency in the way milk pricing is structured and communicated in Australia.

Not only are the announcements much too late for farmers to properly budget and plan around, but many questions have to be asked to understand them. Add to the already complex system a loan repayment and the forecast opening price is far from what it first appears.

Both Murray Goulburn and Fonterra’s recent announcements are confusing and difficult to understand – they lack clarity and transparency.

Murray Goulburn’s repayment system is complex at best. Further, the exact amount that farmers will repay by the end of the financial year 2016-17 is not articulated in the announcement – nor is it clear that farmers will actually pay an initial repayment of 14 cents per kg/ms plus any further repayments Murray Goulburn decide to deduct.
 
Fonterra’s announced opening price of $4.75kg/ms was better than expected, however the detail around who received what is not clear. Existing Fonterra suppliers will receive around $4.75 ($4.73 due to interest on the loans). Any supplier who did not supply Fonterra milk in May-June (including farmers that had dried off) are not eligible for the Autumn offset and therefore receive around $4.54.  
 
We shouldn’t have to ask to get this information – it should be clear as day. After all farmers are providing the very lifeblood of these organisations, it’s in everyone’s best interests that we get this information up front and can work within these means. 

Improving the transparency of the milk pricing system is important, and Australian Dairy Farmers (ADF) continues to work with our state members to this end. It is essential that processors come to the table and discuss this as a collective, to help protect the future of our sector.

No one can dispute that the current market situation for dairy farmers, whether you are a supplier to the export or domestic market, is rough. Even the best placed businesses will be making difficult decisions.

While we cannot change the milk price, ADF is working hard with our state members to improve the transparency in the milk pricing system and simplify milk contracts. We are also fighting for farmers to better manage the risk throughout the supply chain so that they do not always bear the financial risk.

This weekend Australia takes to the polls and by next week the successful party will be moving into Parliament. ADF and our state members will be back in Canberra as soon as the elected party is announced to keep the pressure on.

As an industry dairy has supported its own and will continue to do so. We’ve never asked for a bail out but rather for targeted assistance that will help get our industry over the current hurdle and better balance risk throughout the supply chain going forward. We need structural change that improves fairness and brings more balance into the market – competition law can be improved more.

ADF acknowledges the Dairy Recovery Concessional Loans are now available in SA, TAS and Victoria. We welcome this support, and will continue to advocate that all affected dairy workers are eligible for this assistance. 

I encourage all farmers to keep talking to ADF, your state representatives and RDPs. It’s tough for everyone out there right now, and the season ahead will be challenging. This will go beyond the farm gate, with our service providers and communities likely to feel the pinch too – keep this in mind and let’s all look out for one another.

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

Early pricing signals essential

Jun 10, 2016


Many in the dairy industry feel under enormous pressure at the moment. Farmers not only have the challenge of adapting their business plans to recent price shocks – we also pick up the paper to read about it every day. With more processors' opening milk prices due in coming weeks, following Warrnambool Cheese and Butter’s (WCB) announcement today, no doubt some will feel the pressure begin to mount once more.

We recognise that the announcement from WCB will come as a shock to many, given it is well below the cost of production. Despite the disappointing low price, we must recognise that they have heeded calls for early price signals and provided much needed certainty to their suppliers.

While we are an industry under pressure, we are also an industry that has the know-how and motivation to overcome these adversities and thrive in the long term. No one is alone in this scenario and we need to ensure that all farmers feel supported during tough times.

ADF, together with our state members and Dairy Australia is fighting for our farmers. We can’t solve all of the issues farmers are currently facing, but we can work to relieve some of the immediate pressures and accelerate change to ensure this doesn’t happen again.

We have welcomed the promises made by State and Federal Government, now they must stop playing politics and deliver. Farmers need certainty as to their options right now.

While we await Government decisions, there are industry resources available to help farmers manage the impact of recent events. It’s important to make the time to take up these opportunities. Dairy Australia’s Taking Stock provides free one-to-one business analysis that can help you prepare for the season ahead.

The Dairy Farmer Central website launched this week by the Victorian dairy industry, lists all of these tools and more. It also signposts events - some of these events will inform and help you plan for the season ahead, others provide an opportunity to take time out from the farm and get some perspective. We are working to make this website applicable Australia-wide.

These tools are not a silver bullet to restore our businesses but they will help navigate the challenges, so we can move toward a stronger, fairer and more sustainable future.

David Basham

ADF Acting President

United industry essential during challenging times

May 13, 2016

The past few weeks have presented unprecedented step-downs and claw backs to many farmers. The decisions made by our major processors are extremely disappointing and many farmers must now make difficult decisions about how to best navigate the current market conditions and support their farm.

Across the industry farmers are angry – and they have every right to be. The situation processors have put them in is completely unacceptable. Farmers are resilient and they love what they do. But they need certainty to be able to plan and to be able to trust that the prices they are budgeting on are realistic.

Australian Dairy Farmers (ADF) is working hard on behalf of farmers to signpost help for the short term and find solutions for the long term. This includes:

  • Listening to farmers to make sure we understand what they need most right now. We are working across the industry with our state farming members as well as national service provider Dairy Australia to deliver support, whether it be one-to-one financial guidance or mental health services.
  • Talking to processors, to urge them to help suppliers understand the implications for their businesses and to be accountable for this decision. ADF is pressing the manufacturers to provide early price forecasting. Farmers cannot plan for their businesses without reliable forecasting.
  • Making daily contact with both sides of Parliament, to explain the current and future challenges farmers face, and to seek commitments for targeted assistance.

There are no easy solutions to the challenges we face, but we are examining all options and are considering innovative solutions to build an industry with a stable, long-term future.

Central to this is finding ways to better manage price volatility across the sector, and urging processors to give greater certainty about milk price in a fair timeframe.

The support of government will be essential in better understanding the current situation and in delivering an effective response. As an industry, we need to ensure that we are realistic in expectations and that the solutions we put to them are in the best interests of our farmers and our communities for the long-term.

Our first priority is to provide practical support for farmers facing difficult decisions right now, to ensure that they can take control of their situation and make the best choice for their business and family.

Now is the time for our industry to unite, support one another through the tough times, and collectively consider innovative and practical solutions to help us achieve our vision of sustainable profitability.

Simone Jolliffe

ADF President

For information on programs available through Dairy Australia to help you through the short term challenges click here

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