“We have issues within the dairy industry that need to be dealt with, the current scenario is not sustainable,” he said. “Unless we acknowledge the current situation, things will never change, it is important to take action on this crisis.”
Mr Smith milks 500 cows with wife Maree and supplies Fonterra. They have been able to tighten their belts to get through the past few years, but he questioned how the industry would survive long term. The ACCC interim report, released last week, said it should be easier for farmers to switch processors. Mr Smith applauded this recommendation.
He’s always supplied Colac Dairy Company, which became Bonlac and then Fonterra, but said farmers should be able to shift processors easily.
“I believe people should be able to move companies without some sort of financial restraint put in place,” he said.
“We are in the situation now, where to get our 40 cents a kilogram of milk solids back (money lost in the 2015-16 season), affectively we have to stay this season.”
Mr Smith wasn’t sold on the idea of a mandatory code of conduct though, saying legislation “works both ways”.
“For example, the idea that a dairy factory should be legislated to never step-down — while I think it is immoral and extremely disappointing — if legally they are never allowed to step-down, the opening price will be significantly lower to make sure they never do,” he said.
“It may lead to a more conservative approach to opening and that would impact cashflow.”