COLAC ice-cream manufacturer Bulla is going directly to farmers who supply Australian Dairy Farmers Corporation, after a supply agreement between the two companies broke down.
Yesterday afternoon about 94 ADFC suppliers received either an email or phone call from Bulla asking them to supply the company next season.
The Weekly Times understands this is the first time Bulla has sought direct supply from dairy farmers.
It had previously bought milk through other processors and most recently through a supply agreement with ADFC.
However after months of negotiations between ADFC and Bulla about milk supply for next season, starting July 1, that agreement has come to an end.
The letter, from Bulla Dairy Foods chief executive Allan Hood and seen by The Weekly Times, said: “I am writing to advise you that Bulla and the ADFC have been unable to agree upon a mutually acceptable position moving forward. I have sincerely appreciated your contribution to Bulla’s success and would like to offer you a new partnership for the supply of milk directly to Bulla, effective from 1 July 2018.”
The letter includes information about Bulla’s milk price offer (including farmgate milk prices for different supply ratio bands) and other supply information, including the reference solids price (4.1 per cent butterfat and 3.4 per cent protein).
The opening farmgate milk prices in the letter ranged from $5.60-$6 a kilogram of milk solids.
ADFC chairman Scott Sieben said there was a home for all ADFC’s milk from July 1, about 200 million litres. He said ProCal remained as a customer of ADFC, but didn’t disclose details about the other new customers.
Mr Sieben said he received an email from Bulla at 1.54pm yesterday, and by 2pm he understood Bulla executives had started to ring ADFC suppliers gauging interest in them supplying Bulla directly.
He confirmed the letters were sent directly to ADFC suppliers from Bulla.
Mr Sieben said Bulla had the details of ADFC suppliers under a confidential agreement so Bulla could distribute its newsletter to suppliers. “They did not use the information for the purpose it was provided,” he said.
Mr Sieben said ADFC suppliers where shocked with yesterday’s developments.
“Farmers cannot believe what Bulla have done, they are disappointed as it was the first they had heard of it, getting a phone call from Bulla executives about supplying them directly,” he said.
Bulla Dairy Foods chief executive Allan Hood denied that the contact details of ADFC suppliers were misused.
“We have built our own relationships with farmers over the last four years and haven’t used any information inappropriately,” he said.
“In line with our family values, we want to reassure available ADFC farmers there is a home for their milk with Bulla for the 18/19 season. We have valued our relationship with ADFC over the last four years and wish the organisation all the best moving forward.”
Mr Hood said Bulla’s move to come out with an opening price for next season now, ahead of most major processors, was because Bulla wanted to provide “a degree of certainty and the ability to forward plan for the coming season”.
“There are other processors who have released their opening price for next season, so we don’t consider ourselves to be early,” he said.
Mr Hood said Bulla had been negotiating with ADFC for 18 months on “various aspects of the milk supply arrangement and despite both parties’ best efforts, we have been unable to come to an agreement”.
“Our three year contract (with one year extension) ends 30th June 2018 and unfortunately, we could not agree on a new contract for the 18/19 season.”
He said Bulla intended to continue sourcing milk at similar levels.
By: SIMONE SMITH
Source: The Weekly Times