Dairy processors and supermarkets have a clear and urgent role to play in underpinning the financial future of dairy producers nationally.
Retail prices for dairy products must be increased and processors must guarantee that price increases are paid directly to dairy farmers through their farm-gate price.
This was the message today from advocacy group Dairy Connect CEO Shaughn Morgan reflecting on a call by the Queensland Dairy Organisation for retailers to charge consumers an additional 10 cents a litre for fresh milk.
QDO called on processors like Parmalat, Norco and Lion to also guarantee the 10 cent levy would be transferred to farmers.
Shaughn Morgan says Dairy Connect supports the QDO fresh milk levy proposal and described it as a good first step along the slow path to industry sustainability.
Dairy Connect called on supermarket shoppers to support the petition and sign it now. The petition may be found at https://www.change.org/p/petition-coles-woolworths-for-a-10-cent-litre-drought-levy-on-all-milk.
“Some would question whether or not 10 cents a litre would carry dairy farmers through to financial security,” he said.
“What we need is an end to blame-shifting between processors and supermarkets, each of which have a tendency to point the blame elsewhere for the woes besetting the dairy sector.”
Shaughn Morgan said some analysts had been quoted this week as predicting that around 50 per cent of dairy farmers would be broke by the end of the year if current conditions persist.
“Have the processors and supermarkets come to farmers and offered to work together to get rid of $1 a litre milk?” he asked.
“If supermarkets agree to the 10 cent price rise at retail, processors must publicly guarantee that the extra money would end up in dairy farmers pockets through their farm-gate price.”
“Processors and retailers need to acknowledge that dairy production is in dire straits financially and they need to come together and work with farmers to strategically address the challenges ahead.”
The challenges facing the dairy industry will result in an industry that continues to shrink and eventually disappear. Processors and supermarkets must ensure long-term security for dairy produce that is high in nutrition and is ‘daily fresh’.
Dairy Connect will continue to strongly lobby for a Mandatory Code of Conduct as it will ensure balance, fairness and transparency in milk supply supply agreements, as recommended by the ACCC.
“The Australian Competition and Consumer Commission dairy industry review acknowledged that processors were in a position of unfair bargaining power compared with their suppliers,” he said.
“This meant that processors were able to arbitrarily determine the farm-gate price paid to farmers mid-season and were able to force farmers to supply only to a single processor.”
These practices persist despite the introduction of a Voluntary Dairy Industry Code of Practice and no internal review is going to fix it.
“After a thorough review, the ACCC concluded that a mandatory code would better solve these problems in the industry in wake of the Voluntary Code’s failure,” Mr Morgan concluded.