Dairy farmer moves on with fresh con­tract Har­vey snubs Lac­tanz plan

Countryman - - NEWS -

Har­vey dairy farmer Dale Hanks, who was forced out of the in­dus­try in 2016, is again milk­ing cows af­ter be­ing thrown a life­line by Par­malat-owned Har­vey Fresh.

Mr Hanks was one of three pro­duc­ers who lost their dairy liveli­hoods in Oc­to­ber 2016 when Brownes did not re­new their sup­ply con­tracts be­cause the mar­ket was over­sup­plied at the time.

But af­ter ne­go­ti­at­ing a con­tract with Har­vey Fresh a year later, Mr Hanks has restarted his dairy op­er­a­tion, his milk be­ing col­lected by his new pro­ces­sor since De­cem­ber.

Mr Hanks said the con­tract came about af­ter one of its sup­pli­ers re­tired from the in­dus­try. That meant there was room to re­place this vol­ume un­der Har­vey Fresh’s “litre out, litre in” pol­icy.

As well as los­ing his main source of in­come for more than a year, Mr Hanks es­ti­mates re­plac­ing cows and re­cruit­ing and train­ing new staff had cost him hun­dreds of thou­sands of dol­lars.

None­the­less, the third-gen­er­a­tion farmer was keen to re-en­ter the dairy in­dus­try, given he had more than $1 mil­lion worth of in­fra­struc­ture sit­ting idle. “I had lost my mojo about the dairy in­dus­try, given the kick in the guts we got from Brownes, but I’m get­ting en­thu­si­as­tic again un­der our new pro­ces­sor,” he said.

Mr Hanks said his busi­ness would op­er­ate at a smaller scale.

Un­til Brownes axed his con­tract, Mr Hanks had 350 cows and was sup­ply­ing 3 mil­lion litres a year. He now has 150 cows which will in­crease to 220 in com­ing months.

“We’ll sup­ply 1.7 mil­lion litres this year, build­ing up to 2.1 mil­lion litres in 2019 (as the younger cows be­come more pro­duc­tive), and will stay at this size,” he said. Am­bi­tious growth plans by WA’s big­gest milk pro­ducer Lac­tanz Dairy have been dealt a blow af­ter Par­mala­towned Har­vey Fresh said it would not re­new its con­tract to process more than 20 mil­lion litres of milk a year.

Melbourne-based AAG In­vest­ment Man­age­ment, rep­re­sent­ing a fund based in north­ern Europe, last year re­vealed plans for Lac­tanz, at Scott River in the South West, to al­most triple pro­duc­tion over three years.

In­dus­try sources say Har­vey Fresh ad­vised Lac­tanz it could not ac­com­mo­date the com­pany’s plans and there­fore would not re­new its con­tract af­ter it ex­pired in July.

The move has trig­gered other events, sig­nalling a more pos­i­tive out­look for the em­bat­tled WA dairy in­dus­try.

To re­place the milk that will no longer be sup­plied by Lac­tanz, Har­vey Fresh has is­sued new con­tracts to at least four smaller farm­ers who pre­vi­ously sup­plied Brownes, while ne­go­ti­a­tions with other pro­duc­ers are con­tin­u­ing.

Brownes was last year of­fer­ing con­tracts that paid farm­ers 4¢ to 5¢/litre less than Har­vey and Lion sup­pli­ers, a move de­scribed by many as dev­as­tat­ing and not sus­tain­able.

In­dus­try sources say Har­vey Fresh’s woo­ing of for­mer Brownes sup­pli­ers could leave Brownes, which was re­cently ac­quired by Chi­nese dairy gi­ant Shang­hai Ground Food Tech, with a short­fall of milk at a time when the busi­ness was plan­ning to grow out­put.

But this was re­jected by Brownes man­ag­ing di­rec­tor Tony Gir­gis, who said his firm “does not and will not re­spond to spec­u­la­tions or ru­mours”.

“We have a proac­tive, di­rect and pos­i­tive en­gage­ment and com­mu­ni­ca­tion process with our sup­pli­ers and we have no cur­rent or an­tic­i­pated fu­ture short­age of milk be­cause our com­mit­ted sup­pli­ers have re­sponded well to our de­mand plans,” Mr Gir­gis said.

WAFarm­ers dairy sec­tion pres­i­dent Michael Par­tridge said fi­nally com­pe­ti­tion had been cre­ated in the mar­ket place, which was good for farm­ers. “We hope com­pe­ti­tion will lead to an im­prove­ment in prices paid to farm­ers go­ing for­ward,” he said.

WA’s 145 dairy busi­nesses pro­duce about 380 mil­lion litres of milk an­nu­ally, so Lac­tanz’s cur­rent out­put of about 22 mil­lion litres rep­re­sents more than 5 per cent of the State’s pro­duc­tion..

Har­vey Fresh WA milk sup­ply man­ager Mal­colm Fech­ney and AAGIM ex­ec­u­tive chair­man Mar­cus El­gin de­clined to com­ment.

AAGIM bought Lac­tanz for $30 mil­lion in 2016.

Jenne Bram­mer

Pic­ture: The West Aus­tralian

Har­vey dairy farmer Dale Hanks re­cently re-en­tered the in­dus­try af­ter be­ing forced out in 2016.

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