Call for more fat to earn fair price
A NEW report by one of the country’s major dairy-cattle breed groups is calling for an overhaul of milk-payment systems.
The report by Jersey Australia was funded through Federal Government’s Farming Together program.
It found that the current payment systems used by major dairy processors were highly complicated, outdated and did not reflect the changes in global market conditions.
At present the major processors pay farmers a different price for the protein and butter fat content of their milk.
However, the report states that this disadvantages some producers and applying the same price for both butter fat and protein would reward dairy farmers supplying highcomponent milk.
Jersey Australia board member and Ringarooma dairy farmer Jane Sykes said while the report had been commissioned by a breed group, the breed of a dairy herd was irrelevant when it came to how farmers are paid.
“The current system dates back to the 1980s when butter fat was the product most difficult to find a market for, but things have changed a lot since then,” she said.
“What we would like to see is for farmers who are producing high-component milk to be getting paid properly for it, regardless of the breed of cows they have.”
Miss Sykes said this type of payment system had already been adopted in places such as New Zealand.
In Tasmania, Cadbury also made the move at the start of this season to start paying its suppliers equal prices for both butter fat and protein.
Currently, Fonterra pays its Australian suppliers at a ratio of 1.9 to 1 ration for protein compared to butter fat.
The report has also recommended a volume charge to penalise milk supplied with lower levels of milk solids.
The report says pricing mechanisms are only a means for paying for milk and the breakup of components and other incentives does not necessarily relate to market conditions.
“It’s not going to be easy and there are going to be people with different opinions about this, but we need to start the conversation and have a really good look at how we’re being paid,” Miss Sykes said.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said there had already been some industry discussion.
“Some companies like Fonterra have been looking to go this way because that’s what they do in New Zealand.
“If there’s some way we can put more focus on this or move things along a bit faster that’s something I’d support.”