Farm­ers priced out

Shepparton News - Country News - - FRONT PAGE - By Ge­off Adams

A re­cent in­quiry into the NSW dairy in­dus­try has found pro­duc­ers are caught in a cost-price squeeze, leav­ing farm­ers to op­er­ate on the slimmest of mar­gins.

The com­mit­tee of the NSW Par­lia­ment has pro­duced a se­ries of rec­om­men­da­tions.

The com­mit­tee find­ings chal­lenge the opin­ion of the ACCC that the sell­ing of milk by ma­jor re­tail­ers at $1 per litre does not di­rectly im­pact the price paid to farm­ers.

‘‘It is clear to the com­mit­tee that the price be­ing paid to farm­ers for their milk sup­ply has not kept pace with the in­creas­ing cost of pro­duc­tion,’’ chair Robert Brown, MLC, said af­ter the in­quiry.

‘‘The com­mit­tee is par­tic­u­larly con­cerned by the ev­i­dence of farm­ers who told the com­mit­tee that they can­not draw even a mod­est wage for them­selves from their farm­ing busi­nesses.

‘‘While it is clear that re­cent drought con­di­tions have added pres­sure to dairy farm­ers, the com­mit­tee con­sid­ers that the drought has not caused, but ex­ac­er­bated, the struc­tural prob­lems within the in­dus­try that are re­sult­ing in poor out­comes for farm­ers.’’

This com­mit­tee has found, based on the ev­i­dence be­fore it, what is in­tu­itive to even the ca­sual ob­server and abun­dantly clear to farm­ers them­selves: that re­tail­ers sell­ing milk for $1 per litre has re­moved con­sid­er­able value from the dairy value chain.

This has con­trib­uted to fi­nan­cial pres­sure on NSW dairy farm­ers.

‘‘Dairy farm­ing busi­nesses are clearly strug­gling to sur­vive and this com­mit­tee is greatly con­cerned both for the sus­tain­abil­ity of the in­dus­try and for the well­be­ing of farm­ers.’’

The Dairy Farm­ers Milk Co­op­er­a­tive ad­vo­cated the role of col­lec­tive bar­gain­ing groups for sup­pli­ers.

‘‘In­di­vid­ual dairy farm­ers have a low level of bar­gain­ing power when ne­go­ti­at­ing with pro­ces­sors,’’ their sub­mis­sion to the in­quiry said.

‘‘We have all seen the re­cent ex­am­ple where a num­ber of Western Aus­tralian milk farm­ers were aban­doned by their cur­rent pro­ces­sor.

‘‘In DFMC’s opin­ion, an ef­fec­tive col­lec­tive bar­gain­ing mech­a­nism, both as to price and terms and con­di­tions, is fun­da­men­tal to the dairy mar­ket be­ing fair to ev­ery­one (and, in par­tic­u­lar, the farm­ers).’’

Fin­ley farmer Ruth Kydd raised a num­ber of is­sues in her sub­mis­sion to the in­quiry, in­clud­ing the im­pact of red tape on farm ef­fi­ciency, the uni­lat­eral cut­ting of her farm’s bore wa­ter li­cence, in­con­sis­ten­cies be­tween man­age­ment of Vic­to­rian and NSW ground­wa­ter, the bu­reau­cratic pa­per­work in­volved in se­cur­ing skilled worker visas, the man­age­ment of the Mur­ray-Dar­ling Basin Plan and the power im­bal­ance be­tween farm­ers and pro­ces­sors.

Af­ter the re­lease of the com­mit­tee’s re­port, Mrs Kydd ex­pressed some dis­ap­point­ment that some is­sues had not been ad­dressed and she hoped that the com­mit­tee’s wish for fur­ther time for a more thor­ough ex­am­i­na­tion would be granted.

She said the com­mit­tee’s in­ves­ti­ga­tion ap­peared to be rushed and did not visit the largest dairy pro­duc­tion re­gion in the state.

On the manda­tory code for the dairy in­dus­try, Mrs Kydd said more con­trol was needed to pre­vent bizarre prac­tices such as re­quir­ing a new owner of a dairy farm to con­tinue sup­ply­ing milk to the same pro­ces­sor, or com­pelling sup­pli­ers to ac­cept farm gate price re­duc­tions, but not hav­ing the ben­e­fit of price in­creases.

‘‘I was on the board of Dairy Con­nect for some time and we were told of some un­fair prac­tices which the big­ger com­pa­nies tried to adopt,’’ she said.

Mrs Kydd said the code should also re­quire pro­ces­sors to have their milk test­ing lab­o­ra­to­ries in­de­pen­dently tested for ac­cu­racy, be­cause she had seen some ev­i­dence of vari­a­tions be­tween pro­ces­sors when given the same milk.

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