United calls - don’t let crisis happen again

The Liberal and Labor parties have been united in calls for industry change to ensure dairy farmers are protected from a similar price crisis in the future.

Both Member for McMillan Russell Broadbent and ALP candidate for McMillan Chris Buckingham said the current milk price crisis should never happen again.

Dairy farmers were shocked last month when dairy giants Murray Goulburn, and then two weeks later Fonterra, announced they were slashing farm gate milk prices to farmers.

Instead of being paid $5.60 per kilogram milk solids, the companies announced they were dropping their prices for the last two months of the season, to as low as $4.75/kg milk solids.

But, the burden worsened when suppliers were delivered another blow, the lower end of season price would be retrospective for the entire year.

So, for milk paid for the last two months of the season in May and June, farmers will be paid next to nothing.

Industry commentators have likened the situation to employees being told by their employer – sorry you have been overpaid for the year so now we want the money back.

Prices paid to farmers for May and June will be essentially as low as $1.91 per kilogram milk solids.

Mr Broadbent said to ensure the domestic dairy industry did not face a situation in the future where dairy processors unexpectedly reduced farm gate milk prices late in the season, a re-elected Coalition government will work with the dairy industry to establish a commodity milk price index.

“The deputy prime minister has said that the index would introduce greater transparency and market signals in domestic and global milk prices.

“The Coalition will consult with the industry on the design of the index that would provide dairy farmers with valuable information for use in supply negotiations with processors and to assist in following international price trends,” Mr Broadbent said.

Mr Buckingham said the suddenness that farmers had their profitability pulled out from under them should prompt a rethink about the protections available to small agricultural producers doing business with huge firms.

“We must ensure a crisis like this does not happen again.

Mr Buckingham said the government and opposition needed to commit to review the use of ‘claw-back’ provisions in agricultural commodity contracts and how limiting or restricting their use could improve price transparency for farmers.

“The dairy farmers affected by the current crisis have been caught out by contact provisions that had rarely been exercised in the past, and which few realised could lead to them being saddled with hundreds of thousands of dollars in debt.

“Australian farmers producing other agricultural commodities are also potentially exposed by the use of these provisions, which shift the cost of dealing with sudden price falls from huge entities to individual family farms.

Their use should be reviewed with a view to getting a better balance of protections for producers and growers, he said.

Mr Buckingham said the people responsible for this disaster needed to be held to account and do their bit to help fix the mess.