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Australian Dairy Farmers disappointed with Senate report
August 18, 2017

A long-awaited government review of how to fix the dairy industry’s woes has left farmers feeling disappointed and dubious.
Following last year’s dairy crisis, the Senate Economics References Committee set out to establish a fair and long-term solution to improving everything from milk price contracts to supermarket behaviour.

But farmers said the recommendations fall short of paving the way for change.
Gippsland dairy farmer Rob Paynter described the report as “damp squib” but is putting his faith in the competition watchdog, the Australian Competition and Consumer Commission (ACCC), which is currently conducting its own review of the sector.

Mr Paynter was one of the people left with huge debts when Fonterra suddenly slashed prices last May.

“It’s going to take years to win back the trust that was there. We absolutely need to have a very firm line to say that this must never happen again,” he said.

The committee has handballed the hard decision to the ACCC recommending it consider how to level the playing field between farmers and milk processors.

Calls for mandatory code of conduct

Last month, an industry-led voluntary code of conduct for the dairy industry was introduced. It requires processors to give farmers 30 days’ notice before cutting prices.

But the Senate committee has questioned whether the code goes far enough, and its chair, Labor Senator Chris Ketter, has told the ABC it should go further.

“In an ideal world, and this is my personal view, a code of conduct would be a mandatory one,” he said.

“I think that’s got a better chance of success — a code of conduct that provides the risk to the processor as opposed to the farmer.”

The report recommends the ACCC consider ways to strengthen the code to give farmers more clout, and make it easier for suppliers to collectively bargain with processors.

The committee has also encouraged farm groups to give their members better legal advice on milk contracts.

“I’m really asking farm groups to lift their game in this area,” Senator Ketter said.

“If you can’t provide information and support for your members on this particular issue, which is the contract between the farmer and the processor, I wonder what’s the point.”

Committee handballs the hard stuff

Farmers have been worn down by numerous Senate inquiries that have not presented solutions.

This latest report skirts around one of the most controversial issues — the ability for milk processors to claw back money from suppliers.

While the committee is scathing of Murray Goulburn and Fonterra’s decision to claw back debt last year, it has left scrutiny of controversial milk price contracts to the ACCC.

And it has called for an independent review of the Government’s concessional loan dairy support package, citing concerns that it saddles farmers with more debt than necessary.

With regards to one of the most talked about issues facing the sector — $1 a litre milk prices — the report recommends an “education campaign to promote awareness about the dairy industry so consumers can make informed choices when purchasing dairy products”.

The price cuts that triggered a crisis
In April last year, dairy processor Murray Goulburn suddenly and retrospectively cut the prices farmers received for the milk they supplied.

Its largest rival, the New Zealand dairy giant Fonterra, followed suit and the industry plunged into crisis.

The cuts left many farmers hundreds of thousands of dollars in debt.

The ACCC launched inquiries, shareholders and suppliers initiated class actions, and the senators began their own investigation.

In his first public comments since leaving Murray Goulburn on the same day the cuts were made, former boss Gary Helou told the Senate inquiry he “did not mislead” in the lead-up to the April 2016 announcement.

Senators were due to report their findings in February. The release of the findings were again delayed in March, May and June.

 

Source: ABC Rural



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