A band aid from those who delivered the cheap milk beating?

A band aid from those who delivered the beating?

Dairy
Aa

The Victorian Farmers’ Fund milk deal between supermarket retailer Coles, processor Murray Goulburn and a “reluctant” peak state farmers’ body is a worry.

Aa
Coles continues to sell its house brand supermarket milk disturbingly cheaply at $1 a litre, which continues to put downward pressure on farmgate price contracts.

Coles continues to sell its house brand supermarket milk disturbingly cheaply at $1 a litre, which continues to put downward pressure on farmgate price contracts.

While we should always be grateful for small mercies, the Victorian Farmers’ Fund milk deal between supermarket retailer Coles, processor Murray Goulburn and a “reluctant” peak state farmers’ body is a worry.

The Victorian Farmers Federation and Coles have signed off on a venture to sell Farmers’ Fund branded milk supplied by Murray Goulburn designed to generate a “guaranteed 40 cents from every two litre bottle” to go to a special fund.

Money raised will be used in Victoria for grants to farmers for dairy infrastructure, education or expert advice “to help build more viable farm businesses”.

Coles has kick-started the Farmers’ Fund with a lazy $1 million sweetener.

Some in the industry and outside it might be reacting a tad cynically.

Dairy producers in Victoria have taken a financial beating from milk processors, with their co-operative Murray Goulburn front and centre.

Earlier this year, Australia’s biggest processor slashed fresh milk prices and began clawing back money paid to producers from July 1 the previous year.

The average family farm payback is reportedly $120,000.

The company set up a loan assistance scheme that no one wanted.

This week it announced it was reviewing its response to the economic chaos it had caused during the past six months – which is about time, and a welcome step.

Coles continues to sell its supermarket house brand milk disturbingly cheaply, at $1 a litre, which continues to put downward pressure on farmgate price contracts.

Therefore, not surprisingly the Farmers’ Fund licensee, the Victorian Farmers’ Federation, says its relationship with Coles is not really that close.

Arguably a couple of the parties applying the economic band aid to help farmers are those who actually delivered the beating.

Dairy Connect, naturally, supports the concept of the Victorian Farmers’ Fund milk program and wishes producers who apply for grants every success.

What the fund fails to address, however, are systemic problems crying out to be fixed.

These challenges include:

- The unfair amount being paid for fresh milk at the farm gate.

- One-sided milk supply agreements which reduce farmers to the role of serfs in a 21st century feudal economy.

-  Agreements that demand exclusive supply but fail to deliver price or volume certainty for producers.

We need a mechanism which ensures the certainty of price and volume.

We need the mechanism to ensure that dairy farmers can sell their excess milk without being subject to restrictive and unfair clauses in their milk supply agreements.

Let’s have a look at overseas models such as the Diary UK’s Voluntary Code of Practice.

We need to start somewhere and we need unity of purpose and voice.

Perhaps it is time for dairy farmers to be given a minimum percentage amount of the retail price paid for their milk – would this not be fair?

Would this not be a more equitable response by processors and retailers to the farms and their families that supply the milk and ensure that the consumer is buying any branded milk that will see the dairy farmers be appropriately compensated.

Dairy Connect has welcomed Deputy Prime Minister and Agriculture Minister Barnaby Joyce’s instruction to the Australian Competition and Consumer Commission to go hard in reviewing relationships all along the dairy value chain.

Arising from this is the opportunity, with unity of purpose on all sides, to create an equitable, commercially realistic, whole-of-industry solution. 

This may be the way forward to obtain that ‘fairness’, that ‘transparency’ and that ‘equity’ that we are all talking about.

Shaughn Morgan is chief executive officer of Dairy Connect.

Aa

From the front page

Sponsored by