Dairy mandatory code, drought & generic branded milk: matters to address – Dairy Connect

A mandatory dairy code of conduct will provide the platform to enable the dairy farmer to negotiate a sustainable farm-gate price for their nutritious milk from their processor by encouraging competition in the market place.

Processors must also challenge the retailers to ensure a sustainable price is charged for the milk that is sourced from Australian dairy farmers and sold to the consumer.

The current price of $1 a litre generic branded milk is not sustainable for the long-term growth of the dairy industry. A retail price that has not changed since 2011.

CEO Shaughn Morgan said that we must consider how best to ensure a sustainable farm-gate price that is above the cost of production for dairy farmers. This will require dialogue along the dairy value chain.

“We know that $1 a litre milk is a symptom of an industry in distress but it is not a direct cause of that distress,” he said.

“However, generic branded milk selling at $1 a retail litre serves to devalue this nutritious, naturally healthy food in the eyes of consumers, who have shown a willingness to pay a just price for the nutritious milk that they purchase.”

Consumers must be assured that dairy farmers are benefiting from any increased price that they pay for their dairy produce, from the processor to the dairy farmer.

“Dairy Connect believes that any price increase for generic branded milk may assist halt the downward slide and help in lifting the return for producers back up to a long-term sustainable level.”

While depressed farm-gate prices impacted directly on the viability of dairy farmers, such low returns also hit the economic viability of regional and rural communities that rely on dairy income.

Shaughn Morgan said that when analysts added the impact of 12 months or more of drought in the eastern states to the equation, it was understandable that more and more dairy producers were closing the gate. We must stop this dairy farmer exodus.

“We have long argued for a mandatory code of conduct to eliminate unfair practices in the industry which see producers bear the financial brunt of low farm-gate milk prices and unconscionable milk supply agreements,” he said.

“The Federal Government is sitting on its hands in respect of the ACCC’s recommendations that the industry needs a mandatory code of conduct.

Continued opposition or calls for delay to the introduction of a mandatory code inhibits the development of a long-term sustainable Australian dairy industry.

“Such a code must encourage equitable and balanced milk supply agreements, fair negotiations, access to arbitration and commercially viable farm-gate prices, all underpinned by the ACCC.”

Dairy Connect commends the Federal Opposition in committing to the introduction of a mandatory code for the Australian dairy industry. Dairy Connect calls on the Federal Government to also do so immediately.

Dairy Connect will be shortly undertaking a survey to determine those features which should be a part of a mandatory code, which would be overseen by the ACCC.