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Economics & Trade, Policy & Advocacy

Time to come clean on code claims

By Ben Bennett, ADF President

They say transparency builds trust.

It’s curious then that some processors and their representatives in the dairy industry have been calling to expedite a scheduled review of the ACCC Dairy Code of Conduct without clearly articulating their reasons.

All the more curious given the timing, when we have competitive milk prices (which are set by the processors themselves and the marketplace).

It’s even more curious given some of the recent misinformation in the media, suggesting the code is responsible for high retail dairy prices, and that this is in effect driving a high cost of living, as well as exacerbating the differential between high domestic prices and cheap imports from overseas.

All this suggests that processors are feeling price risk pressure and that it is the code itself that is protecting farmers from this risk being passed down the supply chain in the form of price step-downs this season.

Could it be that processors would like to see the floor price removed from the code? Could it be that they are opportunistically using media around the cost-of-living crisis and the government’s subsequent supermarket inquiries to lobby for an earlier review of the code?

Let’s be clear, it is the processors themselves who have bid-up the price of milk to secure supply in the current market. This is the marketplace at work.

The code does not set the price. It provides the rigour around commercial contracts in the form of milk supply agreements.

Processors are required to honour the minimum price they themselves set after they have locked in a contract with the farmer. The processor can increase prices, and in certain exceptional circumstances, if justified, they can also decrease prices.

As the Australian Competition and Consumer Commission (ACCC) has stated, the code is the thing that “imposes minimum standards of conduct on processors and dairy farmers”.

These standards are needed. We know that’s the case, having lived through previous claw-backs and the subsequent impact on the industry. These led to farms leaving the industry and the declining milk pool, which is now ironically coming home to roost as processors compete for that reduced milk supply.

The Australian Dairy Products Federation (ADPF) commenced the campaign with its executive officer in The Weekly Times advocating that “a further three-year delay (on reviewing the code) is simply unacceptable”.

Yet more articles in mainstream urban press have attempted to tarnish the code as a mechanism that inflates prices. We’re now hearing some processors openly push to have the review of the code brought forward.

In an interview on ABC radio, the CEO of one processor was asked for their take on reviewing the code.

They implied the code wasn’t working for all parties, however couldn’t, or wouldn’t, stipulate what exactly he thought was broken.

The processing company in question received a significant fine last year for breaching the code. After the Federal Court finding, the ACCC Chair commented: “We took action because we considered (the processor’s) conduct would reduce transparency in the industry and served to perpetuate systemic bargaining power imbalances between processors and farmers.”

However, neither the processor in question nor the ADPF have articulated why they believe the codes should be reviewed, or why it isn’t working.

Presumably, processors weren’t feeling the price squeeze during the first review to the same degree as they are now.

Regardless, Australian Dairy Farmers (ADF) would like to see processors treat the rest of the industry with respect and engage in good faith when calling for the review of the code to be brought forward.

It’s time to come clean and be transparent!

After all, if it’s so urgent, we deserve to know the underlying reasons.

Is it simply because they want the floor price for milk withdrawn, making it easier for them to drop prices mid-season? Anyone who was dairying in 2016 will remember where that can end up.

Been here before

The code only came into effect just four years ago and has already been reviewed once in late 2021. This review, a separate Senate inquiry into the dairy industry and the ACCC Perishable Goods Inquiry found no evidence of reduction in competition arising from the dairy code.

In fact, they validated its appropriateness with only minor changes recommended. The second dairy code review has been deferred to allow changes from the 2021 review to take effect.

All parties were consulted and had opportunity to provide input during the last review. Plus, the Department of Agriculture, Fisheries and Forestry is already calling for input on the coming review.

Let’s remember that the code does not set prices. It provides rigour and protection for farmers.

Having considered all this, ADF believes the coming review should be completed. Not least to fulfill legislated obligations. However, there’s no need to bring it forward.

The code is protecting dairy farmers, bringing transparency to the market and addressing power imbalances.

Economics & Trade, Policy & Advocacy

In defence of the Code

It’s something we see so often in life – people seizing an issue and misrepresenting the facts to push their agenda.

That’s exactly what has happened recently in the dairy industry. If you haven’t yet heard of the cost-of-living crisis, you’re lucky. It has been all over the news.

Yet, some industry participants have seen this as an opportunity to pursue their agenda to effectively water-down the mandatory Dairy Code of Conduct. They’ve presented an argument that the Code is, in effect, setting prices and contributing to this cost-of-living crisis.

Blaming the Code for food inflation or the price difference between high domestic dairy prices and cheap international dairy products is, at best, misleading.

This deliberately misrepresents and confuses a number of issues, including the purpose of the Code, how milk prices are set, and underlying world supply and demand.

The misrepresentation is particularly concerning, given the timing. The Department of Agriculture, Fisheries and Forestry is currently seeking the industry’s feedback on aspects of the Code.

Firstly – the Code does not set prices. It adds rigour to contracts. It was introduced after the devastating behaviour of processors in 2016, when they clawed back payments to farmers – resulting in many leaving the industry and contributing to reduced supply.

Secondly – domestic prices are, in effect, set by milk processors. The processor places their price in the market. Farmers and processors then lock in commercial contracts accordingly.

Thirdly – the disparity between high domestic prices and low international prices is being driven by underlying market forces. It’s simple supply and demand.

Domestic milk prices were ‘bid up’ as Australian processors vied to fully utilise their excess processing capacity, as they (not the Code) set prices. Whereas, discounted international prices from the likes of New Zealand and the US are largely because these are major net exporters of dairy products. This domestic Australian shortage and the export surplus of our competitors is what causes a world price differential – not the Code.

It was the years of volatility and low prices paid by retailers and processors, as well as the 2016 clawbacks, that contributed to the declining milk supply in Australia and excess processing capacity.
In the ACCC’s words, the Code is intended to “account for the imbalance of bargaining power between dairy farmers and processors, and address longstanding industry practices which were seen to be unfair or had the effect of deterring farmers from responding to market signals”.

One way it brings rigour, discipline, and price transparency to the market is in forcing processors to nominate their minimum price and honour their fixed-price agreements.

Processors determine their (minimum) price which, upon signing a contract, is locked in. They’re able to increase prices, if they choose. In certain circumstances, if justified, they can also reduce prices.

Importantly, like all good market instruments, the Code helps farmers and processors share and manage risk.

It’s clear to us the Code is working. In taking action against a processor last year under the Code, the ACCC stated: “we considered (the processor’s) conduct would reduce transparency in the industry and served to perpetuate systemic bargaining power imbalances between processors and farmers”.

Ironically, if you want further proof the Code is working, you need look no further than this recent Code-price spin from our processors. It has also passed many other tests.

It was reviewed in November 2021 by the Federal Department of Agriculture. In that review, most stakeholders, including the ACCC, were highly supportive of the Code.

Similarly, the Senate inquiry into the dairy industry and the ACCC’s perishable goods inquiry found no evidence of a reduction in competition arising from the Code.

Farmers are business people. They require a strong, competitive and transparent marketplace to drive greater milk production and ensure milk processing capacity is fully utilised.

Targeting the Code as the cause of food inflation or international-domestic price spreads is clearly a misleading tactic to push an agenda to water it down.

If processors want to have an open conversation about price transparency and contracting options, they should do so. If they say they support the Code – then do just that. Park the spin.

Increasing domestic production is a real issue faced by the whole industry – something which farmers and processors are working on, and which is critical to the future of our industry.

At a basic level, knowing what they’ll be paid gives farmers the certainty they need to make investment decisions for their business. Without that certainty, you’ll see a whole lot more farmers leave our industry – right when we need them to increase supply.

As such, Australian Dairy Farmers (ADF) strongly supports the underlying principles of the Code.

No doubt we’ll continue to hear complaints about the Code. But let’s not get sidetracked by the agenda and the spin.

This indicated desire to wind back the Code cannot be allowed to snowball into a return to the years of volatility and low prices paid by retailers and processors. Such a situation would only serve to perpetuate the dilemma of declining milk supply in Australia and excess processing capacity.

Sustainability

Dairy profitability and sustainability linked

BY ANDREW ALDRIDGE, AUSTRALIAN DAIRY FARMERS FARM OPERATIONS POLICY ADVISORY GROUP CHAIR

Aussie dairy farmers are doing a bloody good job when it comes to environmental sustainability. But like marathon runners competing against folks doing their first couch-to-5k, those personal best records aren’t going to fall as easily and in as big an increment as those just getting started.

We need to recognise that back in 2012 we were the first Australian ag industry to have the foresight to set up a sustainability framework that covers our livelihoods, human nutrition, our animals and the environment. That since then we’ve made big gains, and that while we’ll continue to make gains, they’ll be increasingly incremental.

Sure, the latest Australian Dairy Sustainability Framework report figures are looking pretty good, but the reality is what we’re going to see from now on are incremental gains. It’s not because we’re not doing enough, but rather because we’ve done so much already.

Today more than 70 per cent of Australian dairy farmers have implemented energy efficiency projects or used renewable energy and 83pc have fenced off all natural waterways.

We’re also making new commitments, such as agriculture’s first industry action plan for halving food waste and a roadmap to improve the sustainability of the packaging of dairy products by 2025.

Of course, we need to keep going: farmers have traditionally been custodians of their land and environment, as demonstrated by organisations such as Landcare, which started more than 30 years ago! We now see it has become a focal point for global and domestic consumers and markets.

But we need everyone to recognise that the next gains are going to be tough, and we need to balance our business viability alongside our environmental investment.

Trust is strong in dairy industry

It’s encouraging to see consumer support for dairy reflected in the framework report. The Dairy Trust Tracker Survey shows that is strong, with almost eight in 10 Australians of the belief dairy is essential for good health and wellbeing.

In 2023 the dairy industry also welcomed the release of a study that quantified the health and financial benefits that could flow from increasing the servings of dairy in the diets of aged-care residents. Essentially, consumers know dairy is good for them. And they should feel good about consuming dairy, too.

As we look to 2024, we need to make sure we continue to do our bit for the environment, but we also need to make sure that consumers understand our bottom lines must also be sustainable.

“It’s incredibly hard to be green if you’re in the red”, as they say.

To keep producing food that is nutritious, good for our health and wellbeing and sustainable, it must also be commercially viable – we must be able to turn a profit like any business, otherwise we are not going to be here long.

Essentially, we need regulators and shoppers to recognise the good work we’ve done and when comparing our produce with countries that don’t have the standards we do be willing to pay for the sustainability progress we have achieved.

That’s not all we need to do. We need the whole supply chain to do its bit and not just to look at farmers for the easy gains.

We need to be real about the promise of the new income streams for adapting and mitigating climate change.

Sure, these may be great for some, but for a lot of us already doing good environmental work, we’ve done it. It’s not new, so we won’t be rewarded or will need to keep the gains to shore up our post-gate credentials.

We need to ensure farmers’ interests are represented when new well-considered environmental policies and regulations that impact us are being set. These must recognise that due to the industry’s front foot approach that a scalpel is needed not a chainsaw.

Perhaps most importantly, we need to keep our eye on those personal best scores, not just for the environment but for long-term profitability as well. Whatever the world (or nature, for that matter) throws at us, we need to keep doing what we do best, continually evolving and improving what we do and ensuring we have a dairy industry that not only cares for the environment but which makes sense financially too.

To download the 2023 Sustainability Report, visit https://australiandairyfarmers.com.au/adsf/.

Policy & Advocacy, Sustainability

Ag needs a seat at the Murray Darling Basin table

BY ANN GARDINER, ADF Water Committee Chair

People who should be making decisions on an issue should be the closest to it, and I can tell you right now Canberra is a long way from the Murray Darling Basin (MDB).

Last week the Restoring our Rivers Bill got the support it needed to pass the Senate, and what worries me most is that it’s people far away from the MDB that have had the most say in its future.

Trust me, the Minister said when we met with her two weeks ago in Sydney. But to be honest with you, trust doesn’t go all that far when it comes to politics.

That’s why we’re calling for an ag industry advisory group to be appointed to play a role in the implementation of this legislation.

When ADF’s president and CEO then met with the Federal Water Minister Tanya Plibersek on the same day the Senate support was secured they made it clear to her that this was what was needed.

In representing dairy farmers at these meetings, we have collectively expressed our significant concerns to the Minister about the Bill and the risks it poses to our industry, our farmers, and our regional communities. We explained to her that this is all coming when milk production is at an industry 30-year low.

We also sought details on the new amendments to the Bill. The Bill passed the Senate with minor amendments that included a consideration of socio-economic impacts and options to lease water to the environmental water holder as an alternative to buybacks.

The industry advisory group could help ensure that the government genuinely engages with industry in the implementation and rollout of the new legislation.

The group would endeavour to minimise the negative impacts of buybacks by ensuring ongoing government accountability including the consideration and reporting of socio-economic impacts. It would aim to ensure that “all options are on the table” just as the Minister has said, not just buybacks, and would provide valuable input into these options.

Further, the group could provide input into the inevitable community assistance packages that will be required from structural change because of buybacks.

Our continued aim is to ensure that dairy farmers have a seat at the table. Much as we may not like buybacks, and the potential damage they will do to industry, better to be there trying to mitigate this damage than just throw our hands in the air and walk away.

Twenty per cent of the nation’s total milk production comes from the Murray Darling Basin region. It is home to 912 farms and 42 dairy processing facilities, creating almost 7000 jobs and generating about $2 billion of value to the region and local communities.

Since the introduction of the MDB Plan in 2012, dairy farm numbers in the region have fallen by 47 per cent and raw milk production has dropped by 35 per cent.

We need a healthy dairy industry in the Murray Darling Basin.

If more farmers leave, those left behind are going to struggle. Fewer farmers mean the burden of maintaining irrigation infrastructure falls on the dwindling numbers left behind. It means fewer kids in schools and less money spent at local stores.

It also means less milk produced, and higher prices at the supermarket for Aussie families. Our dairy exports will take a hit.

But don’t get me wrong. We’re disappointed, yes. We’re worried, absolutely. But we’re also optimistic. We know there are innovative solutions that deliver water for the environment that don’t involve damaging buybacks.

If Minister Plibersek wants us to trust her, then she needs to trust us back, and establish an agricultural industry advisory group that guides implementation in a way that allows us to use our knowledge and understanding of the basin and delivers projects without negative consequences to communities and agricultural production.

Let’s get an advisory group in place, let’s listen to the people whose lives and livelihoods depend on the Murray Darling Basin, and let’s do what we can to get this right.

Economics & Trade

EU deal no winner for agriculture

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

This week, I’m representing the interests of the Australian dairy industry in Osaka, Japan, where free trade talks with the European Union (EU) fell over on Monday.

To be honest, the stalemate comes as a relief for Australian dairy businesses. The deal on the table from the EU was not free and it was certainly not fair for Australian agriculture.

The Federal Minister for Trade and Tourism, Senator Don Farrell, has our complete backing for walking away from a deal that was not in the interests of Australian farmers.

No deal is better than a deal which offers no gains for Australian dairy farmers, just costs and burdens.

It remains to be seen when and how negotiations will re-start in the future. It’s not likely to be anytime soon.

I’ve been clear about what we wanted from these meetings, and that was a fair go for our dairy farmers. Australian dairy is a supporter of a free, and importantly a fair, trade deal.

Getting the best possible access to the EU and Asian markets is critical to the future profitability and competitiveness of farmers and the whole Australian dairy supply chain.

We were particularly concerned that an agreement on geographical indications (GI) as part of an Australian-EU free trade agreement (FTA) could restrict the use of common food names, including names of cheeses we commonly produce here in Australia.

It is estimated the deal sought by the EU could have cost the Australian dairy industry more than $75 million per year. It would have also cost the Australian taxpayer as the onus was on our government to manage the GI regulation.

To rub salt in the wound, the deal would have provided greater access for subsidised EU products to the Australian market, without offering reciprocal access for Australian products to the EU.

This is far from fair, as is demonstrated by the greater than 70,000 tonnes of European dairy product imported to Australia every year, compared to the 500 tonnes Australia exports to the EU in-turn.

At trade meetings in Osaka, I made it clear that the future success of our industry relies on a level playing field. The market access offer from the EU was neither equitable nor fair.

Having these conversations in Japan is significant, as Japan was Australia’s second most valuable dairy market last financial year, with 14 per cent market share.

Although volumes were down, the value of our exports to Japan rose 9.5pc year-on-year in 2022/2023, to reach $423 million.

Asian markets are consistently our top five dairy export markets. What we agreed to in our EU deal, especially around GIs, would have implications for other export markets, including Asia.

We must continue to grow our international markets. In 2022-23 Australia’s share of global trade rose to 4.7pc. The target in the Australian Dairy Sustainability Framework is 10pc by 2030, so we’ve still got some way to go.

Global market access will continue to be a core priority for Australian Dairy Farmers, and if this means walking away from a deal that doesn’t serve our interests, then that’s what should be done.

Policy & Advocacy

New Murray-Darling Basin plan ignores farmers

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

The gloves are off for many farmers right now when it comes to water issues, and it’s worth taking a moment to reflect on why some of our usual diplomacy is being set aside.

To put it simply, we’re feeling ignored and fed up.

You see, we’ve spent the past couple of years meeting with and providing submissions to the federal government about possible solutions to the Murray-Darling Basin Plan’s challenge of finding water for the environment.

The health of the Murray-Darling Basin is critical to those of us in the dairy industry, given one-fifth of the nation’s milk supply is produced in the basin. But it’s also an issue for anyone who farms in the Murray-Darling Basin.

Most of us know that environmental flows are necessary and care about a healthy river system. Our livelihoods and the wellbeing of regional communities depend upon it.

We also know from experience that water buybacks can have a devastating impact on the communities living in the Basin, most of whom have no water to sell, but will still pay the price. They cause an exodus of people, drive up water (and consequently food) prices and impact our ability to grow food to feed families across Australia and the world.

And, finally, what we know and what the Minister for the Environment Tanya Plibsersek knows (and even acknowledged last week) is that there are alternatives to buybacks. There are other smart and innovative ways to deliver the plan’s outcomes.

So, why does the proposed water Bill currently on the table from the Federal Government allow for unlimited water buybacks to return the planned 450 gigalitres of water to the environment?

The Bill extends the timeline for delivery of the MDB Plan to 2027, which we’ve welcomed. But by permitting buybacks as a way to achieve its environmental aims and watering down the socio-economic testing, it becomes the “bad bill” so many of us are angry about right now.

Speaking at Murray Bridge last week Minister Plibersek said while “water purchase is … not the first tool at hand … it has to be part of the mix”.

I disagree. I know it seems simple. Buy water, throw it down the river and the environment will flourish. Don’t let social and economic issues or the physical limitations of our current infrastructure get in your way.

But that’s not how the environment or our society operates.

Additional water, without other changes, does not necessarily mean the environmental outcomes we need will be achieved. Indeed, it’s possible that it will do more damage than good.

A whole raft of complementary measures is required to underpin environmental outcomes. Do you remember the Menindee fish deaths? The New South Wales Government Chief Scientist found that the key contributors were water quality and a lack of mobility for fish (i.e. they needed fish passage/ladder reform).

Push more water down the river and you’ll likely end up with infrastructure damage and possible flooding of local communities.

Driving the price of water up artificially with buybacks makes many farm businesses unviable and drives people off farms. This leads to increasing food prices, both because inputs now cost more and because there’s less availability.

Losing farms from a region has a huge flow-on impact on a region. Most of a dairy farmer’s milk cheque is spent in the region where they farm. Take the farm out of a region and you lose that farmer, the people they employ and the money they bring to the local economy.

The other aspect that this too-simple plan overlooks is that many farmers use their water to provide on-farm environmental outcomes, including wetlands and fenced-off revegetated areas. Take water away or make it prohibitively expensive and much of this work will end.

So, what’s the answer here? Amend the water Bill proposed by the federal government, which in its current form is bad for basin communities, bad for regional jobs and bad for people who eat food (i.e. all of us). Drop the use of buybacks and bring back the socio-economic test. Work with farmers and farming communities on innovative solutions that deliver environmental benefits, while also allowing us to produce quality food in the quantity and at the price Australian consumers require.

It might not be the ‘simple’ solution.

But you know what? It might actually work.

Policy & Advocacy

Dairy voice eyes reset

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

The dairy industry is facing some serious challenges and right now, dairy farmers need someone in their corner.
For more than 80 years, Australian Dairy Farmers (ADF) has been proud to play this role. As the peak body for dairy farmers, we have two core functions: to ‘represent’ dairy farmers in formal roles and to ‘advocate’ on behalf of dairy farmers to industry, government, processors and community.

In terms of advocating, we are currently defending the hard-won Mandatory Dairy Code of Conduct. It was carefully designed to equalise bargaining power arrangements between farmers and processors in the trading of raw milk. It imposes minimum standards of conduct that address unfair and harmful practices by processors against farmers and improves certainty and transparency in commercial arrangements.

The Australian Dairy Products Federation (ADPF), which represents dairy processors, claims the code is contributing to profitability pressures on processors and is not operating as intended.
We are making it clear that while processors are experiencing some financial pressures, the code is not the problem.
Many dairy farmers and their communities have been devastated in recent years, with $1 milk, step-downs, claw-backs and reduced competition in the milk market. The code is a significant step towards protecting farmers’ interests and continued milk supply.

As well as defending the code, ADF is objecting to Coles’s proposal to buy two milk processing sites from Saputo Dairy Australia at Laverton North, Victoria, and Erskine Park, NSW.
ADF has voiced its concerns in media and in submissions to the Australian Competition and Consumer Commission (ACCC). ADF is concerned the proposed acquisition could substantially lessen competition for raw milk with potentially detrimental impacts on dairy farmers and the broader dairy supply chain in the short and long term.

The ACCC echoed our concerns with the release of a Statement of Issues in August requiring further scrutiny of the deal. We now await the ACCC’s final ruling, scheduled for September 14.
These are only two of the many examples whereby ADF provides critical policy advice to the Australian government on the issues that matter most to dairy farmers. Some of these issues are quite public like the Murray Darling Basin plan or trade agreements such as the European Union Free Trade Agreement.

Others are less public but will still impact dairy farmers such as legislation to mandatorily report emissions; the Minister’s workforce taskforce; or upcoming legislation for agricultural and biosecurity levies. ADF continues to work for dairy farmers behind the scenes regardless, no matter how public the issue is. Recently, our role as the peak dairy body representing all dairy farmers to deliver ‘industry good’ services on behalf of the industry has been in focus.

ADF provides oversight, governance and strategy functions to Dairy Australia and serves as the representative peak dairy body on biosecurity with Animal Health Australia.
ADF is also the dairy member of Safemeat, a partnership between the Australian government and the meat and livestock industry, which promotes Australia’s best practice management systems.
As the dairy representative, we’re working with the Department of Agriculture, Fisheries and Forestry, as well as the chief veterinary officer, on the threat of lumpy skin disease.

Under our current model, ADF funds these industry good functions via member fees and other revenue streams. This arrangement is unsustainable. Not-for-profit member organisations are coming under increasing funding pressure, at the same time as industry must step up its preparedness against the increasing risk of a biosecurity outbreak. It is unfair that a minority of dairy farmers pay for these industry-good functions that ADF delivers for the benefit of all levy payers.

The Australian Dairy Plan 2020-2025 identified structural reform, including providing a sustainable funding model, as the most important priority for industry bodies. ADF is the peak dairy Industry Representative Body (IRB) for all dairy farmers. An allocation of a small percentage of the compulsory levies collected from dairy farmers for research, development and extension and biosecurity to ADF would help deliver that priority and sustain these essential services.

As the national industry representative body, ADF must be positioned to best meet the needs of our members and the interests of all dairy farmers and industry in the long term.
These issues are top of mind as we embark on a strategic review of the role, structure and funding of ADF. In coming months, we will reach out to members and other industry stakeholders to hear their views about what they want from ADF and how they want it structured.

I look forward to leading this review and ensuring ADF can continue its important work for years to come.

Policy & Advocacy

ADF says ACCC decision validates its concerns on Coles-Saputo deal

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

Dairy farmers are reassured by the Australian Competition and Consumer Commission’s (ACCC) decision to further examine Coles’s proposal to buy two milk processing sites from Saputo.

Australian Dairy Farmers (ADF) believes the ACCC’s decision validates its concerns about the proposed sale of Saputo sites at Laverton North, Victoria, and Erskine Park, NSW, to Coles. The sites produce fresh milk for Saputo’s Devondale brand, and for other parties, including Coles’s home-brand dairy products.

ADF is concerned the proposed acquisition could substantially lessen competition for raw milk and have further implications for the sale of dairy products at a retail level.

In June, we raised these concerns in a submission to the ACCC that opposed the deal. In reply, the ACCC has identified issues associated with the acquisition that it is investigating further.

In releasing the Statement of Issues, ACCC deputy chair Mick Keogh echoed our concerns and those of many of our members. “For NSW dairy farmers, concerns have been raised that this acquisition may change Saputo’s incentives to continue acquiring raw milk in NSW,” Mr Keogh said.

“If Saputo does exit NSW as a result of the acquisition, this would leave limited competition in regions of NSW, which could result in farmers receiving lower prices for their raw milk.

“We have heard strong concerns across the industry about how the acquisition will strengthen Coles’s position in the dairy supply chain.

“Many industry participants have expressed concerns that the acquisition will result in Coles consolidating its private label milk production, which would increase its bargaining power in negotiations with dairy processors and dairy wholesalers.

“The ACCC is concerned that Coles’s increased bargaining power could lead to reduced competition at the wholesale level, impacting on processors’ long-term viability and with the potential for flow on impacts to farmers in Queensland and regions of NSW.”

Like ADF, the ACCC has raised concerns the sale of the Erskine Park facility may see Saputo exit market/s for raw milk in NSW and give Coles the ability to foreclose or frustrate competitors.

As part of an ACCC consultation process, interested parties have until August 3 to respond to the Statement of Issues. ADF has, of course, submitted a response.

From the outset, ADF has argued competition would decline over the long-term, if Coles began to preference its own brands over competitors in the procurement of farm suppliers and sales in its retail outlets.

ADF does not wish to see a sale that disadvantages dairy farmers in the long-term.

The Competition and Consumer Act 2010 requires the ACCC to approve the acquisition. The legal test the ACCC applies in considering the acquisition is in Section 50. This requires proposed acquisitions to not have the effect of substantially lessening competition in a market.

In theory, Coles already can (in effect) set the retail price of competitor brands in its stores. This deal would give Coles total control of every fresh milk price within its sphere of influence.

An incentive already exists for Coles to act in this way, however, the proposed acquisition, bringing with it increased vertical integration, maximises the potential financial gains for the retailer.

If the sale proceeds, we want Coles to guarantee that all existing Saputo farmers supplying milk to the processing plants will be offered milk supply agreements with either Coles or another party over the long-term. We do not want to see contracts restricted to Coles’s suppliers only.
Dairy farmers need strong competition for their milk. They do not want a deal that could reduce competition for their milk and reduce the supply or choice of products for consumers.

ADF is seeking an outcome from the ACCC that does not reduce competition in the value chain and benefits – or at least does not disadvantage – dairy farmers and the market, more generally.

ADF not want to stand in the way of Saputo, one of the country’s largest dairy processors. We hope, irrespective of the outcome of the investigation, that Saputo and Coles will act in the best interests of the dairy farmers of Australia.

Economics & Trade

A new era of potential for Aussie dairy exports

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

You might have heard about the slow-down in China’s economy. Things have not taken off post-COVID, as expected.

While it is true the heifer trade has all but evaporated, do not think for a minute that the opportunities for Australian dairy with our biggest trading partner are also on the slide.

In June, I was fortunate to join the first Australian dairy trade visit to China since COVID. I spent six days there with Charles McElhone, Catherine Taylor and Sarah Xu from Dairy Australia.

As part of the trip, I attended the China Dairy Industry Association conference in Nanchang and met with Dairy Australia Scholarship alumni. I attended industry meetings at the offices of Coles, Austrade and the Victorian Government in Shanghai and met with Chinese dairy manufacturers.

It all left me with the resounding feeling that there are many significant opportunities in China for Australian dairy businesses, albeit in a slightly different guise than what we are used to.

China is Australia’s biggest dairy export market, taking more than 30 per cent of the dairy product that leaves our shores.

Traditionally, we have sent milk, infant formula and yoghurt. But Chinese consumers are developing a taste for cheese and frozen creams … the fats, essentially. From what I observed, their tastes are predominantly sweeter. We saw processed cheese that looked like lollipops – flavoured and on a stick – for kids!

In some good news, local nutritional guidelines are promoting dairy consumption.

The dairy packaging we saw in China also lends itself to on-the-go consumption. Milk was commonly sold in 100-250ml bottles and cheese was individually wrapped in single serves.

In China, there are many modern styles of cuisine, as well as the more traditional dishes, so there is plenty of scope for the use of Australian dairy products in Chinese meals and diets.

For now, China will be importing a lot of cheese, as opposed to producing it locally. It will be mainly the cheddar style, as consumers have not quite developed a taste for soft cheeses yet.

Free trade deal a saviour for dairy exports

The China-Australia Free Trade Agreement (CHAFTA) is invaluable to Australia. When it comes to dairy, Australia enjoys marketing advantages over other countries, with minimal tariffs. Australia’s liquid milk exports attract a 1.5pc tariff, compared to 15pc from the US and European Union.

Milk powders are taxed at 2.5pc compared to 10pc and cheese 1.2pc instead of 12pc. Infant milk formula wins the race, with zero tariff compared to 15pc from the US and EU. That said, we saw a lot of product from the European Union and the United States on supermarket shelves, as well.

Pleasingly, Bega cheese was available in many places and our A2 milk was quite popular as well.

There is also a significant appetite for bulk ingredients like frozen cream and whey powders, as opposed to retail products. The bulk trade outweighs Australian retail offerings in China.

Wherever we went, I noted that all these Australian products were still well respected and trusted. The Chinese are still looking for Australian dairy.

However, like us here at home, they are concerned by the dwindling Australian milk pool.

Dairy scholarship program pays dividends

Meeting with alumni of the Dairy Australia Scholarship was a highlight of the visit.

The scholarship program has been running for more than 20 years, bringing people from China, Japan, southeast Asia and South Korea to Australia to see our industry.

The great thing about the program is that many of the participants climb the corporate ladder. Some go on to become managing directors and CEOs of Chinese dairy companies.

It means Australia enjoys strong relationships with these companies. The scholarships and ensuing relationships mean we have contacts who are open and honest with Australia about what is happening in their industry.

Whether it is the scholarship, trade meetings, export potential or cheese lollipops, it really was inspiring to see the value and opportunity that exists for the Australian dairy industry in China.

Policy & Advocacy

Coles’ dairy deal sparks concern

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

Today, 1 June, is World Milk Day – a day when we celebrate a nutritious food that makes for a healthier world.

For Australian dairy farmers, today is also D-day. It’s the day when dairy farmers find out what price processors will offer for their milk at the farmgate for the coming supply season.

The Mandatory Dairy Code of Conduct requires processors to publish these prices and, in doing so, the code has brought more transparency to milk pricing and certainty for farmers.

Yet, amid this celebration and certainty there is caution because Australia’s competition watchdog is considering Coles’ proposed acquisition of two milk processing facilities from Saputo.

This is a deal Australian Dairy Farmers (ADF) has voiced its concerns about – both publicly and in a submission to the Australian Competition and Consumer Commission (ACCC).

Specifically, we are concerned about issues around price transparency, competition, market power and control.

Already, Coles has the theoretical ability to set the retail price of its competitor brands in all its supermarkets. This deal would make Coles a processor, affording total control of every fresh milk price within the Coles sphere of influence.

The supermarket giant wants to purchase Saputo’s Laverton, Victoria, and Erskine Park, NSW, facilities. The bulk of the processing done at these two facilities is to supply Coles’ home brand milk products.

ADF does not want to see a deal that disadvantages farmers. Dairy farmers need strong competition for their milk.

ADF is concerned that the proposed acquisition would provide Coles with a stronger incentive to restrict or discriminate against the branded milk it offers, to the advantage of its private label milk.

An incentive already exists for Coles to act in this way, however the proposed acquisition, bringing with it increased vertical integration, maximises the potential financial gains for the retailer.

If the sale proceeds, we want Coles to guarantee that all existing Saputo farmers supplying milk to the processing plants will be offered milk supply agreements with either Coles or another party over the long-term. We do not want to see contracts restricted to Coles’ suppliers only

A chequered past of milk discounting

ADF is conscious of Coles’ prior conduct, in particular the introduction of the $1 per litre milk pricing model which hamstrung dairy farmers for eight years.

We note there was further criticism of Coles’ behaviour when it finally increased prices and promised to pass on the 10 cent per litre “drought levy” to farmers. Coles committed to pay around $5.25 million to processor Norco to resolve the concerns after the ACCC became involved.

However, it must be noted that poor behaviour is not exclusive to any one party in the supply chain.

The supermarket duopoly already has enough market power to lower prices for milk products across the board and dedicate extra shelf space for private label products.

A vote of confidence in dairy’s future

For now, we must remain upbeat as we await July 20 – the provisional date the ACCC has set to announce its findings.

To remain positive, in the spirit of World Milk Day, the deal can also be viewed as a vote of confidence in the future of dairy.

ADF has confidence in the ACCC’s review process and does not want to stand in the way of Saputo, one of the country’s largest dairy processors. We hope, irrespective of the outcome of the review, that both Saputo and Coles will continue to act in the best interests of those ADF works for – the dairy farmers of Australia.

We hold this hope in good faith, bearing in mind that retailers, processors and farmers all need each other.

On World Milk Day, we encourage all industry stakeholders not to overlook the value of the nutritious food produced by dairy farmers in Australia.

This year, the Australian dairy industry has a local theme for World Milk Day – “make your mornings with milk”. The campaign encourages everyone in the dairy supply chain to take to social media with a photo or video showing how you “make your mornings with milk”. Don’t forget to tag #WorldMilkDay and #EnjoyDairy … just as we do at ADF!

Economics & Trade

Australian Dairy Farmers warns about impact of inflation, interest rates

By CRAIG HOUGH, DIRECTOR STRATEGY & POLICY, AUSTRALIAN DAIRY FARMERS

With Australia’s annual inflation rate at a 30-year high, there is no denying consumers are feeling the economic squeeze.

But inflation and interest rates – the same factors that drive up the cost of living for consumers – are also hurting Australian dairy farmers.

When an Australian dairy farmer looks at their bank statement, on average, they will see seven red figures. That is because the average Australian dairy farm debt is now $1.2 million – a record high.

The International Monetary Fund (IMF) has predicted that global inflation will fall to 6.6 percent in 2023 and 4.3pc in 2024, which is still above pre-pandemic levels.

This means the Reserve Bank of Australia will continue to increase interest rates. After a decade of no interest rate increases, the RBA has made nine interest rate increases since May 4, 2022. This has amounted to a total increase of 3pc to increase the cash rate target, which is the market interest rate on overnight funds, from a record low of 0.10pc to 3.35pc currently.

It is the rapid rise that is hurting farmers and households. Most never budgeted for such dramatic change.

How much they increase further will depend on what other measures governments take to address the drivers of high inflation – production and supply chain inefficiencies and disruptions and excess money supply.

Why the inflation?

Dairy farmers are lucky there’s strong competition from processors. The relatively strong prices go some way to offset high input costs and the rising cost of servicing a debt.

The war in Ukraine is often cited as the reason costs are rising. But the reality is much broader than that.

Wages have risen, leading to increased consumer spending and an ability for businesses to charge more for a product.

Labour and material supply shortages, mainly from COVID-19 lockdowns, has limited production capacity and not been able to keep up with demand.

Consumers understand that the RBA increases interest rates to keep inflation in its target range of 2-3pc.

However, they do not understand that these decisions have significant ramifications for the people who produce the food they eat.

We also do not talk enough about how government spending can influence inflation.

State and federal governments have not invested in productivity-enhancing initiatives and have spent too much borrowed money, which in turn adds to inflation.

Australian Dairy Farmers’ (ADF) analysis of last year’s federal Budget found a need for structural reform to offset the rising costs of administering social programs like the National Disability Insurance Scheme, and further reform to mitigate the risk of a potential global recession and provide better value of the Australian taxpayer dollar.

Importantly for dairy, ADF also would have liked to see food included in a $7.5 billion plan to mitigate inflation for parents and socially disadvantaged people in last year’s budget.

Future fiscal policy

The Business Council of Australia and the National Farmers Federation submissions to the May 2023 Budget provide direction and initiatives on how cost of living, productivity and fiscal responsibility can be improved.

The key priorities are economic and Budget reform, sustainably resourcing our biosecurity system, sustaining our natural environment, responding to our urgent road and infrastructure needs, securing Australia’s farm workforce and supporting smarter growth for regional and rural Australia.

To maximise the impact of these initiatives, ADF believes the government needs to bring the Budget back in surplus.

Reducing the deficit will cool demand and inflation, so central banks do not need to raise interest rates as much.

This helps everyone repay their debts while maintaining an appropriate standard of living.

People & Community

Celebration of Dairy event held at Parliament House

By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT
Australians often take the dairy industry for granted as they tuck into their breakfast, lunch, dinner, desserts, or a nice cheese platter.
Having returned recently from trade missions to Asia and Europe, I can say with confidence that Australia is blessed with its huge array and ample supply of fresh, nutritious dairy food.

Unlike some markets overseas, our dairy products, right down to the basics like fresh milk, are readily available wherever we are in Australia.
This is not always the case overseas.

UK deal welcome

Australian dairy has a reputation globally for being a reliable export trade partner, providing quality nutritious food for a healthier world
About one-third of Australian dairy production is exported.
Australian Dairy Farmers (ADF) supports global free trade.
This is why we welcome the ratification of the Australia-United Kingdom Free Trade Agreement (UK FTA) by the UK Parliament.

The free trade deal is the first with the UK since Brexit. This highlights the speed with which the Australian government and negotiators in the Department of Agriculture moved to secure the deal.
The deal eliminates tariffs on dairy trade between Australia and the UK within five years.
It provides immediate duty-free access for significant volumes of milk, cream, yoghurt, whey, butter and cheese.
Further, the deal increases access to Australian ice cream and infant formula in the UK.

Time to work together

Trade is especially important to the Australian dairy industry.
Having worked with Dairy Australia on trade issues and participating in trade missions, I have learned that it is this Australian demand that the European Union (EU) wants to target in the EU Free Trade Agreement (EU FTA) negotiations.
ADF supports free and fair trade and market access, however, we do not support so-called geographical indications (GIs) being used to effectively trademark commonly used names for cheeses.
Accepting GIs would have a huge economic impact on our dairy processors and farmers – estimated at a staggering $77 million to $95 million a year in the early stages of the FTA.Up to 1000 jobs are at risk.

As a wine maker in France said during my recent visit there with other farmer leaders as part of a National Farmers Federation mission, “we work cleverer together than we do apart”.
The Australian dairy industry took that spirit of unity to Canberra last week when 80 pollies attended a “Celebration of Dairy”, hosted by the Parliamentary Friends of Primary Producers group.
The event’s guests also heard that while the Australian dairy industry enjoys strong demand and faces competition from overseas, it is facing the dilemma of declining milk production.
Dairy farmers have weathered droughts, fires, floods, a pandemic, and rising input costs – however, despite strong milk prices and profitable farmers, we see production has declined.
Our challenge is to sustain strong dairy prices into the long term, address impediments such as workforce shortages, and provide the incentive and confidence for farmers to invest to produce more milk.
It is clear the domestic market; export markets; and processors all want more supply of our great, fresh and nutritious product!

Leading the way

Dairy farmers and manufacturers have long recognised that to continue to produce their delicious and highly nutritious food, they need to operate sustainably.
Australia’s dairy industry has led the way when it comes to sustainability.
It is 10 years since the industry embarked on implementing the Australian Dairy Sustainability Framework – the first of its kind in the world.
It is important to remember when discussing carbon and emissions that everything has an environmental footprint.
As a collective, dairy farmers have voluntarily reduced their methane emissions by 40 per cent between 1980 and 2016.

But we need support and investment to continue to meet our greenhouse gas target of net zero by 2050.

Worth celebrating

Australia’s dairy Industry is the nation’s third largest rural industry, generating $4.9 billion in value at the farm gate.

It produces eight billion litres of milk from 1.3 million cows, averaging 6200 litres of milk per cow per year.
They live on 4400 farms with a workforce of 34,700 people.Despite the challenges in food production, dairy farmers and processors have become more efficient.
As a result, the dairy foods they produce represent better value now than ever for consumers.No wonder Australians consume 93 litres of milk and 15 kilograms of cheese per year!It is a challenging, yet exciting time to celebrate dairy – an innovative and progressive industry and a source of nutritious food for a healthier world.

We have come a long way in the past decade.
Economics & Trade

Australian feta cheese under attack in EU free trade deal

By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT

The Australian dairy industry is united in its fight against the European Union’s (EU) geographic indicators (GIs) claim, which represents a potential $75-95 million loss.
The Department of Foreign Affairs and Trade (DFAT) describes geographic indicators as “a name used on a product that has a specific geographical origin and possesses qualities or a reputation that are essentially attributable to that origin”.
You might have heard about GIs in the news recently. That’s because talks on the Australia-EU free trade agreement kicked off again recently, and the EU wants GIs included.
The EU wants to restrict the use of more than 160 agricultural and food names in Australia. The list includes cheeses, meat and smallgoods, horticultural produce, alcoholic drinks and more. Fifty cheese names are included.
The acceptance of GIs in Australia would have deep consequences for our dairy industry.
Australian favourites such as feta, parmesan and haloumi are among those potentially in danger.
Australian Dairy Farmers considers these are common names, adopted right around the world. These cheeses have been produced in Australia for generations, in some cases by immigrants who brought the heritage, traditions and cheese making skills here.
GIs are not accepted globally and are applied inconsistently in Europe. For example, the EU is trying to claim feta for Greece. However, the EU is also home to Danish feta.
Forcing cheesemakers to change the name of their product and denying them the right to use their branding due to evoking European heritage is unjustified. The effects of this will be greatly felt when it comes to farmgate prices, demand for raw milk, and the unfair displacement of local Australian producers and quality made products, putting up to 1000 jobs at risk.
This will inhibit Australian production so the EU can increase exports at our expense.
In addition, the potential direct impact on Australian dairy manufacturers from lost sales and increased marketing costs caused by the strict enforcement of GIs could range from a staggering $75 million to $95 million a year in the early stages of the FTA.

Not a fair claim

ADF supports free and fair trade. That’s why we don’t accept the EU’s claim, and we wouldn’t want to see a similar Australian claim forced upon our trading partners.
To flip the GIs argument – we often forget the macadamia tree is native to Australia.
Macadamia nuts are now grown in Australia, Hawaii, California, Central and South America and Africa.
Europeans clearly have an appetite for them. The Centre for the Promotion of Imports from Developing Countries – a Netherlands government department – suggests Europe is the second-largest importing region of macadamia nut kernels, buying 30 per cent of total world exports.
They’re happily marketed as macadamias worldwide.
Similarly, the lamington originated in Queensland. But I can’t imagine there’s many people wanting to force European bakers to market “sponge squares covered in chocolate sauce and coconut”.
Nobody likes the sound of yeast spread, and let’s not explore a Chiko Roll.

A poor case

To add salt to the wound, the Europeans say products with GI protection can attract twice the value in sales. But research from Hazel Moir, Honorary Associate Professor, Centre for European Studies (CES), at the Australian National University, shows that the GI policy is politically motivated.
She found relevant economic data to support GI policy was most lacking in the EU, “where the European Commission does not yet collect good data to evaluate and improve GI policy”.
Ms Moir reported Europe’s most recent study, from 2013, “simply involves 13 case studies with almost no quantitative data”.
A key point missing from the discussion to date has been the significant changes the Australian government would have to take, should it agree to protect EU GIs.
Implementing such an agreement would require legislative change which would come at a considerable cost to the Australian taxpayer.

Consumer confusion

It’s important to recognise that this debate extends beyond the name of a product. It also includes how it is presented to the consumer.
That represents two layers of confusion for consumers.
Feta and parmesan are the cheeses at highest risk. There are more than 70 Australian brands of feta and 30 brands of parmesan in the market.
Under the GIs regimen, these products would become white, crumbly cheese stored in brine, or semi-hard, grainy cheese.
If introduced, Australian producers could also have to alter the packaging, labels and colours if they are deemed to contribute to a perception the product is of European origin.

Open trade support

Just as Australians value a fair go and share our produce with the world, we value a fair trading environment.
ADF supports free and fair trade, and we look forward to continuing to work with government on this FTA, to achieve a win-win outcome in the best interests of the Australian dairy sector.
The GIs claim represents millions of dollars the industry can’t afford to lose.
Economics & Trade

EU plans to stop Australia using popular cheese names

By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT

Australians are being urged to stand behind cheesemakers whose livelihoods are under attack from the European Union as part of the Free Trade Agreement negotiations.
The EU wants to impose Geographic Indications (GI) on cheese.
Under a GI system, Australian cheesemakers could not use cheese names such feta, parmesan, haloumi, pecorino, neufchatel and gruyere.
But imported European cheeses could still use the names.
Cheesemaker Mauro Montalto, from Floridia Cheese, said the introduction of GIs on European cheese would result in more overseas products at Australian supermarkets, taking up prime space Australian producers currently held.
“Our family has been making cheese in Australia for more than 65 years, and the EU’s attempts to restrict common food names is in one word – unjustified,” he said.
“This new system privileges one set of producers, namely those in the European Union, over local Australian producers.”
If the EU is successful, this could have an enormous negative impact on many Australian dairy manufacturers who produce high quality locally made dairy products.
Australian Dairy Farmers president and Australian Dairy Industry Council chair Rick Gladigau said Australia had a rich tradition of cheese making.
It was a core part of the country’s food culture built upon it proud multicultural heritage.
“The impact of a strict agreement on GIs cannot be underestimated,” said Mr Gladigau.
The EU wants to go a step further and restrict the right of cheesemakers to highlight their cultural heritage by banning the use of certain colours, fonts and other branding which it believes could ‘evoke’ European heritage – potentially extending to Greek-style yoghurt as well.
“Forcing cheesemakers to change the name of their product and denying them the right to use their branding due to evoking European heritage is unacceptable,” Mr Gladigau said.
“The effects of this will be greatly felt when it comes to farmgate prices, demand for raw milk, and the unfair displacement of local Australian producers and quality made products, putting up to 1000 jobs at risk.”
The EU’s trade restrictive GIs regime would impact many local cheese brands and artisans and cost them an estimated $77 million-$95 million per annum in the early years of implementation.
“Many of the GI at risk cheeses have been made in Australia for generations. We must protect not only our beloved cheeses but support the cheesemakers who have been making quality products for generations – small and large,” Mr Gladigau said.
“Australia is a multicultural country, and our food culture is a pivotal part of our identity that reflects our proud migrant history.
“Many European immigrants have built successful cheese businesses that supply Aussies with great tasting, nutritious, cheese.”
Mr Montalto said if the EU were successful, many family-run specialty cheese manufacturers, such as his own, would be forced to rebrand their products.
“We’ve seen the EU GI system challenged within the EU itself, and we know it has been inconsistently applied with trading partners such as Canada, NZ, and Japan, in the past,” he said.
Biosecurity, Farming operations

Farmer action key to being prepared for biosecurity threats

By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT

You’d have done well to escape commentary last year about Foot and Mouth Disease (FMD) and Lumpy Skin Disease (LSD) being closer than ever to Australian shores.

It has been 150 years since FMD was last in Australia. Currently, the threat of incursion has never been more real.
An expert panel’s assessment showed the probability of an incursion within the next five years had increased significantly. For LSD it more than doubled and the risk of an FMD incursion is up more than 30 per cent.
As the headlines of 2022 fade into the rear-view mirror and we power into 2023, Australian farmers would do well to remain aware of the threat. Behind the scenes, Australian Dairy Farmers (ADF) has worked with countless other organisations to ensure the dairy industry is as best prepared as possible.

Dairy week serves up biosecurity for breakfast

Industry and government have worked together to update many aspects of preparedness and response plans in the past 12 months.
ADF provided an update on these preparations and an overview of the threat and outlook at an industry breakfast we hosted at International Dairy Week at Tatura, Victoria, last month.
The government has done a substantial amount of work to reduce risk and keep FMD out. It has responded to industry concerns by vaccinating cattle and improving biosecurity practice in Indonesia, increasing border controls and detector dogs and implementing other initiatives such as product import risk reviews including dairy products. This has lowered the risk and kept the virus out of Australia.
Looking ahead, ADF has made its position on emergency animal disease (EAD) preparedness clear. Together, dairy leaders are loudly advocating to the government for better preparedness on biosecurity.
In our submission to the Senate’s Inquiry into the Adequacy of Australia’s biosecurity measures and response preparedness, we highlighted ways to further improve Australia’s already commendable preparedness work.
We highlighted the need for ongoing biosecurity funding at or above 2016-17 levels in real terms and greater transparency around where that funding is spent.
ADF also advocated for the reinstatement of the 80pc target for security screening of incoming travellers at the borders.
The full submission is available on the Australian Parliament’s website.

ADF has Senator’s ear, recognition for dairy

The submission has been extensively considered by Senator Linda White, a member of the Senate Standing Committees on Rural and Regional Affairs and Transport, who we were pleased to hear from at the IDW breakfast.
We welcomed Senator White’s acknowledgement of dairy’s united voice on biosecurity. Senator White said agricultural commodities with a united voice had a better chance of clearly advocating for their needs.
Importantly, most of the observations and proposals we made in our submission to the inquiry have been addressed in comment and/or recommendation by the committee in its report.

The stakes are high; be ready, alert

In his address Exotic Animal Disease Preparedness Taskforce leader Dr Brant Smith said Australia enjoyed a good reputation globally for managing disease threats but he said vigilance was important.
We were reminded of the control measures that would be implemented in Australia should there be an EAD incursion.
Consideration of the consequences of these measures reinforces the need for adequate preparation.
For example, the first stage of the response for a FMD incursion involves a national livestock standstill.
Milk collection, transporting and processing would continue.
However, farmers would not be able to move livestock off their property. Other restrictions include:
  • Restrict effluent on public roads.
  • Tankers and other vehicles to be washed/disinfected before entering your property and upon exit.
  • You would have to record all vehicle and people movements.
  • Essential visitors only – and they must use a property vehicle.
  • Personnel and visitors would be subject to increased hygiene requirements.
Stage two of the response would include a move to a zoning system. A restricted area, control area and outside area would be established. Movement between zones would be heavily restricted.
Rigorous on-farm biosecurity practices would prove critical in the management of the virus in this stage and, if found wanting, may jeopardise milk being collected.
When you consider the severity of these implications you can see why the dairy industry needs to be prepared and aware, but not alarmed.

Preparedness starts with action on-farm

The biosecurity system is even stronger when farmers take action at home too.
Justin Toohey, who is advising ADF on animal health, welfare and biosecurity, also spoke at the breakfast. Mr Toohey said dairy farmers should consider what they can do to benefit their businesses and biosecurity.
He recommends farmers:
  • Remove livestock from tanker tracks.
  • Separate ‘farm’ and ‘visitor’ personnel and vehicles.
  • Install tree belts between farm and neighbour(s).
  • Re-purpose water carriers/pumps for decontamination.

Essentially, dairy farmers should use the coming months and years to create barriers between their animals and the outside world.

Farmers can take action today. Get started by saving the Australian Government’s EAD Watch Hotline (1800 675 888) into your phone.

Biosecurity, Farming operations, Policy & Advocacy

ADF seeks change to Australia’s biosecurity system

By CRAIG HOUGH, STRATEGY & POLICY DIRECTOR, AUSTRALIAN DAIRY FARMERS
Dairy is working alongside partners in the livestock industry and the Australian Government to transform Australia’s biosecurity system.

As globalisation continues to increase the rates of movement of both people and goods into Australia from areas where pests and diseases are more widespread, the risk to our industry is increasing.

Biosecurity affects the profitability and sustainability of our industry. An incursion, of any sort, lowers production, disrupts trade and adversely impacts animal welfare and the mental health of farmers and stakeholders. For example, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated a widespread FMD outbreak in Australia would have a direct economic impact of around $80 billion.

In August 2022, Australian Dairy Farmers (ADF) made a submission to the Senate’s Rural and Regional Affairs’ committee’s Inquiry into the Adequacy of Australia’s biosecurity measures and response preparedness, in particular with respect to foot-and-mouth disease (FMD).

Our submission endorses, and builds on, the Australian Government’s National Biosecurity Strategy, which provides a 10-year roadmap for significant change to our biosecurity system.

An analysis of various reports from the Inspector General of Biosecurity, the CSIRO, independent reviews and consultation with ADF members and stakeholders informed this submission. For example, the CSIRO report Australia’s Biosecurity Future: Unlocking the next decade of resilience in 2020 found that between 2012 and 2017, the annual number of interceptions of biosecurity risk materials at Australian borders rose by almost 50 per cent. Such an increase in threats requires an increase in capability and efficiency in response.

So, ADF is calling on the Australian Government for additional reforms to the biosecurity system to ensure Australia is fully prepared to respond swiftly to the growing biosecurity threats.

Specifically, our submission calls for everyone to ensure exotic animal diseases do not enter Australia. We call for reforms to governance, funding, disease categorisation, surveillance and detection, diagnostics and vaccine development and a review of compliance measures.

The key recommendations in our submission include:

  • Consolidation of the separate governance models into one biosecurity governance model for animals and one for plants
  • More specific details on what actions and outcomes biosecurity funding is being directed towards to improve funding transparency
  • A commitment from Government for ongoing funding at or above 2016-17 levels in real terms, and to work with industry to explore establishing a dedicated industry biosecurity levy
  • Reinstatement of the 80 per cent screening target at the borders
  • A review of biosecurity infringements and penalties issued over the past decade to determine whether enforcement has been adequate
  • Transforming the Australian Centre for Disease Preparedness into a centre of excellence for vaccine and diagnostics capability for livestock diseases to enhance our ability to develop better vaccines and biosecurity tools
  • Amending the Biosecurity Act 2015 to drive continuous improvement in the system.
  • An explanation of the rationale of these reforms can be found in the ADF submission. A final report from the Senate committee is due to be tabled in the Senate on 24 November 2022.

    As we know, there are no silver bullets for biosecurity. Biosecurity is everyone’s business – it is a shared responsibility. We need adequate measures in place to protect Australia’s agricultural industry from any threats of pests and disease, and this involves working together to protect our farms, livelihoods and natural environment.
    —–
    ADF’s submission can be viewed at: www.aph.gov.au/Parliamentary_Business/Committees/Senate/Rural_and_Regional_Affairs_and_Transport/FMDBiosecurity/Submissions
    For more about the National Biosecurity Strategy:
    www.biosecurity.gov.au/about/national-biosecurity-committee/nbs

    Labour, People & Community, Policy & Advocacy

    Dairy gets seat on jobs taskforce

    By CRAIG HOUGH, STRATEGY & POLICY DIRECTOR, AUSTRALIAN DAIRY FARMERS

    Resolving workforce shortages in Australian agriculture, including the dairy sector, is a key priority for government, unions and rural industry in 2022/23.

    Over 110 recommendations emerged from the Jobs and Skills Summit in September 2022. These need to be analysed and formalised into a White Paper and funded via the October 2022 Federal Budget. Priority should be given to actions that help resolve worker shortage now like providing $36.1 million in additional funding to accelerate visa processing and resolve the visa backlog.

    Agriculture Minister Murray Watt has announced a new tripartite Agricultural Workforce Working Group. The group brings together the Australian Government, unions and employer groups to generate solutions that better skill, attract, protect and retain workers in the agriculture and processing sectors.

    Through collaboration, the working group will ensure the agricultural sector benefits from announcements made at the Jobs and Skills Summit in relation to skills, migration and worker protections.

    Dairy has secured a place in this milestone taskforce, alongside three other employer groups.

    ADF National Council member Ann Gardiner was named representative for the dairy industry, with an alternate member yet to be nominated. This is a fantastic achievement for the Australian dairy industry.

    Farm workforce shortage dominates dairy conversations
    Although the working group is a crucial step in the right direction, more action is needed. The dairy industry requires immediate support and long-term planning to address the systemic worker shortage.

    This issue is long-standing but has been exacerbated by the pandemic, particularly the Omicron outbreak which saw thousands of workers along the dairy supply chain having to isolate because they have caught COVID-19 or are close contacts.

    The National Agriculture Workforce Strategy, which was launched last December, was welcomed by ADF as it contains 37 recommendations to modernise agriculture’s image, attract and retain workers, embrace innovation, build people’s skills, and treat workers ethically. Most of these recommendations align with the Jobs Summit recommendations. In some instances, the strategy provides a more effective option than the Summit’s proposal. For example, the strategy recommended establishment of a Workforce Data Unit to improve agriculture workforce statistics and forecasting.

    Currently, significant gaps exist like with the ABS’s Job Vacancy data which reports on most sectors but not agriculture. The Jobs Summit acknowledged the issue but proposed a different solution. It recommended the establishment of an independent body called Jobs and Skills Australia to undertake this and other workforce planning tasks. A unit in the department is a preferred option because it is quicker to establish, subject to direct Ministerial oversight and is more cost-effective. It is important that the new working group considers the strategy in its deliberations. Significant work was undertaken by ADF and other agriculture groups to develop the strategy with government. We do not want to see this disregarded just because it was a former government initiative.

    At an agriculture workforce roundtable chaired by Minister Watt in Brisbane back in August, I highlighted the efforts industry is taking to help address the worker crisis. The People in Dairy website provides extensive workforce information for potential and current employees and employers in the industry.

    In September, Dairy Australia launched a new national marketing campaign to promote the benefits of working in dairy farming and encourage Australians to explore a job in dairy. This extension of the Dairy Matters campaign is being delivered into dairying regions across TV, YouTube, radio, social media and local newspapers. We encourage jobseekers to visit www.dairyjobsmatter.com.au for more information.

    All these efforts to bring people to industry – and keep them – are vital to resolving the workforce shortage.

    Farming operations

    Backing our farming operations

    By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

    SINCE 1942, Australian Dairy Farmers (ADF) has been developing policy, and advocating on issues such as water, climate, biosecurity, energy and animal welfare, to support dairy farmers’ operations.

    To mark ADF’s 80th anniversary it is timely to look back on significant advocacy outcomes.

    One of the great success stories of the Australian industry is the Australian Dairy Herd Improvement Scheme (ADHIS), which was set up in 1979 to progress increased herd genetics. ADF was instrumental in the development of the ADHIS.

    In 2011, ADHIS released Australia’s first Genomic Breeding Values. ADHIS became DataGene in 2016. By 2016, it is estimated that ADHIS had generated $200 million in net benefits to dairy farmers at a cost of about $10 million.

    Another achievement is this publication, the Australian Dairyfarmer magazine. Initially set up in 1984 to communicate Australian Breeding Values (ABVs) for production traits to farmers, it quickly evolved into the go-to source of information, learning tools and community engagement, as it still is today.

    In 2018, ADF adopted the NFF climate policy for an economy-wide target of net zero emissions by 2050 (with conditions). One of these conditions is that Australian and state governments must adequately fund emissions reduction programs and research to enable farmers to utilise new methodologies and technologies to lower greenhouse gas emissions across their business while also increasing farm productivity.

    ADF successfully advocated for an independent analysis of socioeconomic impacts of the Murray Darling Basin Plan in the southern basin. ADF has adopted the National Farmers Federation’s position the plan, so long as the water acquired by the Australian Government achieves good environmental outcomes without harming dairy operations and rural communities. ADF believes a smart and efficient implementation of the plan can generate positive environmental and socio-economic outcomes without the need for the Government to acquire an extra 450 gigalitres (GL). ADF continues to advocate for outcomes-based policymaking for water management to sustain dairy production in the food bowl of Australia.

    In 2020, ADF developed a policy framework that addressed issues for dairy farmers in bushfire management e.g. land clearing, consultation with fire affected farmers and on-the-ground responses to bushfires. The framework considers findings and the implementation of recommendations from bushfire inquiries, including the 2010 Victorian Royal Commission. The framework was shared with the Australian Government to support the nation’s bushfire recovery effort.

    A new approach for managing animal health, welfare
    A fresh approach to the management of Bovine Johne’s disease (BJD) in cattle emerged in 2016 with the release of a framework by Animal Health Australia.

    ADF sought revisions to the framework (which were endorsed), including a focus on a program to assess individual BJD farm status and how to eradicate or manage the disease so as not to bring it on-farm. Further, ADF released a revised risk-profiling score to assess and manage the likelihood of BJD in dairy cattle.

    In 2021, ADF formed a skills-based group tasked with recommending a policy for managing surplus calves in the Australian dairy industry. This work follows the ADF Dairy Beef Forum in July 2021. This forum explored current information, research and business opportunities for surplus calves in Australia. Establishing a policy on surplus calves is a priority in the ADF Strategic Plan.

    An end to routine calving induction that generated high animal health and welfare outcomes was achieved in January 2022. Following a decision in April 2015 to phase-out routine induction by 2022, work by ADF, Dairy Australia, farmers, vets, and processors, together with improved herd improvement practices, tools and technologies, achieved this goal.

    Economics & Trade, Farming operations

    Margin risk offsets high milk prices

    By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

    WHILE high opening milk prices are critical for the viability of the Australian dairy sector, increasingly volatile global markets are taking effect with rising cost pressures through the supply chain.

    There is strong competition from processors in the market, which is fantastic for dairy farmers. ADF recognises that these opening prices for milk at the farmgate are strong, and we believe there is potential for more increases because processors need to meet existing domestic and international contracts with a limited milk supply.

    However, the costs of fodder, fuel, fertiliser and electricity are skyrocketing, eating into the margins of most dairy producers.

    Currently, the biggest cost is grain, with wheat prices jumping 25 per cent in recent weeks. In extreme cases, feed costs can represent one-third of a dairy farm’s turnover.

    In a volatile market, the increase in the milk price paid to farmers is not keeping pace with the unprecedented rises in the cost of farm inputs. Some dairy farmers are under significant pressure.

    It is timely for farmers to review their operations in response to the increasing input costs.

    Real action needed to support dairy recovery

    The next three years is a defining period for the sustainability of the Australian dairy industry. As the recognised national policy and advocacy organisation working for dairy farmers, we will be doing our utmost to ensure the reality of this situation is well understood by the Labor Government and consumers.

    The government made pre-election pledges that respond to several issues in our policy statement – which if properly executed – will help the profitability and sustainability of dairy farmers. These include:

    • setting minimum standards for nutrition in residential aged care
    • improving existing regulations that deliver accurate and clear food labelling
    • providing $500m for agriculture in the $15b National Reconstruction Fund
    • protecting the competitiveness of emissions-intensive export industries
    • investing $3 billion from the $15 billion National Reconstruction Fund to fund emission reduction initiatives
    • directing financial support to energy efficiency projects under a new Powering the Regions Fund and funding two regional tech hubs

    More money needed for regions, biosecurity, jobs

    Beyond these pledges, ADF is calling on Federal Government to invest more in regional development, biosecurity capabilities and a skilled regional workforce to reduce risks to dairy production, support the adoption of supply chain traceability reforms and reduce the impact of pests and weeds.

    It is heartening to read that 88 per cent of respondents to the 2022 National Dairy Farmer Survey reported an operating profit in 2020/21. With the rising cost of inputs during the past two months, the outlook for some farmers in 2022/2023 is less optimistic.

    For many dairy farmers, the uplift in opening prices will give them the confidence to continue to invest into their farms. For others, however, labour shortages, high beef cattle prices and soaring land values, will see some farmers make a business decision to exit the industry.

    Due to the surging costs of farm inputs, the need for movement in retail prices is critical. A significant upward movement in milk pries at the checkout in the short to medium term is essential.

    The ongoing strength of the dairy sector is crucial to Australia’s future, as we navigate the Covid-19 recovery phase. Resilient and prosperous regional communities need a robust dairy sector.

    We look forward to working with the new Labor Government to deliver on our election platform, much of which seeks to drive profitability and sustainability through the Australian dairy industry. This includes creating even more transparency of prices across the dairy supply chain.

    Farming operations

    On the long road to recovery

    By HEATH COOK, ADF DEPUTY PRESIDENT

    Dairy farmers across New South Wales and South-East Queensland face a long road to recovery after recent flooding. Almost three years of stress from fires, drought, and pandemic-related workforce issues have seen the recent floods place enormous mental and financial strain on farmers.

    At least 290 farms have been affected. Accounts of damage and losses include 200-head herds wiped out, infrastructure and machinery swept away by floodwater, kilometres of fencing ripped from the earth – with winter crops, fertiliser and fodder being collateral damage.

    Stories of heroism abound, of farmers working tirelessly to rescue people and livestock alike. In the aftermath though, it is keeping herds fed that is proving to be a daily challenge.

    There has been a significant toll on animal health, with conditions such as lameness and mastitis becoming prevalent. Exhausted, distressed and undernourished, cows that would usually produce 20-30 litres daily are giving barely a trickle.

    Cold, wet weather has scythed its way through calf populations. Rescuing heifers and cows sunk deep in mud is a daily event. Costs are likely to be in the range of hundreds of millions.

    Many farms are not only experiencing stock feed issues but fuel shortages, phone and internet outages.

    Dairy Australia is working with government, industry bodies and emergency response services to provide aid services. Flood-affected farmers and land managers can call the Department of Primary Industries’ hotline on 1800 814 647 to request assistance for emergency fodder, aerial surveillance and veterinary assistance.

    Emergency fodder distribution centres have been set up in Casino, Alstonville, Grafton and Coraki, and reimbursement for emergency fodder freight has been made available by the Rural Assistance Authority in New South Wales. Need for Feed, a volunteer service coordinated by Lions International is also supplying fodder.

    Farmer welfare and mental health is a priority. After prolonged strain, there is a real risk of farmers leaving the industry. Dairy Australia encourages farmers to make use of recovery centres, as well as grant application support for flood recovery services. Grants of $25,000 are available for small farmers, and up to $75,000 for primary producers. Zita Ritchie at NSW DPI is managing New South Wales support, with Belinda Haddow at Subtropical Dairy supporting farmers from affected areas in Queensland.

    One-off disaster payments have been announced by the federal government, available to farmers from 80 local government areas across New South Wales and Queensland, to help with livestock assessment, veterinary support, euthanasia and burial costs. Funds are also being released to fast-track road repair.

    Norco Cooperative has been severely impacted by the floods, particularly the Norco ice cream factory, feed mill and two rural stores. The federal government, in partnership with the New South Wales government, has announced a business support package to help restore operations and assist with ongoing employment.

    The floods, like other disasters from recent years, have highlighted challenges facing the dairy industry. Not limited to animal welfare and human mental health impacts, increasing instances of fire, drought and flooding could see insurance premiums rise to untenable levels for some farmers. These risks need to be addressed in a long-term manner, as implications carry on long after acute events – as demonstrated by the long tail of mental hardship, cow health issues and financial strain that has followed these floods.

    Any rise in prices for dairy foods on retail shelves at this time may likely be a necessity for ensuring dairy farmers make it through these challenges and stay on their land with their mental health intact.

    Now, more than ever, our beloved northern industry needs to know that we ‘have its back’.

    Moving forward, we recognise that insurance will be a challenge, and let me assure every farmer affected by the floods that ADF will be working on this issue with representatives from the insurance industry.

    At meetings of the National Coordination Mechanism, attended by the Hon Bridget McKenzie, Minister for Emergency Management and National Recovery and Resilience, and the Director General of Emergency Management Australia, Joe Buffone, ADF has represented the national dairy industry’s interests.

    If retail prices for dairy products increase, one of the reasons will be the floods. If this happens, please tell everyone that the increase is an absolutely necessity to ensure flood-affected farmers survive this disaster.

    Animal Health, Biosecurity, Farming operations

    Policy shifts on live viruses importation

    By DAVID INALL, ADF CEO

    Lumpy skin disease (LSD) virus, identified in March in Indonesia – and Singapore shortly thereafter – is posing a threat to Australian livestock. The proximity of these nations to Australia means the disease could be transferred to Australian cattle or buffalo via windborne biting insects. Currently, the virus is only around 3,000 kilometres from Australia. Once introduced, the virus is very hard to eradicate.

    Australia has restricted the importation of certain live viruses for laboratory purposes, primarily to reduce the possibility for such diseases to escape and spread. However, an exception is being made so that CSIRO’s Australian Centre for Disease Preparedness, Geelong, can begin developing vaccines for lumpy skin disease.

    Australian Dairy Farmers (ADF) supports the development of safe, effective vaccines for lumpy skin disease virus, in acknowledgement of the significant risk this disease poses to the industry.

    The virus does not affect humans – but has serious implications for animal health. It causes emaciation, damage to hides, a decrease in milk production, fever, reproductive losses and can ultimately be fatal. This can lead to major disruptions to livestock trade and dairy supply. There would also be trade implications for Australian exports if Australia was to suffer a lumpy skin disease detection.

    The disease, identifiable by nodules on animal skin, is usually spread by flies, mosquitoes, and ticks. Infected animals can also contaminate products and equipment.

    The federal government is working with its counterparts in Indonesia to stem the outbreak and prevent the disease from making its way to Australia. Current prevention efforts are extensive, with strict import regulations and conditions to prevent the disease entering via traveller, cargo and mail pathways. However, the risk of spreading via insects crossing the ocean is Australia’s primary concern.

    Without local research, Australia would have to rely on sending samples overseas for diagnosis and, if confirmed, importing vaccines. These can be of inferior quality to Australian standards and obtaining adequate quantities could be a challenge. With Australia undertaking development, vaccine supply will not be an issue for Australian farmers. Once developed, the vaccine will also be shared with neighbouring nations.

    Livestock industries as well as the Australian Governmentsupport importation of the live virus. Internal policies have been amended to ensure safety and security. This approach is being echoed across other parts of the industry.

    A taskforce has been set up by Agriculture Minister David Littleproud. The group, led by Dr Chris Parker – former chief executive of the Australian Pests and Veterinary Medicines Authority – will coordinate the federal government’s newly-announced $61 million commitment to boosting northern frontline biosecurity.

    Vaccine development within Australia is crucial to preventing major outbreaks and eventually eradicating the disease, if possible. Most vaccines currently available from overseas have shown capacity to cross with wild strains of the virus, producing virulent variants that transmit more rapidly.

    With such a significant exotic disease on Australia’s doorstep, we must remain vigilant, and farmers are always urged to contact their local veterinarian if they see any signs in their herd, In the case of LSD, after an initial period of high fever (41°C) and swollen lymph glands, the animal may develop large, firm nodules that are up to 5 cm in diameter in the skin..

    An important element of the industry’s response has seen ADF partnering with the Red Meat Advisory Council (RMAC) to form a high-level cross-industry taskforce to ensure coordination and collaboration across all affected industry sectors. The taskforce is comprised of senior representatives of RMAC, ADF, the National Farmers’ Federation, and the relevant industry service providers.

     

    The taskforce’s membership ensures we can seek the requisite skills to undertake appropriate action and establish technical committees as determined by the taskforce to ensure the broader agriculture sector can monitor, manage and work with government to reduce the likelihood and potential impact of any incursion.

    Farming operations

    Collaboration puts dairy levy to work

    by RICK GLADIGAU, ADF PRESIDENT

    As the voice of dairy farmers in your regions, Australian Dairy Farmers (ADF) actively provides input on key focus areas for development in Dairy Australia’s Annual Operating Plan (AOP).

    This year, for the 2022/23 operating plan, our consultation with Dairy Australia started earlier, went deeper into discussing the priorities and has lasted longer than the consultations for previous plans.

    Dairy Australia is the national services body for the Australian dairy industry, and is funded by a combination of industry, government and research organisations to advance the interests of dairy farmers. This includes levies paid by dairy farmers and matching payments from the Commonwealth Government for eligible research and development (R&D) activities.

    Together with Dairy Australia, ADF took the opportunity to engage earlier in the consultation to provide meaningful input to the annual R&D activities supported by the plan.

    Strengthening research, productivity

    The consultation process started with a review of recent changes in the operating environment and how these might affect work under each of the seven strategic priorities in the DA strategic plan 2020-2025.

    Several key areas of focus emerged at the workshop, with feed base/pasture identified as the most important area of focus for the next DA annual operating plan. Additional focus areas centred on continued research and monitoring of productivity and dairy’s competitive position with other sectors, as well as increased policy development and support, leaning into more state and regional based issues.

    One of the key directions to emerge from this consultation was a call for the R&D to focus on productivity, growth and reducing farmers’ cost base. Suggestions included building resilience in the dairy industry through scenario planning to ensure farmers can maintain low-cost production and exploring alternative innovative farming methods such as how to use feed to reduce carbon emissions/methane in the value chain as well as build adaptation of feed base and pasture feed to changing environments.

    Strengthening collaboration, best practice

    Critical success factors identified for DA operations and the dairy industry included greater collaboration between ADF and DA, more celebration of the dairy industry’s best practice along with greater engagement of the workforce, industry and emerging leaders, especially the Young Dairy Network.

    To update our members on the progress with development of the next operating plan, ADF will host a briefing session in May. At this session we will report on how our input has been incorporated into the plan.

    Keeping abreast of what is happening in domestic and international markets was important to all members as this helps us identify and explore the future opportunities in agriculture, and better understand our competitive position compared with other sectors.

    Defining dairy’s role in agriculture

    By strengthening the collaboration of dairy farmers with government, industry and research organisations, we increase transparency and build trust, as we ultimately want to continue to play a key role in Australian agriculture.

    Now that we have clear guidance from Dairy Poll 2022 as to the income for research and innovation programs in the future, ADF will keep working with Dairy Australia to ensure the dairy levy is invested in work that delivers.

    Economics & Trade

    Open market a win-win for dairy

    By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

    Australian dairy farmers have reason to celebrate. The future of milk trading is looking brighter.

    Last week, a key first step has been taken which delivers monthly milk price transparency and competition, as the Australian Milk Price Initiative (AMPI) ran its first regional milk spot markets.

    Trading was done on the Mercari platform, owned and operated by the Financial and Energy Exchange. These regional spot markets deliver the monthly price transparency necessary to enable a forward financial hedging market like those seen in New Zealand, the US and Europe. Such financial markets already enable dairy farmers and processors to lock in prices up to three years forward for some of their milk.

    As the national representative body for dairy farmers, Australian Dairy Farmers (ADF) has advocated for and sponsored the AMPI and encourages dairy farmers to take advantage of the trading platform.

    Not only will the AMPI empower dairy farmers when they sell milk, it will also increase transparency and build trust. As said at the launch, ‘there is no more transparent price signal than an open market price!’.

    The benefits to the dairy industry do not end there. The AMPI will improve risk management across the supply chain with back-to-back pricing from customer to processor to farmer, providing the ability to lock in margins across the chain. Better margin and risk management enables better planning, which, in turn, drives investment and growth across the supply chain. More investment means a strong dairy industry.

    Among the concerns to emerge from industry consultations during the development of the Australian Dairy Plan was a call for ‘New measures to increase transparency and help manage market risk, including the establishment of a functioning milk price market and new risk measures backed by government legislation’.

    This is something the ADF has been helping to achieve.

    At the ADF we have been working closely with government and industry to develop the AMPI. Similar trading platforms are already operating for other agricultural sectors, including wool and grains.

    Through consultation with industry bodies and the dairy community, and with a grant from the Federal Government, the new trading platform will allow Australian dairy farmers to leverage their competitive advantage.

    In 2019, a pledge of $560,000 towards the development of a milk trading platform was one of the most significant election promises the dairy industry received from the Morrison Government.

    While the launch of the AMPI is an important step in the right direction, the work is not over yet.

    Seed funding is required for the AMPI’s governance and operating model, as well as education for participants. It is our view that these funds can come from the Improving Market Transparency in Perishable Agricultural Goods Industries Grant Program. This program will run over three years from 2022–23 to 2024–25.  A total of $5 million of grant funding is available.

    Ongoing investment and innovation are key to the future of the dairy industry. With an open market where farmers can choose who they sell their milk to, at what cost, and on what terms the future is looking brighter.

    Climate change, Public Health, Sustainability

    Dairy: good for people and planet

    By DARYL HOEY*

    Agriculture and in particular livestock production has been central to formal global talks about sustainable food production and healthy diets hosted by the United Nations in past weeks.

    There have been passionate voices on food, biodiversity and climate. Mostly, these voices have respected all dimensions of sustainable food production from cultural and economic to nutrition and environment.

    For our part Australian dairy has a long history in sustainability and is committed to being part of the solution to the world’s biggest sustainability challenges, including climate change and food insecurity.

    First and foremost, an unhealthy diet is not sustainable. Our industry nourishes people across the world daily. Milk, cheese and yoghurt are nutrient-rich with proven health benefits.  Dairy is a staple food with traditions woven into society. It’s affordable and accessible meaning it can be part of many cultural diets.

    Seventy-nine per cent of Australians agree that dairy foods are essential for good health and wellbeing,

    Dairy has and always will be a food – not a fad.

    As an industry Australian dairy stands for a healthier world, for people and the planet.

    It is not lost on us that livestock industries such as dairy contribute methane to the atmosphere from cow burping. These gases are short-lived relative to those from fossil fuels however there is still an opportunity for us to improve our performance and do more to protect the environment in which we operate.

    It’s in our nature – and in our hands – to action on climate change; 94% of Australian dairy farms have implemented practices to reduce greenhouse gas emissions (GHGs) and GHGs from manufacturers are down 27% since 2010/11, according to the 2020 Australian Dairy Industry Sustainability Report. The report also shows that 93% of waste from manufacturers is diverted from landfill. We are committed to meeting the challenge of climate change and looking after our natural resources.

    In relation to economic development Australian dairy is committed to creating a vibrant industry that rewards dairy workers and their families, their related dairying communities, business and investors.

    Dairy provides jobs and income for many families and contributes to social cohesion in regional communities. Eighty-six per cent of people in regional areas think dairy is an essential part of their community.

    In 2019/2020, Australian dairy processors generated $15.7 billion in revenue and contributed $12.4 billion to Australian GDP. The industry directly employs 42,600 people. It brings regional communities to life.

    Australia’s dairy farmers and manufacturers are innovative. We think ahead. This enables us to be part of the solution to food and agriculture’s biggest sustainability challenges, now and in the future.

    The Australian Dairy Sustainability Framework sets out what we do to reward our people, make nutritious products, care for our animals, and leave the environment in better shape for the future.

    We report our progress towards sustainability goals and targets every year for all to see. Our sustainability promise is to produce nutritious food for a healthier world. It’s a promise we aim to keep.

    If people planning the future of food take into account the social, economic and environmental impacts of food production Australian dairy will be part of whatever food system emerges over time.

    * Daryl Hoey is Chair of the Dairy Sustainability Steering Committee, which directs the Australian Dairy Sustainability Framework, a whole-of-industry initiative from the Australian Dairy Industry Council.

    People & Community, Public Health

    Mental health: a focus for you, us

    By TERRY RICHARDSON, ADF PRESIDENT

    A GOOD season and improving returns for dairy farmers doesn’t necessarily mean it is easy for everyone in the industry.

    Dairy farming is the career we choose because we love the industry, and the quest for a strong balance sheet is part of that.

    Yet, even when the figures are looking good, the requirements of dairy farming – a career that involves living where you work and cows which need attention 365 days a year – can seem relentless.

    A survey of the New Zealand dairy industry last year showed that 60 per cent of respondents said at least one of their team had experienced a mental health issue in the previous year.

    Although to the best of my knowledge there has not been similar research in Australia, it’s not hard to imagine that there would be a similar result in this country.

    While we are much more prepared to talk about mental health now, there is still an inherent unwillingness to acknowledge it in ourselves or our friends or work mates.

    It seems at times we consider mental and physical health differently, and this may be at the root of why many are afraid to speak up or acknowledge they have an issue.

    If you break your arm, there is a course of action you take – you follow that and there is an outcome. You get the x-ray, you may get surgery, you get another x-ray to check it’s okay and the episode is over.

    Dealing with a mental health issue in comparison may appear to be complex, and could require ongoing treatment, much like some physical injuries require ongoing physiotherapy.

    For some people, the problem may be with them for a lifetime but there are things that we can do which can help and we should strongly encourage people to seek that help.

    The biggest fear that many of us have when we recognise that things are not right with a relative, a friend or a worker (or even ourselves) is that we don’t know how to help.

    While you may not have the professional skills to help, you are able to reassure others that they are not alone, and that there are people who can help.

    Knowing that you, your friend or worker can get help is reassuring not only to them, but to you as well.

    A good season doesn’t guarantee wellbeing, nor does addressing particular issues like sourcing extra labour. That very issue – the lack of workers – means some are working longer and longer hours simply to just carry out the basics.

    Working smarter and not harder allows time to relax, go on a holiday or even take a bigger picture view of your business and make decisions and plans. But you can’t do that if you don’t have people to fill in. It’s one of the drivers behind the ADF advocating for Government to take a multi-pronged approach to address the worker shortage.

    At ADF, we also get caught up in the daily activities around policy and advocacy and while these are critical, we care deeply about the wellbeing of dairy farmers. We are assessing the merits of developing a wellbeing program, specifically for dairy farmers in Australia.

    We understand that much of our work in advocacy does lead to a better dairy farming environment and less business pressure on our farmers, but alongside this, the ADF needs to dedicate specific time to check in and support the wellbeing of dairy farmers.

    Ideally, ADF would like to see specific research mirroring that done within the New Zealand industry to gauge the extent of mental health issues within the Australian dairy industry.

    That understanding could allow us to tailor programs which could make the greatest positive impact.

    We also appreciate fully that the good season many of us are lucky enough to be experiencing this year does not take all the pressure off and while paddocks may be full of feed and milk prices are strong, it’s by no means easy.

    For almost 80 years, ADF has cared about wellbeing of dairy farmers – and this will always be at the heart of what we do. We are in the final throes of a new strategic plan, and for the first time we are including a focus area on mental health. It’s important to us, and we know it’s important to you.

    Whether it’s lobbying for things that farmers can easily see will make a difference like increasing the labour force to the less obvious planning around farmer health, we’re seeking better outcomes for our members.

    So, my challenge for you is to look around your farm and ask yourself “what is my most valuable asset?” If that’s your rotary dairy and something was wrong with it, you wouldn’t hesitate to fix it – right?

    Now, think again about your biggest asset – let’s say it’s you, your family or your fellow workers. If any of them are not functioning at their best due to a mental health issue, why would you respond any differently?

    Farming operations

    Looking ahead for dairy levy poll

    By TERRY RICHARDSON, ADF PRESIDENT

    For the first time in a decade Australian dairy farmers will get a say on how much money is invested in the industry services managed and delivered by Dairy Australia.

    This is an outcome sought and welcomed by Australian Dairy Farmers (ADF).

    In July, the Levy Poll Advisory Committee (LPAC) recommended that a poll of all dairy farmers be held to set the future level of the dairy service levy – a levy that funds Dairy Australia, including its research and innovation.

    This is good news for dairy farmers. We can now consider whether the current dairy levy, or a potential increase in the levy, is needed to ensure the investment in farmer RD&E meets our farmers’ needs.

    The LPAC is developing the voting options which will go on a ballot. This process has included seeking input from dairy farmers to determine the voting options, including an option they prefer.

    As the voice of dairy farmers, ADF is deeply committed to working with our members, LPAC, Dairy Australia and the broader levy payer farmer base to ensure that an effective and engaging consultation process is undertaken prior to the March 2022 vote.

    It is essential this process delivers clear and concise feedback from farmers, because the levy poll should not be taken likely. It will determine how much is invested into RD&E for the coming years.

    We expect that levy payers will be informed of voting options by late September, with the levy poll to be held in March 2022.

    Importance of leadership in levy poll

    While it’s too early for ADF to form a view on a preferred voting option, we know as the national representative body, we need to build consensus among people with diverse views on what levy is best for the industry.

    However, we do anticipate that an option to maintain current levels will be included in the levy poll, together with any options for an increase that LPAC may determine appropriate.

    The levy poll provides dairy farmers with the opportunity to have a say on an important investment that works to benefit their dairy farm businesses and advance the industry as a whole.

    We need to ensure the levy sets the industry up for success, by resourcing Dairy Australia to:

    • deliver on the five-year strategic plan agreed by industry
    • build and maintain the capacity of Dairy Australia to respond to emerging issues (challenges and opportunities)
    • continue to invest in high-returning research and development
    • deliver specific services as prioritised by levy payers
    • collaborate with other agencies to meet ‘head on’ the broader challenges facing the agriculture sector.

    Throughout the levy poll development and voting, ADF and the state dairy farmer organisations will engage and consult with our membership.

    When you vote – via the poll – I encourage you to think about the broader industry and services that benefit everyone, now and into the future.

    To our members, no matter what you vote I have great respect for belief and conviction and urge you to consider the poll carefully.

    Labour, People & Community

    Worker shortage: hope on horizon

    By CRAIG HOUGH, DIRECTOR, STRATEGY & POLICY

    A CRITICAL shortage of employees is stalling growth in the Australian dairy industry.

    While issues around sourcing employees are not new, there are factors which are now making it even harder to find and retain staff.

    As an industry, we are working with both the Federal and State governments to find ways to address the workforce issue with a mix of lobbying and creative solutions such as projects to implement the National Agriculture Workforce Strategy

    We know and understand that the dairy industry is changing. Farms are getting bigger. The average herd size has lifted from 93 cows in 1985 to 276 in 2018/2019, and there is a growing number of 1000-cow herds. Managing this increasing complexity requires more higher skilled staff.

    Not only is it difficult to find staff who are willing to work within the industry, it is also hard to find employees with the skills required to manage and work within larger, more complex operations.

    The situation was brought to a head last year with COVID-19, as potential employees and even casual staff like AI technicians faced border closures and the inability to travel freely to work.

    Here, Australian Dairy Farmers (ADF) and Dairy Australia stepped in to find an immediate, workable solution. It was the tip of the iceberg though, as the Australian Dairy Plan had already identified a capable workforce was a key to future dairy industry productivity.

    As such, ADF has been working hard on a number of fronts to lift not only the number of employees but the profile of the industry to attract staff.

    The solutions we are working on aim to deliver a bigger field of employees as soon as possible because of the dire need across the industry.

    The measure of success will be that by 2025, all sections of the industry will have access to the people they require to meet their operating needs, and who are trained in the skills required for their roles.

    We believe that potential employees who see a career path within the dairy industry is key to growing the workforce.

    Offering that career pathway and lifting dairy positions into the professional realm could attract more applicants of a higher quality if they could see the ability to progress professionally. If they are engaged and can see a satisfying future career, they are also more likely to stay within the industry.

    Making this happen is important, so ADF has been working with education providers to develop a flexible means of study which can be taken up across institutions and across borders. ADF has also stressed the importance of offering “bite size” learning, which recognises the inability of employees to leave the farm for longer periods.

    We know that capacity building in employees is vital in ensuring a skilled workforce as well as retention of that workforce.

    It’s why the Pathway for People in Dairy Program, including the Dairy Passport, was launched in September last year was a significant step. ADF working in partnership with Dairy Australia ensured the initiative was fast tracked with government funding support. It offers one-stop shop for both employers and employees, which not only acts as an information source but also provides a portable skills registry.

    It is also important to try to remove some of the hurdles for future employees, be they short term casuals or those wanting a longer-term career.

    Short term workers are useful for some purposes and JobSeeker applicants can fill employment gaps.

    Working around this was one of the recommendations in the National Agriculture Workforce Strategy, so we feel it is important to keep the pressure up on this issue.

    Overarching all these efforts must be the push for recognition of dairy, and more broadly agriculture, as an important and valuable industry.

    Wanting to be part of a vibrant industry will only add to the other initiatives in terms of attracting employees.

    While as the ADF we are taking the lead, we also need help from dairy farmers across the nation.

    To find the best solutions, we need input to the collection of employment statistics and modelling, which will help set the scene for future policy development and the creation of employment programs.

    WHAT WE ARE DOING

    • Working with government through NFF on an agricultural visa for dairy workers
    • Pushing educators to offer “bite size” learning for workers with short-leave period
    • Lobbying for JobSeekers to fill dairy employment gaps at no risk to their benefits
    Misc

    Time to talk about reforming culture in the dairy industry

    We need to talk about culture.

    In fact, far too often I find myself discussing with friends and colleagues the negative culture in the dairy industry and what must change to improve respect and unity between us.

    Just the other day, a farming leader told me he wouldn’t have my job for quids. His precise words were: “I don’t know how you put up with it.”

    The industry’s culture problem is so prominent that unity is one of the three pillars of the Australian Dairy Plan, released earlier this week.

    The second Dairy Plan Commitment – to attract and support new people and investment – depends on an improved industry culture.

    How can we possibly hope to attract new and eager talent if the infighting continues?

    I can attest from personal experience just how damaging it is to manage the current culture within the dairy industry.

    How would we describe an industry culture that leads success?

    Do we seek to build consensus and focus on the future, or continue to debate the past?

    Do we prefer to collaborate, or is confrontation more acceptable?

    Do we stop and listen or just go on the attack?

    Do we think that the politics of personality is better than the politics of substance?

    Do we challenge ideas or people?

    Do we provide encouragement or just say nothing works?

    And do we see ourselves as victims or as problem solvers?

    Attacking peak bodies might be sport for some, but it comes with very real consequences for those who give their time to represent farmers and achieve real outcomes for the industry.

    All the farmers who care enough about the well-being of our dairy industry to sit on the Australian Dairy Farmers (ADF) national council, or our policy advisory groups, or any committees of the state dairy farmer organisations when they all have their own businesses to manage.

    In the past year alone, ADF has worked with the Federal Government on a plethora of projects, including implementing a new mandatory industry code of conduct, developing a standard form contract that complies with the code, and facilitating a new blockchain and traceability system customised for the dairy industry. In the next 12 months an industry standard and trial of the blockchain and a milk trading platform will also be delivered.

    We have campaigned to reclaim the label “milk” from plant-based dairy alternatives. Just last year, we requested a review of labelling and marketing of non-dairy alternatives, and development of additional regulations to prevent plant-based products from trading on the labelling, qualities and values of dairy.

    We have investigated the feasibility of different market intervention mechanisms and recommended to the government that the current dairy code be extended to cover the whole supply chain, including supermarket retailers.

    We have made submissions in collaboration with Dairy Australia to several inquiries, including to the Victorian Government’s $50 million Agriculture Workforce Plan and the Federal Government’s National Agriculture Workforce Strategy. The latter addressed all of dairy’s long-standing workforce issues relating to recruitment, skills and training, while the former resulted in a provision of $715,000 for Dairy Australia to deliver the Dairy Farm Induction Program.

    This is a substantial work program by any measure, and one that has yielded some outstanding achievements. But if we are to continue fighting on behalf of farmers, we need farmers to stand with us, not against us.

    In June, we presented to the Senate inquiry into the performance of the dairy industry since deregulation. I was proud to speak up on behalf of farmers and outline the critical issues that continue to confront many of our colleagues and has led to a disheartening number of dairy farmers making the difficult decision to leave the industry in recent years.

    But I was saddened by the conduct, and personal attacks, I witnessed during the last Senate hearings a couple of weeks ago.

    We want an industry culture that makes people proud to belong to the dairy industry. Because that’s how you attract new people into representative positions.

    Not through continual criticism and personal attacks. Everyone who works in this industry is human, and the culture of negativity has a deep and lasting impact on all of us.

    I want new people – people of any age and background – to join us in representing dairy farmers. But why would they want to if all they can look forward to is being targeted on social media?

    Before we can champion these new dairy advocates, we first need to lead by example. We must be able to disagree and debate with respect and provide constructive feedback rather than harsh putdowns.

    There is a destructive culture eating away at our industry. And it needs to stop, if not for us, then for the next generation.

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    The digital revolution has arrived: Dairy must embrace technology to stay ahead of the competition

    We are experiencing a revolution in digital technology and dairy needs to seize every opportunity we get.

    A 2017 report by McKinsey and Company estimated that digital technology could contribute somewhere between $140 and $250 billion to Australia’s Gross Domestic Product (GDP) by 2025 based on currently available technology alone.

    For dairy, the Precision to Decision Agriculture Project, which included Dairy Australia, estimated an additional $497 million or 15 per cent to its Gross Value of Production (GVP). Three years later, we now have a commitment to realise this opportunity.

    But digital is not limited to just information technology (IT) infrastructure, nor is it focused narrowly on an online/mobile presence. It is an integrated set of opportunities leveraging technologies ranging from automation and advanced analytics through to agile methodologies and customer-centric product and experience design.

    At or near the digital frontier is a cluster of high-tech, knowledge-intensive service industries: IT, financial, professional and administrative services. Closing the gap between dairy and these sectors requires government and industry to address a number of issues around poor telecommunications, privacy and security concerns, capital constraints in agricultural businesses, and capability and time limitations.

    Broadband and Internet of Things (IoT) network infrastructure is essential to fully realise the potential of a ubiquitously connected landscape, enable access to large data loads, use of digital imagery and real time controls around autonomous vehicles.

    Telecommunication providers and the Federal Government’s Mobile Blackspot Program, National Broadband Network and Regional Connectivity Program are expanding the quality and reach of internet connectivity in regional areas. These are being supplemented by a range of low-power wide-area networks (LPWANs) and other smaller scale networks to enable whole of landscape management and community wide data sharing at low cost.

    Data privacy and security have long been complex issues. Vast amounts of personal and commercial data are being housed in a small number of internet service providers. These agencies are now the target of hackers who are increasingly demanding access to national security and commercial in confidence data and information.

    While Australia has adequate privacy and security protection, industries need common, open source and secure interoperable data standards. This is a key output of Australian Dairy Farmers’ (ADF) Blockchain and Real Time Payment System project. By establishing a governance framework, farmers and processors have a greater level of assurance that their digital technology investments are secure.

    Last year, Australian agriculture adopted a National Traceability Framework. This sets out a common vision, principles and responsibilities for regulated and commercial traceability systems across agriculture supply chains. The framework requires each industry to develop an action plan over the coming 12-18 months. For dairy this will require a significant degree of coordination.

    Currently through SAFEMEAT, a partnership between the Australian red meat and livestock industry and state and federal governments, dairy is moving to a fully digitalised livestock traceability system. This will see national consistency in the National Livestock Identification System (NLIS), compliance and enforcement of livestock identification and movement recording and data collection and entry.

    Farmers will need to adapt with forms such as National Vendor Declarations and other devices becoming electronic. A number of agencies are reasonably well advanced in this journey. For example, Dairy Food Safety Victoria is rolling out its Dairy RegTech program to Victorian dairy manufacturers in late 2020.

    Demonstrating economic benefit on digital technologies is critical to accelerating adoption. Like most businesses’ farmers need to see a proven return on investment before making a capital outlay.

    Agriculture Victoria is undertaking an IoT trial of 125 dairy farms in the Maffra region. This includes capturing key economic data to compare against other farms across the state who do not have the technology. Results will be publicly shared to help inform investment decisions. This is also an output of ADF’s Blockchain and Real Time Payment System project.

    Economic and environmental benefit is now reasonably well established for virtual fencing. This is an animal-friendly fencing system that enables livestock to be confined or moved without using fixed fences.

    The CSIRO are world leaders in this area, having delivered various R&D initiatives since 2003. They are currently collaborating with Melbourne based ag-tech start-up Agersens, universities and livestock RDCs to deliver the Virtual Herding project. This is showcasing better grazing management practices, environmental protection for example riparian areas and reduction in cost of building and maintaining fences for farmers.

    So, the fourth industrial revolution is underway for the dairy industry. There is a clear shift happening from feasibility and concept to farm and supply chain adoption. The challenge for industry as it seeks a competitive advantage over international rivals is the speed and integration of uptake. Basically, the faster and more coordinated it is, the greater benefit.

    Uncategorized

    Stronger leadership on horizon

    It won’t be an easy road to reforming dairy industry structures, but we are not shy about facing the challenge head on.

    The message, delivered by more than 1500 dairy farmers and other industry stakeholders during the Australian Dairy Plan workshops last year, was crystal clear that our existing structures – which have served us well for many years – are no longer fit for purpose.

    Structural reform has therefore rightly become a central component of the Dairy Plan. To address this priority, a Joint Transition Team of industry representatives was tasked with developing structural options for industry’s consideration.

    They delivered a report in January which recommended creating a single, whole of industry national dairy organisation to support industry services including policy, advocacy, research and development and marketing.

    But while this model provided a solid foundation from which to build a new structure, further industry consultation is needed until we can be satis ed that a proposed structure will receive support from a majority of the dairy sector.

    The federal government, which collects levies from dairy farmers that help fund the current structure, will play a key role in determining whether any changes should be made. The government must be con dent there is support from industry for the proposed changes.

    It is not enough to ask the government to support such significant reform to the dairy industry without demonstrating that a majority of the industry stands behind this change.

    The industry, or those advocating for change, must demonstrate there has been high levels of awareness for the change, participation in a vote, and support for the proposed new structure.

    The Dairy Plan partner organisations – Australian Dairy Farmers, Australian Dairy Products Federation and Dairy Australia – have now established a process intended to meet these rigorous criteria.

    It is based on a phased approach that engages industry around organisational design challenges and develops a new design for industry consultation and a vote around the recommended model. This process, which began in 2019 with the work of the Joint Transition Team, has continued throughout 2020.

    This year, we are establishing a pathway to reform, engaging industry and government on any reform challenges, designing options for reform operating models and conducting industry consultation on those options. A proposed model should be  finalised in 2021 for industry to vote.

    An Organisational Reform Steering Committee has been formed, comprising two directors each from Australian Dairy Farmers, Australian Dairy Products Federation and Dairy Australia.

    This committee will guide the pathway to reform and ensure appropriate consultation and vote prior to recommending a model. Ernst and Young and former MLA managing director David Palmer are leading the coordination, engagement and design efforts.

    Three working groups have also been established to further support industry engagement.

    One will be dedicated to exploring the potential involvement of dairy processors in a single industry body, including how a fully transparent financial contribution may work for mutual benefit.

    Another will consider issues around governance, including how decisions should be made in a reform model that represents all sides of the dairy industry.

    And the last will look at representation, such as how to strengthen advocacy without compromising delivery of research, development and extension via a single levy, while still ensuring there is a strong capacity to proactively participate in cross-commodity issues at both a state and federal level.

    David Palmer is conducting listening meetings with all recognised leadership groups and capturing key principles and design input from the regions.

    Assuming there is adequate support for a new structure, any plans for implementation will require close engagement with the federal government and all affected industry organisations. Legal, financial, and governance considerations must be fully explored.

    This is a long, complicated process and should not be underestimated by anyone.

    But our aim is to deliver lasting reform that will deliver stronger leadership, a uni ed industry voice, create a single point of contact for all industry services, deliver stronger industry funding, and ensure regional interests directly shape industry policy and advocacy.

    Uncategorized

    A dairy industry in recovery

    I’m feeling confident about the future of the Australian dairy industry. Yes, there are a lot of issues affecting us, such as the lingering impact of drought, production costs, discount dairy products, the misleading labelling of non-dairy alternatives as “milk”, and shifts in the global market.

    But if there is one thing the COVID-19 pandemic has showed us, with all the panic buying that occurred earlier this year, it is that dairy will always be a staple household item.

    And it appears confidence is rising across the industry. The National Dairy Farmer Survey, conducted annually by Dairy Australia, has confirmed that farmer confidence in their own businesses and the future of the Australian dairy industry as a whole has risen over the past 12 months.

    While overall confidence remains lower than in 2018 and 2017, 44 per cent of farmers reported feeling good about the future of the industry. This is a marked improvement from last year, when just 34 per cent felt positive about the industry’s future in the survey’s worst ever result, but still far below the historic high of 78 per cent recorded in the 2008 survey, before the Global Financial Crisis.

    Even more encouragingly, more than two thirds of farmers surveyed (67 per cent) reported feeling positive about their businesses, a massive 22 per cent jump from last year. This is the highest level reported since Dairy Australia started measuring own business sentiment in 2017.

    We can feel buoyed by the fact that there has been an improvement in farmer sentiment on every score since last year, when the ballooning cost of feed and water eroded farm profitability despite stronger than average opening milk prices.

    Nearly two thirds of farmers surveyed in 2019 said they were concerned about the cost and availability of feed, while just 43 per cent expect to make an operating profit.

    Encouragingly, 70 per cent of farmers surveyed this year expected to make a profit, while 48 per cent of farms anticipated an increase in production volumes for the year ending June 2020.

    Significantly more farmers in all but one region reported that they were expecting higher profits in 2020 than have been achieved on average over the past five years. Unsurprisingly, regions with the largest share of profitable farmers also reported the highest levels of confidence in their own business.

    All of this comes even as prolonged drought, bushfires and high feed and water costs continued to be major concerns prior to the survey. It seems that farmers are ready to invest in their businesses, buoyed by a favourable start to the season.

    As has been reported, these statistics show a dairy industry in recovery, although it is unclear whether this confidence will continue to grow in a post-pandemic environment.

    What has been confirmed by Dairy Australia’s June Situation & Outlook Report is that demand for dairy remained strong during the panic buying that accompanied the COVID-19 pandemic.

    But while farmers are feeling more positive about their individual businesses, there has only been a modest boost in confidence since last year for the future of the industry. Last year, just 34 per cent of farmers surveyed felt optimistic about the industry’s future – the worst result in the survey’s history.

    While there has been a 10 per cent jump in overall confidence this year to 44 per cent, there is still a long way to go before we can approach pre-GFC levels of confidence.

    That is the challenge facing the Australian Dairy Plan. A confident industry is one of the Dairy Plan’s key objectives, with a goal to boost milk production up to 9.3 billion litres per year by 2024-25. This would generate more than $600 million annually in extra value at the farm gate and stimulate the growth of at least 1,000 direct new jobs, mostly in rural and regional areas.

    There are a lot of factors involved in sustaining a confident industry. But if the trend in farmer confidence continues, I have no doubt that we will go a long way towards achieving our goal over the next five years.

    Uncategorized

    Contract commitment: ADF developing code-compliant form

    THE mandatory code of conduct has been in place for a few months now, but the real test of its effectiveness comes with the negotiation of new milk supply agreements in the lead up to the new season.

    All contracts signed after January 1 this year must comply with the code, while prior agreements have 12 months to transition to become compliant.

    The federal government made a commitment in the lead up to last year’s election to develop a standard form contract that meets the requirements of the mandatory code and can be used by processors and farmers in negotiating supply agreements.

    The government contracted Australian Dairy Farmers to develop this template, which will provide a foundation for the obligations of both farmers and processors under the code with the least cost to industry.

    Farmers and processors won’t have to spend time becoming experts in the code or contract manage- ment nor will they have to spend time developing new agreements from scratch. ey can simply adopt the template, or develop their own contract using the template as a basis.

    The template will also help to resolve a number of issues identified by the Australian Competition and Consumer Commission in its Dairy Inquiry report.

    The competition watchdog made several recommendations related to contracting practices, including that milk supply arrangements should be acknowledged in writing, processors should provide farmers with all contractual documents before the start of their contract, and that those contracts should be simplified.

    Many farmers have had no contracts with their processors or contracts that may have contained complex terms. e new standard form contract will ensure that all farmers will have a contract with acceptable and meaningful conditions.

    ADF’s goal is to ensure that farmers have a stronger bargaining position when negotiating contracts with processors. One of the key findings of the ACCC Dairy Inquiry was that contract arrangements between processors and farmers have been favourable to processors and exacerbated most farmers’ weak bargain- ing power.

    The template was developed by comparing the mandatory code and other legal requirements to current contracts in the marketplace. It will be made widely available on the internet for anyone wanting to use the contract or even to compare with their own milk supply agreements.

    Of course, ADF expects that many farmers will have questions about the template and it will seek to answer those through a series of webinars and other online tutorials.

    The past few years have been difficult for the dairy industry, underscored by diminished trust between farmers and processors.

    One of the key commitments of the Australian Dairy Plan is to improve trust and transparency along the dairy supply chain.

    The new standard form contract will help this pro- cess. ADF will be encouraging farmers and processors to use this template and seek further information from ADF, either by attending one of the information sessions when they are organised or by contacting ADF’s office.

    Uncategorized

    ADF clarifies comments on Murray Darling Basin Plan

    ADF welcomes the opportunity to respond to questions around our recent Dairy Insight column in the Stock & Land and other newspapers.

    The situation facing farmers in the Murray Darling Basin must be addressed before we lose more farmers. Fodder and water are trading at untenable prices
    and we recognise the impact at the family, farm and community level.

    All dairy farmers can rest assured that ADF continues with its proud 77 year history of passionately representing the interests of dairy farmers.

    The objective of the column was to share a view that drought is the major factor impacting on basin communities, including of course dairy farmers.

    ADF has a long-standing position not to abandon the Murray Darling Basin Plan.

    We have stayed firm in fighting to stop the federal government from buying back water once 1500GL has been recovered, as stated in the Water Act.

    We have also urged that any plan to drain an extra 450GL from the Basin for the environment must be viewed as a last resort and only if there are neutral
    or positive, NOT negative, socio-economic impacts. This means a cost-benefit analysis and consideration of any future effects on communities.

    ADF has also supported the ACCC investigation of the water market to validate assumptions of water use along the Murray River system, including irrigation
    and environmental demand and the impact of constraints, and to ensure greater transparency in water trading.

    The Murray Darling Basin is home to around 1,330 dairy farm businesses with a value of production worth more than $2.6 billion, supporting over 3,000 direct
    jobs in the region. Dairy sits at the heart of the Basin community.

    ADF continues to urge state and federal governments to consider any impacts the Basin Plan may have on dairy jobs and local communities.

    But while this is paramount, we also urgently need an agreement between commonwealth and state governments to provide a national approach to drought preparation,
    response and recovery.

    Uncategorized

    Pausing the Basin Plan misguided

    Angst in Murray Darling Basin over skyrocketing water prices is now at fever pitch.

    Many groups are advocating for change to the Basin Plan. The Victorian Nationals want to terminate the additional 450 gigalitre (GL) recovery target. Some
    farmer groups in the Southern Riverina and northern Victoria want the plan paused or their state governments to withdraw. Members of NSW Farmers Association
    passed a motion at their July conference to lobby the federal government to hold a Royal Commission into the Basin Plan.

    But while such decisions are being made in response to issues with the Plan, especially an assumption that it is responsible for many areas of the Basin
    now having zero water allocation, a solution is not as simple as pausing the Basin Plan.

    The dairy industry has largely supported the Basin Plan, mainly because it is underpinned by science and economics. A plan that ensures a balance between
    irrigation and water required to maintain river, wetland and floodplain health is not just necessary, it is good policy.

    The Australian Dairy Industry Council (ADIC) has argued through countless submissions to government that for the Basin Plan to have the most impact, the
    acquisition of water for environmental use must always be rooted in scientific and economic evidence.

    Not only that, but the government must also ensure an open and efficient water trading market, coordination between water recovery programs such as irrigator
    buybacks and infrastructure reform, respect for individual property rights, and consultation with affected communities.

    Investors, especially, have copped blame for driving up the price of water in an already stressed market.

    In recent months, horticulture groups have urged Minister Littleproud to put a temporary ban on investors buying water and holding on to it for the next
    year. The government responded by announcing the Australian Competition and Consumer Commission (ACCC) will investigate markets for tradeable water
    rights in the Basin.

    The ADIC has not joined this push to ban the Basin Plan or investors. Water policy experts, including Aither, have found the market to be working effectively
    and that high prices are the result of high demand and low supply caused by persistently dry conditions and below average rainfall.

    Ultimately it is the devastating impact of drought that is most responsible for rising water prices.

    Over the past 30 months, many parts of the Basin have received the lowest rainfall on record, particularly around the Border Rivers – a trend that is set
    to continue in 2019-20 given the Bureau of Meteorology’s forecast of below average inflows.

    It is important to remember that water prices during the Millennium Drought in the early 2000s, prior to the Basin Plan, were significantly higher than
    they are now.

    For most of that dark period allocation prices in the Southern Basin were over $500 per megalitre (ML), while in June 2007 it peaked at a whopping $1,400/ML
    in the Murrumbidgee.

    To put this in perspective, the Australian Bureau of Agricultural and Resource Economics (ABARES) is predicting an average annual water price of $473/ML
    in 2019-20 for the Murray trading zones.

    While this is not good news, the best chance to increase water availability and lower water prices in the Basin is for the federal government to get behind
    large scale water supply projects to safeguard industries and Basin communities from drought and decline.

    The ADIC has requested the government to commission the CSIRO to develop a transformational water supply blueprint for Australian agriculture.

    The government, meanwhile, has announced the development of a National Water Grid to bring together water experts, scientists and economists to look at
    how large-scale water diversion projects could deliver reliable and cost-effective water to farmers and regional communities.

    Ultimately, it is not the answer to simply abandon the Basin Plan. The dairy industry, together with the National Farmers’ Federation, other farmer groups,
    and federal government, are working to relieve pressure on irrigators while ensuring a healthy river system.

    – Terry Richardson, ADF President

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    Australia’s climate change policy needs to focus on a global response

    Australia’s climate change policy has revolved around whether the climate is changing, to what extent has it been human induced and the country’s response,
    by way of an emissions reduction target. These issues were front and centre during the election campaign, with all political parties providing the
    electorate with vastly different policy approaches to consider. The problem with this debate is it has focused narrowly on what Australia is doing.
    It has completely ignored the role of other nations and Australia’s role in influencing their positions, in particular those countries who are underperforming
    or not participating.

    The climate is changing, and humans are responsible for some of it
     
     The International
    Panel on Climate Change (IPCC), and many other scientists across the globe, have demonstrated that the earth’s climate is changing. In their 2013 report
    they found surface warming increase of 0.85 °C from 1880 to 2012, ocean warming by 0.11°C per decade from 1971 to 2010 and global average sea level
    risen at the rate of 1.7 mm/year between 1901 and 2010. The panel attributed these changes to the earth’s nature weather cycle in addition to atmospheric
    concentrations of human induced greenhouse gases of carbon dioxide, methane and nitrous oxide increasing by 40 per cent since 1750.
    The consequences of climate change vary depending on location. Rising sea levels, changing precipitation patterns and more frequent extreme weather events
    like heat waves will occur across the globe as temperatures increase. Some countries like Russia may benefit while others like Bangladesh will be severely
    impacted. Generally, countries closest to the equator will be most negatively impacted and less developed or low-income countries will have the lowest
    adaptive capacity.
     
    The Abbott, Turnbull and Morrison Coalition Governments have been acting on climate change
     
     In December 2015,
    the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement was signed by 196 countries, including Australia under the Abbott
    Coalition Government, to combat climate change. The agreement aims to keep global warming below 2°C from pre-industrial levels through nationally determined
    contributions (NDCs) to emission reductions. An NDC is a country’s statement on what emissions reduction target it is setting, how it intends to achieve
    it, what adaptation measures it will be pursuing and from 2020, report progress. The agreement also aims to significantly strengthen national adaptation
    efforts by enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change.
    Under the agreement Australia, which is responsible for 1.45 per cent of total global emissions, set itself a target of reducing 26-28 per cent CO2-e below
    2005 levels by 2030. This is comparable with most countries with similar or higher polluting profiles. The United States of America (12.1% of total
    emissions), Japan (2.82%), Canada (1.96%), Indonesia (1.49%) and Mexico (1.27%) are all in the 25-30 per cent reduction range. Brazil (5.7%) and South
    Korea (1.28%) are higher at 37 per cent and the EU (8.97%) is the highest at 40 per cent. The key concerns are China (23.75%) who are allowed to increase
    pollution to 2030, India (5.73%) who have an emissions intensity target translating to a significantly lower target than other G-20 countries, and
    other smaller countries who are not signatures to the agreement.
    The Australian Government has been delivering various emission reduction initiatives to achieve its international targets. Under its flagship $2.55 billion
    Emissions Reduction Fund, a policy implemented by Tony Abbott as Prime Minister, has delivered over 700 emission reduction projects. These have reduced
    over 190 million tonnes of CO2-e from the Australian economy. As a result, the government’s review of its climate change policies found Australia to
    be on track to meet its Paris Agreement target and its second Kyoto Protocol target (another emissions reduction agreement), which requires emissions
    to be reduced by 5 per cent below 2000 levels by 2020. This follows Australia exceeding its first Kyoto Protocol target to limit emissions to 108 per
    cent of 1990 levels over the period 2008–2012 by 128 million tonnes of Mt CO2-e.
    The re-elected Morrison Coalition Government will continue with its current policy of meeting the 26-28 per cent it set in 2015. It will do this largely
    through a $3.5 billion Climate Solutions Package, which it announced on 25 February 2019. The package includes a $2 billion Climate Solutions Fund
    (an extension of its original Emissions Reduction Fund), investment in energy efficiency adoption and building the Snowy 2.0 Hydro Electricity Project.
    The ALP wanted stronger action on climate change through a higher emissions reduction target
     
     A Shorten Labor Government
    would have committed Australia to an emissions reduction target of 45 per cent on 2005 levels by 2030 and net zero pollution by 2050. This would of
    positioned the country as having one of the highest targets in world. It was intending to do this by focusing primarily on transitioning to renewable
    energy sources quicker than the government. It set a 50 per cent renewable energy adoption target by 2030 to be achieved through initiatives such as
    a $2,000 rebate for solar batteries for 100,000 households and doubling the original investment in the Clean Energy Finance Corporation by $10 billion.
    A higher emissions reduction target costs the Australian economy
     
     BAE Economics modelled
    the economic impacts of Australia’s two emission reduction targets. They estimate:
    • Cumulative Gross Domestic Product (GDP) loss of $62 billion under the 26-28 per cent scenario versus $472 billion under the 45 per cent scenario. This
      is a significant impact given the total size of the Australian economy is $1.3 trillion.
    • Real average wages to decrease $2,000 per annum under the 26-28 per cent scenario versus $9,000 per annum under the 45 per cent scenario.
    • Full time job losses of 78,000 under the 26-28 per cent scenario versus 336,000 under the 45 per cent scenario.
    • Electricity prices, which are already at excessive highs, to increase $93/MWh under the 26-28 per cent scenario versus $128/MWh under the 45 per cent
      scenario.

    The advantage for agriculture is it was to be excluded from the 45 per cent target. This significantly reduces the impact on the sector compared to
    other sectors. However, agriculture would experience indirect costs passed on by those directly impacted. BAE Economics estimate that for the livestock
    sector, which includes dairy, a decline between 0.7 to 2.6 in output will occur depending on the scenario.

    The impact of Australia’s emission reduction target depends on responses by other countries

     The difference between the two targets of the major parties is 19 per cent. This translates to 0.27 per cent of total global emissions
    (based on Australia’s current 1.45 per cent contribution). Assuming all countries remain the same by way of emissions, the impact of this on the
    climate is negligible. If other countries were to increase their emissions, then Australia would be in deficit both in terms of environmental and
    economic impact.

    Australia’s politicians are ignoring the benefits and issues with the Paris Agreement

    While global aggregate emission levels resulting from NDCs are expected to be higher over the reporting period, their implementation will lead to sizeably
    lower aggregate global emission levels than in pre-NDC trajectories. Unfortunately, estimated aggregate annual global emission levels resulting
    from implementation of NDCs do not fall within the scope of least-cost 2°C scenarios by 2025 and 2030 (a key target in the agreement). However,
    by lowering emissions below pre-NDC trajectories, the NDCs contribute to lowering the expected temperature levels until 2100 and beyond.

    Despite these achievements there are significant concerns surrounding the consistency, fairness and compliance with the Paris Agreement. Each country
    is required to submit its NDC every five years from 2015 to 2030. Based on the 2015 reporting:

    • Only 174 countries have submitted their NDCs. Of these submissions 161 were submitted on time. This leaves 22 countries without an NDC.
    • There is significant variation in each country’s emission reduction targets – type and number.
    • Reporting processes not only vary but are inadequate in terms of specificity, coverage and transparency/comparability.

    Australia needs to advocate for improvement to the Paris Agreement and adoption of a standardised emissions reduction target for all countries

    Climate change is a global problem requiring a global solution that is fair and equitable. This translates to all countries participating and adhering
    to a standardised policy framework. There should be one emission target type applied across all countries with calculation based on a ratio of
    total emissions (total Mt CO2-e) and wealth (nominal GDP). It should not be up to one country like Australia to run down its economy to achieve
    an aspirational target while others do nothing or worse, continue to increase emissions in the pursuit of economic prosperity. Adopting a standardised
    approach ensures the policy response is not only effective (at achieving the 2°C cap) but proportionate to who is causing the problem and their
    capacity to pay.

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