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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.


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.


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.


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.


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.


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.


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


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

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.


Stakes high in election

Australians will head to the polls on May 18 to cast their vote for who will govern the country for the next three years.

The stakes are high for all sides, with both major parties holding a slew of seats on narrow margins.
In Victoria, several seats are in play. In the state’s south-west, Corangamite, which includes dairy regions around the rural centre Colac, is held
by Liberal Sarah Henderson on just over 3 per cent.
In the north, Independent Cathy McGowan’s retirement as the Member for Indi has thrown that seat back into play. Irrigators along the Murray River
will no doubt vote for who they believe has a better vision for the Basin Plan.
In Central Queensland, the rural seats of Capricornia and Flynn, sitting just on either side of 1pc, offer another opportunity for farmers to play
a role in how the election plays out.
This will be a tough-fought campaign from all sides. But I expect it will be toughest in the regions, where farmers and rural communities have the
power to determine who will form the next federal government.
The Australian Dairy Industry Council has worked with farmers and dairy processors to identify a list of priorities and actions across trade, sustainability
and resource management that the next federal government should deliver.
Integral to securing a more sustainable dairy industry is an ambitious trade agenda. We are asking that the next government ensures high quality, comprehensive
outcomes for dairy in free trade deals with India, the Gulf Cooperation Council, Taiwan and Pacific Alliance, and the Regional Comprehensive Economic
The federal government must continue to invest in climate change mitigation research, and extension programs, as well as provide funding for drought
preparedness programs.
We are also advocating for tax relief to businesses installing or upgrading to more energy efficient or renewable energy systems.
Everything we are trying to achieve is to contribute to a profitable dairy industry.
Yes, the industry faces continued market volatility, drought, rising input costs such as fodder, electricity and water, and subdued farmgate prices.
But despite these, the outlook for dairy is positive. There is growing demand for high-value dairy products from a rising Asian middle class domestically
and abroad.
Advances in genetics, digital and other technologies can significantly improve farm productivity, supply chain efficiency and traceability and enhance
consumer purchasing power across the globe.
What we need is a political environment that recognises and understands the importance of the dairy industry to the national economy.
Dairy is still Australia’s third largest agricultural industry, but we are presented with an opportunity to grow the sector’s value.
The National Farmers’ Federation (NFF) wants to grow agriculture to become a $100 billion by 2030. Dairy must be a part of this ambitious target.
A courageous government will seize this opportunity and work with industry to address these challenges and opportunities.
Your vote counts on May 18. Vote for the person or party you think will give our industry a fair go to achieve its full potential.

– Terry Richardson, ADF President


Battles on many fronts

The dairy industry is in the fight of our lives on a number of fronts. While the drought continues, fodder and water are trading at record or near-record

For irrigators in northern Victoria, where the average price for water was recorded in February at $499 per megalitre, this is nothing short of a catastrophe.
That’s a $79/ML increase since the month before and 420 per cent higher than it was a year ago.
The current situation is untenable and must be addressed before we lose more farmers.
On a broader scale, I was in Canberra in March for the start of third round negotiations between Australia and the European Union over a new free trade
The EU is continuing to drive a hard bargain by pushing for the inclusion of geographical indications (GIs) in the agreement, banning Australian dairy
manufacturers from using product names which have a connection with EU countries, such as Parmesan and Fetta.
If the federal government caves to this demand, the dairy industry faces losing 22,000 tonnes of cheese varieties with an annual value of production worth
more than $180 million and export sales averaging more than $55 million.
Even more worryingly, if Brussels succeeds in forcing us to extend GIs to capture packaging that evokes EU regions, a further 45,000 tonnes of local cheese
production will be affected, averaging $300 million in domestic and export sales per year.
This is truly alarming for our industry, which is still the third largest agricultural industry in Australia.
And if we are serious about growing the Australian dairy industry, we must also work constructively to solve the industry’s skilled labour shortage.
After scrapping the sub-class 457 visa last year and replacing it with a Temporary Skills Shortage (TSS) visa, which blocked a pathway to permanent residency
for skilled migrants looking for work on dairy farms, the federal government has now brought us a step closer to securing a permanent skilled workforce.
Under changes to the Australian Skilled Occupation List, high-level dairy farm managers who have responsibility for overseeing farming operations are eligible
for TSS visa entry to Australia for up to four years with the possibility of renewal and permanent residency via the 187 visa.
The pathway to permanent residency is vital to ensuring Australian dairy farmers can attract skilled overseas workers who will avoid Australia if they
can obtain permanent residency in other countries.
This outcome is good news for farm owners. The experience of regional communities around Australia is that migrant farmers not only fill labour shortages,
but they also bring with them new technological insights gained overseas to apply to Australian farming and revitalise local communities.
The industry has also achieved a victory in breaking the back of the despicable discount milk marketing ploy that has dogged us for eight long years.
Woolworths, Coles, ALDI and Costco have all raised the price of their cheap milk by 10 cents, with the increase going back to farmers. IGA is slowly following.
There is no denying that this is a great outcome, but while some producers have gained substantially from this initiative, most farmers won’t receive much
It at least sets the stage for a larger conversation around the value of the entire dairy cabinet, but it is vital that all dairy farmers receive a fairer
return for their hard work.
But while we speak about the industry, we must remember that it begins each day with people on more than 5500 individual farms sending milk off to be processed.
Every dairy farm relies on the commitment, enthusiasm, and hard work of these people for success.
However, I know from my own experience that dairy farming can be tough, and sometimes you have to reach deep for the commitment to get to the day’s end.
The nights can then be long, wondering what the next day will bring.
But I also know from experience that it is important to never think you are alone when there is uncertainty.
I count myself fortunate that I reached out, shared problems and talked issues through. I encourage anyone who finds themselves in a tough spot to do the
Even more important is for each of us to open the conversation with someone who might be in that position.

– Terry Richardson, ADF President


Checkout milk price key factor

The dairy industry has been crippled by the debilitating effects of $1-a-litre milk for more than eight years.

But now Woolworths has raised the price of its $1 per litre milk to $1.10, with the extra 10 cents to go, in full, directly back to farmers, there is for
the first time hope that we can beat this destructive pricing strategy.

This is a major victory and Woolworths should be congratulated for making the difficult, but right decision to ensure farmers get a fairer return for their
tireless work.

However, while we may regard this as a step in the right direction, it is certainly not the end of the battle against discount dairy.

Other supermarkets have so far refused to follow Woolworths’ lead. Coles has proposed a government mandated industry-wide levy, while Aldi has so far rejected
all calls to raise the price of its discount milk line, which retails for 99 cents-a-litre.

This sends a negative message to our farmers about the worth of their work and their product – especially when the major retailers have just raised the
price of bread due to high grain prices.

Coles, without a mechanism to ensure an increase in the discount milk price would go directly to farmers, has instead offered to collect donations at their

This suggestion is just another slap to their suppliers. Any suggestion by Coles that they can rattle the collection tin for struggling farmers shows how
out of touch they are. Farmers don’t want a handout. They run businesses and like all business owners, farmers want a fair price for their product.

Farmers are currently suffering through a severe drought, with production costs skyrocketing due to high grain, hay and water prices.

Supermarkets cannot continue selling cheap milk while simultaneously raising the price of other products to help drought-stricken farmers.

The last Dairy Australia National Dairy Farmer Survey, conducted in 2018, found farmer confidence in the future of the dairy industry has dropped from
75 to 47 per cent over the past four years.

Removing $1 milk will help restore farmers’ financial confidence, and also boost confidence in regional communities and small businesses.

Farming families put tireless effort and resources into producing a quality product, day in and day out, and to see it devalued to the consumer has a deep
and lasting impact.

Most shoppers are aware of how difficult the past few years have been for the dairy industry. We have been heartened by the outpouring of support from
all Australians, wanting to know which brands they can buy to support farmers.

The latest Dairy Australia Situation and Outlook report attributed a trend of declining farm profitability to soaring productions costs combined with relatively
steady milk prices.

Dairy Australia is forecasting national milk production in 2018/19 will fall below 9 billion litres for the first time since the mid-1990s, in another
blow to industry confidence.

It is clear something must change to reverse this trend of decline, and the retailers have an opportunity to come to the table and help us implement a

If more farmers leave because their milk price doesn’t reflect their high production costs, there will be a real danger of Australia soon not having a
dairy industry.

– David Inall, Australian Dairy Farmers CEO


Firm trade stand vital

Australia needs to stand up to the European Union and ensure our local dairy industry doesn’t suffer under a new free trade agreement.

The federal government is clearly enthusiastic about the prospect of securing a $100 billion trade deal.

Prime Minister Scott Morrison went so far as to pledge to “accelerate” negotiations for greater Australian export access into Europe at last year’s G20
leaders’ summit.

But as part of the negotiations, that started in mid-2018, the EU is pushing for Australia to accept and implement strict labelling rules that could spell
disaster for our dairy industry.

Called geographical indications (GIs), the stated purpose of these rules is to “protect distinctive EU food and drink products from imitations in Australia”,
but in practice imposing such restrictions poses a grave threat to existing locally produced dairy products.

Such a move could see a ban on locally produced Feta, Parmesan, Haloumi and eventually Greek Yoghurt.

Dairy producers will be forced to change the names of these products and consumers will be confused and frustrated at no longer being able to find some
of their favourite dairy products on supermarket shelves.

Not only that, but European negotiators are also arguing to extend the scope of GIs beyond the name of products to include colours, flags, symbols, script
or anything that might evoke the source of a product.

A quick look in any supermarket cheese section will show you that many Australian dairy manufacturers have built their brands on their cultural heritage,
and now face the possibility of having that taken from them.

This is a nightmare scenario we cannot let play out.

Australia has a prominent dairy sector, worth $4.3 billion at the farm gate alone, and is still the country’s third largest agricultural industry.

We produce over 22,000 tonnes of cheese varieties that are of risk each year, with a value of production equalling more than $180 million per annum and
export sales averaging over $55 million.

And alarmingly, the EU wants to reserve the right to add names to the GI list in the future.

Greece is currently applying to have the term ‘Greek Yoghurt’ protected as a GI.

This is just a taste of things to come if Australia allows GIs to be included in a trade deal with the EU.

The dairy industry does not oppose the concept of GIs that are linked to a specific place, but we do have concerns with restricting common food names –
for example, the use of Camembert as a common name, in comparison to Camembert de Normandie, which is clearly linked to Normandy in France.

A further 45,000 tonnes of local cheese production, averaging $300 million in domestic and export sales per year, could face future restrictions on production
and sale if strict GI evocation rules are applied under the FTA.

It is vital that the free trade agreement has benefits for both sides, considering the ease of access European dairy manufacturers have to the Australian

These trade negotiations should allow both Australia and the EU to capitalise on an improved commercial relationship.

But we need to ensure this deal frees up the trade relationship rather than creates technical barriers such as GIs.

The future of the Australian dairy industry depends on the federal government’s courage to stay firm in trade negotiations and push back against the EU’s
demand to enforce GI restrictions.

– Terry Richardson, ADF President


Learning from crisis

When Australia’s largest dairy processor and farmer co-operative Murray Goulburn announced in April 2016 that it was slashing the farmgate milk price in
an attempt to claw back $183 million it had already paid to suppliers, the dairy industry was plunged into a deep crisis.

Farmers were rightly outraged that the industry became paralysed by events that were seemingly preventable.

The Australian Competition and Consumer Commission (ACCC) took action against the processor in the Federal Court for making false or misleading representations
to farmers that it could maintain its opening milk price of $5.60 a kilogram milk solids and a forecast final milk price of $6.05/kg MS when in fact
this was not sustainable.

But while Murray Goulburn admitted to this breach of the Australian Consumer Law, which at the time carried a maximum fine of $1.1 million, the ACCC elected
not to pursue a financial penalty because as a farmer co-operative, any penalty would likely end up being paid by the very people who were hurt by
the company’s actions in 2016.

Instead, the blame was dumped squarely at the feet of former managing director Gary Helou, who copped a $200,000 fine for being “knowingly concerned” in
Murray Goulburn’s false or misleading claims about the farmgate milk price.

He must also pay $50,000 to help cover the ACCC’s legal costs and has been banned for three years from any involvement in the dairy industry.

This outcome should have brought closure to the farmers whose livelihoods were affected by the milk crisis.

But instead, new questions are being raised over the strength of penalties meted out for misleading suppliers and the need for greater information sharing
in ensuring robust accountability processes.

Some farmers have reacted angrily to a $200,000 fine which appears to pale in comparison to the $10 million Mr Helou reportedly pocketed during his tenure
at the helm of Murray Goulburn – especially when the co-op’s former unitholders have been ordered to pay the ACCC’s remaining legal costs, also amounting
to $200,000.

Farmers are valid in their anger, considering the impacts of the milk crisis on their own businesses and the whole industry.

But we must remember that at the time the ACCC intervened, the maximum fine that could be imposed on an individual for this breach of the consumer law
was just $220,000.

This has subsequently been increased to $500,000 under new legislation, but the door is open to discuss whether penalties imposed for breaches of the consumer
law and Corporations Act are a sufficient deterrent for executive wrongdoing.

We must consider how these penalties improve governance processes, provide accountability and maintain the trust between farmers and their processors that
is vital for success.

The Murray Goulburn saga reinforces the need to maintain high standards of corporate governance. Anyone who wants to retain a position on a company’s board
of directors must be prepared to be held ultimately accountable.

The dairy industry’s primary goal in the past three years has been to ensure that another governance catastrophe never happens again.

Australian Dairy Farmers, as the peak dairy farmer body, has done its best to bring the industry together behind measures that will help repair relationships
across the supply chain.

The Federal Government is now moving closer to implementing a mandatory code of practice for the industry.

There has been intense community interest for the health and well-being of farmers.

It is encouraging to know that Australians who aren’t involved in the dairy industry understand the stresses caused by the events of 2016.

The dairy industry needs closure and we are trying to achieve that outcome.

The recent judgment against Murray Goulburn’s former management is another step towards repairing trust.

The loss of the Murray Goulburn co-op – which for nearly 70 years was the cornerstone of the Australian dairy industry – continues to cast a long shadow
over the industry.

We must take seriously the lessons learned from the 2016 milk crisis so that we can genuinely rebuild trust between farmers and processors and repair once
strong relationships.

– Terry Richardson, ADF President


Dairy’s watershed year

It has been a big year for the dairy industry and ADF – sometimes difficult, but often rewarding. I want to reflect, in the final Dairy Insights for the year, on some of the significant moments from the past year.

The industry lost Murray Goulburn, which for nearly 70 years has been a bedrock of the Australian dairy industry – our biggest farmer co-op and our largest
dairy processor.

The sale of Murray Goulburn to Canadian dairy company Saputo has no doubt changed the dairy landscape forever and the industry is still coming to terms
with this event.

ADF led an industry discussion on the code of practice. Working under the auspices of the ADIC, we reviewed the voluntary code of practice and, through
consultations with our state dairy farmer members, developed draft clauses to be incorporated into a new code of practice being implemented by the
federal Government.

The Government is now using the ADIC work as a foundation to engage farmers in consultations around what they want in a mandatory code of practice.

We called for a change to the federal Government’s skilled worker visa system. We told the Government that the job of dairy farmer needs to be upgraded
from an unskilled occupation to skilled. Not only that, but we argued that the visa systems should provide skilled workers with access to longer visa
period and a pathway for permanent residency.

This is important because the industry is losing too much money – up to $364 million per year – due to labour shortages. The dairy industry employs more
than 40,000, but we will continue to suffer if we can’t gain access to skilled labour.

This year we pushed for the Murray-Darling Basin Plan to include a socio-economic test that is fair for all farmers. Dairy communities cannot tolerate
any further job losses or having to pay for increased temporary water costs due to less water being available. We advocated for a test that will deliver
neutral or positive benefits for Basin communities.

We have also maintained an active policy focus on key areas such as animal welfare, trade and market access, biosecurity, and social licence.

But despite the achievements of this year, there is still much work to be done. This has been a watershed year for the dairy industry. I also want to highlight
some of our priorities going forward.

Collaboration is vital between ADF, the state dairy farmer organisations, our industry services body Dairy Australia, and indeed across whole dairy value

With the departure of our major co-operative the role of industry leadership falls fairly and squarely with farmers through their representative and service

There is no institution to provide weight to the farmers voice. That will only come with farmers speaking as one.

We are not in competition with one another at the farmgate, and there can be no reason to depart from the original purpose of ADF “to promote the interests
of the dairy farmers of the Commonwealth in all matters affecting them.”

To do this requires we engage in the painstaking work of building consensus. There will always be gaps and ambiguities, but is our greatest advantage in
acting alone or together in the long-term interest of the industry?

We also need to seriously consider greater investment in leadership opportunities. We must have open and honest discussions about the future of dairy advocacy.

Farmers should have greater ownership over the achievements and opportunities in the industry, and we need to develop opportunities to engage the next
generation and harness their passion for the dairy industry.

Looking ahead, it is important to keep in mind that while we are an industry that has been under intense pressure, we are also an industry that has the
know-how and resilience to overcome adversity and thrive in the long term.

– Terry Richardson, ADF President


Drought policy priority

This season on my farm we are paying $470 a tonne for grain. Last year we paid around $280/t but that’s a sign of how tough things are, and how the current
drought is affecting all farmers. Others I know are doing it tougher.

Prime Minister Scott Morrison has toured drought-affected regions and convened a summit to talk tactics on getting through the current drought and preparing
for the future.

Any opportunity to make drought preparedness a government priority cannot be squandered. We urgently need an agreement between commonwealth and state governments
to provide a national approach to drought preparation, response and recovery.

Unfortunately, there isn’t much chance of this drought lifting, despite recent rainfall acros some parts of the country. Australia just experienced the
driest September on record and the Bureau of Meteorology is predicting a 70 per cent chance we will soon be hit with an El Nino event.

Fodder remains scarce and water prices have continued to surge. Farmers are now looking to secure new season hay for their livestock, which has pushed
up demand. The result is near record price hikes.

Worryingly, prices will most likely rise further as demand for feed continues to come from across the country, outstripping supply. This means that securing
long-term supplies of new season hay could be an issue.

Some farmers are resorting to alternative feeds such as sorghum stubble and cane tops. But with crops like canola being cut for hay and silage, farmers
should be cautious and get feed tests.

Water prices are also a point of concern. Both northern Victoria and Murray water prices are at record highs. In northern Victoria, prices have skyrocketed
by 202 per cent since last year despite less water being traded, down 53,770 megalitres (ML). The average price reached $321/ML in September, the highest
since 2009. Demand continues to grow as tight supply is driving the price up.

The Murray irrigation area has a similar position – the average price recorded in September was $351/ML, up 179 per cent from the same time last year,
despite the amount of water being traded decreasing by 22 per cent. The current price trend is being driven by lack of rain and reduced inflows. Our
main concern is that if all weather forecasts prevail, there will be no respite from the high prices.

There has been little rainfall and drought conditions have only intensified. Unfortunately, this appears set to continue with the Bureau of Meteorology
now indicating eastern Australia will likely remain dry.

Queensland, Tasmania, Victoria, eastern South Australia and southern New South Wales are all expected to have below average rainfall, while Western Australia
has about an equal chance of exceeding the median rainfall. The above average temperatures are likely to remain to at least the end of 2018. These
conditions will continue to pose challenges to producers currently affected by drought.

I would encourage farmers to use the different drought assistance packages being offered by state and federal governments. Information about all these
initiatives is available on the relevant government websites.

Dairy Australia is also a valuable resource for information and advice on managing drought preparedness. The latest Situation and Outlook report is out
this week and paints a more complete picture of seasonal conditions and critical factors for farm performance.

Many are calling this the worst drought in living memory. We’re all praying for rain, but with no end to the drought in sight, we must be realistic about
our options and talk seriously about safeguarding against future droughts.

Dairy farmers aren’t just part of a broad industry; we are a community. Don’t be afraid to seek advice, talk with others and be aware of others who may
need support.

– Terry Richardson, ADF President


Retailers must do the right thing by dairy farmers

For nearly a decade, dairy farmers have been wearing the pain caused by discounted products, whether it’s $1 per litre milk or cheap cheese.

I remember when the first $1 per litre products went on supermarket shelves on Australia Day, 2011 and the outrage caused by the resultant “milk wars”.

Prior to this marketing campaign, the last time milk was $1 per litre was around 1992. But in 2018, it’s impossible to live on a wage set at 1992 levels.

Now there is momentum to turn things around and give value back to the dairy supply chain.

Some supermarket chains have announced plans to help drought-affected dairy farmers.

Woolworths plans to introduce a special range of milk priced at $1.10 per litre in mid-October. Homebrand 2L and 3L milk products are currently on shelves
for $1.10 per litre until the drought-relief milk product launches.

Coles is now selling its 3L Own Brand milk products for $3.30, with the money collected to be distributed back to farmers via a fund with an application

Both have been upfront about the fact that their initiatives are only short-term measures that aren’t intended to solve the problem of discounted dairy

As President of Australian Dairy Farmers, I represent farmers all across the country. Many are calling me asking how they are eligible to receive a fair
price from either of these plans.

The problem with both plans is that many regions of Australia affected by drought with high production costs impacting thousands of dairy farmers, yet
most of those farmers won’t be able to claim a benefit from either initiative.

Coles has encouraged any dairy farmers to apply for a grant through their fund, but those in drought-declared areas will be given priority, while

Woolworths intends to distribute the extra 10c from their drought-relief milk back to farmers via their processor.

While I support measures that see farmers paid a reasonable price for their hard work and dedication, I must ask, “Is this really the best we can do?”

Certainly ADF and our state dairy farmer organisations believe all dairy farmers must see a benefit from any increase in retail milk prices.

Farmers put tireless effort and resources into producing a quality product. And it leaves a deep and lasting impact to see your hard work sitting on a
supermarket shelf for less than the price of water.

This pricing practice is not viable and we urgently need a shared solution to assist in building the long-term sustainability of Australian dairy farmers.

Ultimately, we must push for a permanent end to discounted dairy products, whether it’s $1 per litre milk or cheap cheese.

There is a groundswell of support for farmers hit hard by the drought and supermarkets have the best opportunity to scrap their discounted dairy products
right across the breadth and depth of the dairy cabinet.

The supermarkets know what farmers want. They know what they deserve. It’s now time for them to take a big step forward and do the right thing by ending
this pricing practice.

But until that time comes, I encourage the public to help dairy farmers by continuing to buy branded dairy products.

– Terry Richardson, ADF President


Time for young dairy representatives to step forward

I was in Canberra last month and witnessed first-hand the political turmoil that rocked the federal Government and which ultimately led to a change of
Prime Minister.

Ironically, I was accompanying a group of young dairy industry professionals as part of the Developing Dairy Leaders Program, run by Marcus Oldham College
with support from Australian Dairy Farmers and Dairy Australia.

The aim of the program is to expose the next generation of dairy representatives to industry advocacy and the Australian political process.

What they received was a valuable bonus lesson: leadership is everything.

Many of these young farmers had never visited the “bush capital” and had little understanding of how Canberra operates. For them, it was eye-opening to
be caught up in the feverish atmosphere that engulfed the city during those four days.

But the leadership lesson is transferrable to the dairy industry, which we all know has struggled with its own leadership issues in recent years.

We talk a lot about unity. We talk about creating the mindset of one team, one dream. But at some point, these words lose their value if we fail
to act.

The young dairy professionals I accompanied last week were in fierce agreement that unity is the vital element to ensuring a successful dairy industry.

This sentiment was reinforced by Agriculture Minister David Littleproud, who told the group that if they want to be taken seriously and influence federal
politicians to achieve real outcomes for the dairy industry, the sector first needs to show leadership.

I have written before about the fractured state of the dairy industry. Our differences have become pronounced. Too often, we think only about the interests
of our individual regions, instead of common ground that could provide a national, tangible benefit for dairy farmers.

This makes it difficult for political decision-makers in Canberra to understand which policies are likely to have the greatest benefit for farmers. Politicians
love an industry that brings to them solutions instead of problems. But instead we have an industry too concerned with its internal issues to agree
on solutions to the many problems we face.

As we saw in Canberra, this situation can have many consequences but won’t lead to outcomes.

The question is usually posed on social media: why can’t dairy advocacy groups work together on behalf of farmers? The
simple answer is there’s no reason why we can’t.

ADF, as the national peak organisation for dairy farmers, is the group responsible for taking solutions to Canberra and asking the federal government for
its support in enacting these measures. To be effective, we need constructive input from farmers across the country who want to ensure a secure and
prosperous future for the dairy industry.

Hopefully, this means you. We need you to join your state dairy farmer organisation and join the cause. Contribute your ideas and help us maintain a sustainable
dairy industry.

– Terry Richardson, ADF President


Dairy Code of Practice must address key concerns

Farmers want protection. They want to know that if they have a contract dispute with their processor, there is a mechanism in place to ensure their interests
are safeguarded. They want certainty that there will never be another milk price crisis.

The dairy code of practice which has been in place now for just over a year was the industry’s response to address the power imbalance between farmers
and processors. Before the code was introduced in July last year, farmers had little protection against practices used by some processors.

The performance of the code of practice was reviewed by the Australian Competition and Consumer Commission (ACCC) in its dairy inquiry.

Despite recommending that the industry proceed with a mandatory code, the competition watchdog acknowledged the significant effort it took to implement
the voluntary code and the positive impact of the code on current-year (2017/18) milk contracts.

But the risk for farmers remains the same and if success is to be measured solely by the strength of the code to eliminate risk, the current code needs
strengthening. Some processors are not signatories to the code and there are no penalties enforced for breaches.

How does this prevent a repeat of the milk price crisis? Farmers can take their business elsewhere if their processor isn’t a signatory to the code. But
this is a problem in regions with only one monopoly processor. It is not a viable solution and the risk is that suppliers could once again be forced
into hardship should the milk price crash.

The ACCC report noted that the current code does not include a mechanism to resolve disputes between farmers and processors – a key difference with the
voluntary Food and Grocery Code of Conduct, which introduced an independent adjudicator to resolve complaints.

If a revised code is to provide adequate protection for farmers, it must have binding sanctions for non-compliance and independent management oversight
– including reporting and review – of code conditions.

The ACCC report generated considerable discussion around the benefits of a mandatory code. They argued that a mandatory code would eliminate this risk
for farmers, providing them with greater protection and paving the way for increased farm investment and processor competition.

But there are still many unknowns that must be investigated before the industry can proceed with a new version of the code.

The dairy industry will wear the burden of paying for administering a mandatory code. Despite media commentary suggesting the cost would be negligible,
it is a requirement of the federal Government’s Cost Recovery Guidelines that those affected by the code must pay for its administration.

Part of the code of practice review process is that we assess the potential benefits of a mandatory code to farmers against the expected costs to farmers.

If the decision is made to proceed with a mandatory code, the impact must be fully understood. It will be extremely difficult to reverse the decision if
a mandatory code doesn’t operate as farmers expect it should.

We understand the desire for quick action, but farmers should expect their national representative body to conduct this review in a considered and comprehensive

At the end of the process, regardless of the outcome, this will be a significant step with long-term ramifications for the industry, so we must get it

It is vital that farmers have the best information available to them and it is our job to provide that guidance and clarity as we are committed to working
on improved contractual arrangements for farmers and rebuilding confidence in the industry.


United we stand, divided we fall

It’s not news to say that the Australian dairy industry is highly fractured. Divisions exist all along the supply chain, often for historical reasons.

We should acknowledge the impact of the challenges of the last few years – the bargaining imbalance between different sections of the industry, volatile
markets reflected in farmgate milk prices, adverse seasonal conditions, and other factors outside farmers’ control.

While there has been hardship for many, this environment has facilitated a culture of blame and negativity, which now permeates the industry and could
have destructive consequences.

It is doing none of us any favours to attack our own. Our focus must be on working together to rebuild our industry.

Every step along the value chain depends on strong relationships, based on trust and confidence, the value of which we only know when it’s lost.

Much has been made of the trust deficit engulfing our industry. It has been broadly acknowledged that trust has been lost right across the supply chain.
But we cannot let anger describe us. We simply cannot allow the industry to implode.

Tough questions bring forward new options. Cynicism leaves us closed to new ideas. There is always be room for differences to be expressed. But this
process must be constructive.

It is vital that we find a way to cooperate, share knowledge and support each other – bring together our considerable capacity for optimism and resources
to face the future. Only through sharing our experiences can we truly understand and regain trust in our industry.

Unfortunately, this is common advice which is rarely followed. It is sad to note that the Australian dairy industry traditionally has failed to stick
together during difficult times, when unity is most important. We cannot let this vicious cycle of negativity continue.

We have a lot to be proud of as an industry. Our achievements are significant, but imagine how effective we could be as a cohesive, united industry?
That’s how we have an impact. That’s how we influence decision makers.

We need to show our unity of purpose, shared belief and passion for the dairy industry. None of us by ourselves has an answer to what may be sought,
but unity brings an open, honest, and shared discussion about the challenges faced by our friends, neighbours, or the broader industry.

If we cannot deal with challenges as an industry, there is a real problem. We need unity, collaboration and support if we are to affect change. If
we don’t have farmers sitting at the table, we lose the opportunity to help ourselves and influence the future for others

How can we expect government to help us if we can’t first help ourselves? Government doesn’t want us to dump our problems on them. They want us to
seriously consider solutions that they can implement to benefit industry.

It’s time to stop being part of the problem and start contributing to the solution. Share your pride in the work we do and value the need to contribute
to industry development. Acknowledge the belief others have shown in us through investment and a shared desire for a sustainable industry.

Join a local branch of your state dairy farming organisation, bring forward your ideas and help rebuild a strong and vibrant dairy industry.

Engage with industry leaders at all levels. They need to hear from you. Reach out with respect and ensure they have an opportunity to walk with you
and share your issues.

Be tough on issues but also respectful to our friends and others who are taking action on your behalf.

Our industry depends on our ability to unite.


A conversation we need to have

Farmers are admired for the way they reach out and help neighbours and friends in time of need. However, they are also renowned for keeping their problems
to themselves.

Despite farming being a good industry to be in, we are all familiar with the challenges of farm life.It can be tough at times. Financial pressure. Overwork.
Isolation. And it is a tragic reality that this takes both a physical and mental toll on the health of individual farmers.

 A report by the National Centre for Farmer Health found that rural populations have an elevated risk of suicide, with a 66 per cent higher
risk of death than those in metropolitan areas.

Stress and depression can have tragic consequences and while there is no difference in the prevalence of mental illness between city and regions, those
in the country remain at a distinct disadvantage to our city cousins.

It is harder to find help in regional, rural or remote areas. Poor access to services and professionals, cost, and continued reluctance to seek help all
contribute to more pronounced mental illness consequences in rural communities, including a suicide rate almost double what it is in the cities, according
to the Australian Institute of Health and Welfare.

A report by mental health charity Sane Australia also found that access to medical assistance in the bush is compromised, owing to around 50 per cent less
money being spent on mental health services in rural and remote Australia.

Add to this travel times required to reach medical services and the stigma around mental illness still felt in many smaller communities and the issue becomes
a real problem.

It is a problem that extends beyond the Australian outback. We can look to the United States to see that our farmers are not alone in battling depression
and other mental health issues.

The US Centers for Disease Control and Prevention compiled a breakdown of suicide rates by profession, and farmers have the highest rates of suicide by
more than 30 percent. This study found almost identical factors contributing to depression amongst primary producers, including social isolation, financial
strain, and barriers to seeking mental health services.

The statistics are clear considering the Australian dairy industry is in a period of recovery after two challenging seasons and cash flow for many farmers
remains under pressure, while the global dairy industry continues to suffer a downturn. There are reports from the States that dairy farms are disappearing
due to the downturn and many farmers, while incredibly resilient, are now at poverty level.

We tend to acknowledge the strengths and the virtues of the dairy industry, such as improved prospects in a global market, but we must also pay attention
to the many farmers continue to suffer significant financial pressure.

We understand some farmers are suffering emotionally and physically because they simply do not have the resources to get by. We are aware of families suffering
because the farm must come first, and the farm is struggling.

There are of course understandable sensitives around pride and privacy and the silence can be deafening.

This could be because key individuals and organisations do not realise this situation exists, or because farmers are trying to project a positive but unrealistic
image of our industry.

There is little point in talking about where we will be in two years’ time if we can’t get through the present.

Some of the consequences of this silence include farmers feeling isolated or not realising they could seek help, farming families suffering short and long-term
damage as they try to cope, pressure on paying bills, impact on children’s education and farmers departing the industry.

This is a conversation we need to have. And we need to take care that we are not blaming farmers for poor business skills, or some other perceived ‘lack’.

We must find ways to talk about it, so we can create positive opportunities for farmers to help themselves and for others to help them. We must aim to
take away the stigma associated with financial stress. We’re all in this together.

If you or someone you know is struggling with mental health issues, call:


Leaders urged stay course on Basin Plan

The Murray Darling Basin Plan has been subjected to countless reviews and inquiries since its inception, but the message from irrigators remains clear
– we cannot abandon the plan.

A recent inquiry by the Murray Darling Basin Authority recommended slashing the water recovery target by 70 gigalitres (GL) – 18 per cent – to lessen the
impact on irrigation communities.

Such a move has been supported by farmers, but it has been bitterly opposed by environmental groups and the Greens, who claim the Basin Plan is failing
to deliver for the environment.

The Greens have already succeeded in having the proposed changes to the federal Water Act disallowed by the Senate, but the issue is expected
to return to the upper house on May 7 and could threaten the entire Plan.

This will surely inflame tensions with Victoria and NSW. The two states have already flagged a willingness to pull the plug on the Basin Plan if the disallowance
motion gets through, leaving the whole show on the brink of collapse.

An emotional response would only be a disaster for irrigation communities along the east coast. We need our political leaders to come back to the table
in good faith with a vision to act on behalf of the whole community.

The Basin Plan is flexible — water should be able to come from a range of projects and alternative arrangements agreed by the States. It does not have
to be recovered solely from irrigators through on-farm projects. The key is that the ‘upwater’ is found without negative social or economic impacts
to communities along the river.

Australian Dairy Farmers has strongly advocated for the recovery of 605GL in offsets and would like to see the Basin states deliver the full 605GL to be
sure no further water is recovered from irrigators.

ADF and the Australian Dairy Industry Council have remained firm in advocating to halt Federal Government water buybacks at 1500 GL and urging the Government
to make clear that it will not seek to recover the additional 450GL if it would harm our farming communities.

The Government is restricted by the Water Act from purchasing more than 1500 GL. It has so far purchased around 1160 GL and can still purchase
340GL. But the 450GL of upwater is exempt from the restriction, meaning that about 790GL can still be bought by the Government.

Alternatively, the upwater can include entitlements given up by farmers in return for Federal funding of on-farm upgrades. Either way, we are faced with
the prospect of more water being ripped from productive agricultural use.

All states agreed to the offsets as a mechanism for achieving the goals of the plan. No State should be walking away from that agreed process now. The
offsets will deliver better environmental outcomes than merely sending more water down the river and hoping for the best.

The process is now being complicated further by a South Australian Royal Commission into the Plan, which intends to invite witnesses to attend formal hearings
from all four Basin states.

It is now likely this could change with the election last month of a new government in South Australia. The Australian Government is understood to be encouraging
SA Premier Steven Marshall to wind back the Royal Commission’s terms of reference.

This is only the latest in a series of reviews and inquiries that have for more than five years plagued the Basin Plan. Running concurrently with the Royal
Commission is a federally funded review which will, again, look at the effectiveness of the Plan.

We’re relying on all parties to reaffirm their commitment to the Basin Plan and reassure us that in retaining control of water, they are operating in good
faith. It’s time to quit the review process and continue with the agreed course.

The Plan will never be able to satisfy all parties equally. But it is vital we stick to the original goal and ensure the 2750GL target is delivered as
agreed, in part through 605GL in environmental offsets.


Skilled migrant labour vital for dairy

It isn’t easy being a dairy farmer. A lot of people think we just milk cows all day, but the reality is farmers need a wide range of skills to manage a
sustainable farm business.

In fact, the National Centre for Dairy Education estimated that dairy farmers need over 170 different skills to run a successful farm business.

Apart from milking, farmers have to feed livestock, make hay and silage, operate machinery, protect waterways, manage milk quality assurance and supervise

It really is a skilled profession, and one that rarely gets the credit it deserves. This is underscored by the crippling skills shortage that the industry
continues to face.

To this end, we rely on our political representatives to address the problem. Unfortunately, there is still a misapprehension from some in Canberra
that farming is an unskilled industry which should be able to source labour from the pool of unemployed in regional areas.

Reality again is different. The local labour just doesn’t exist, and many dairy employers rely on skilled migrants brought to Australia under subclass
457 visas to fill core on-farm roles. Many farmers even consider overseas workers to be integral to their long-term business strategy.

The dairy industry has found the 457 visa very useful. It has enabled us to recruit skilled workers from overseas for farm management roles. And it
has also given these workers a pathway to permanent residency. Everybody wins.

We were struck a blow when the 457 visa was abolished and replaced from March this year by the Temporary Skill Shortage visa, a scheme that operates
in two streams – for short-term labour for up to two years with the option of a two-year renewal, and for medium-term labour for up to four years.
Only the second stream offers the possibility of permanent residency.

Industries eligible under each stream is determined by the Regional Occupations List. Dairy farming is currently listed as a short-term skill, which
will only hamper our ability to use the scheme because the prospect of permanent residency is an important factor in attracting skilled overseas

It should be clear to even casual onlookers that agricultural industries are not just facing a “temporary” skills shortage. This is a problem we have
been battling for years and one that will only grow worse unless it is addressed now.

It is strange that dairy farming has remained on the Regional Occupations List yet has not been placed on the Medium Labour TSS.

One concern is that dairy farming could be wiped from the list entirely when the list is reviewed in July. We can’t let that happen and advocates in
the industry – including Australian Dairy Farmers and Dairy Australia – are working to ensure farmers’ voices remain strong on this issue.

It is vital that while the skills shortage persists, dairy farmers remain on the Regional Occupations List and that the federal Government take immediate
action to allow skilled overseas workers to gain longer visas and a pathway to permanent residency.

Given the size of the dairy industry it will take considerable time to correct the documented skills shortage with suitably qualified Australian workers.

In the meantime, dairy farmers will continue to struggle to staff their businesses with skilled workers and need to have reliable access to skilled
overseas workers.

Let’s not forget that farmers are not the only people who stand to benefit from allowing skilled overseas workers opportunities in Australia. A recent
report into the rural workforce found that immigrant farmers not only fill labour shortages, but they also bring with them new technological insights
gained overseas to apply to Australian farming, providing a valuable contribution to regional Australia.

As the Regional Occupations List comes under review, this insight hopefully provides our decision-makers with food for thought and an urgent lifeline
to an industry that still faces a critical shortage of skilled labour.


Dairy Bio – A day on the green

The ability to access new technologies is essential for dairy farmers to keep
the cost of production down.

DairyBio CRC and DataGene are two organisations that are steadily delivering solutions for the dairy industry in the fields of animal health, fertility, herd improvements and

Australian Dairy Farmers (ADF) and the Australian Dairy Products Federation recently attended the Dairy Bio CRC Open Day in Hamilton, Victoria. More than
150 dairy and livestock farmers, and service providers from all over Australia attended the Open Day to view how research programs are changing the
way dairy farmers innovate on-farm.

Hamilton’s Agriculture Victoria research farm is the site where all the large-scale, field-based pasture activities are located for DairyBio, and it is
the best place to see how innovations will deliver game-changing increases in pasture yield, persistence and quality.

Throughout the day we were informed of the world’s largest precision-planted ryegrass filed trial, viewed drones and ground vehicles with advanced sensor
technologies, walked through glasshouse facilities with the latest forage innovations and shown drought-tolerance trials which could be a game-changer
for farmers in the future.

One of DairyBio CRC’s major achievements is the invention of a hybrid technique for ryegrass breeding. This will unlock a 20 per cent yield advantage in
hybrid ryegrass varieties and also make it easier for plant breeders to use genomic selection and add novel endophytes in new pasture varieties. The
current modeling suggests that hybrid ryegrass could deliver a benefit of $300 per hectare to Australian dairy farmers.

These viable solutions are a great example of how industry and research sectors work together to deliver some of the most positive and permanent changes
to dairy herds and dairy pastures.

ADF recognises the potential productivity benefits of these new technologies and the need to innovate to compete on the global stage. The adoption of these
technologies is going to become increasingly important to help farmers remain profitable, improve natural resource use and facilitate adaptation to
ongoing business pressures.

The Australian dairy industry has achieved considerable improvements in farm productivity through the adoption of new technology and will continue to find
new ways to be more efficient, and environmentally sustainable while still remaining profitable over the long term.

David Inall

ADF Chief Executive Officer


Expressions of Interest Open for the ADF Board

Nominations for three Business Director positions and an Independent Director on the
Australian Dairy Farmers’ (ADF) Board opened today.

ADF is calling on its members to nominate eligible candidates for three Business Director positions and an Independent Director position.

ADF President, Terry Richardson said that we are looking for dairy farmers who are passionate about advancing dairy farming in Australia and have a strong
industry commitment.

“The maximum term a Business Director may serve is three years without submitting for re-election and an Independent Director may serve two years without
submitting for re-election,” said Mr Richardson.

ADF currently has two Business Directors who were elected at the 2014 AGM for a three (3) year term, these Directors must retire and may nominate for re-election.

Additionally, following the retirement of a past President in February, a temporary Business Director was appointed in May 2017 to fill the casual vacancy.
As required by the constitution, the Business Director must retire and may nominate for re-election.

The Independent Director was elected in November 2015 for a two-year term and must retire, however may seek to be re-appointed for another term.

Director elections will take place at the ADF’s next Annual General Meeting on Thursday 24 November, 2017.

The eligibility criteria for the position of Business Director are:

• Must be in the business of dairy farming

• Must be a member of Australian Dairy Farmers Limited; and

• Must be eligible under clause 4.2.2 of the ADF Constitution (no more than two Business Directors from any one state)

If you wish to receive a nomination form or position description please contact the ADF Office via (03) 8621 4200 or email

Applications close midday (AEST) Thursday 28 September 2017.

Terry Richardson

ADF President


Advancing Dairy Farming

Starting a new job (adventure) is sometimes difficult, particularly after a crisis.

Over the last couple of months, I have had the opportunity to sit down and discuss many of the issues that the dairy industry has faced.

Last year was an extremely challenging time in the world of dairy, both internationally and domestically.

Many farmers were hit by late season farmgate step-downs, which came after a difficult season due to dry conditions and increased input costs.The lack
of demand and oversupply of dairy worldwide caused prices to crash which left many farmers with significant debt.

No doubt it will take the industry a long time to recover, not just financially but emotionally as well.

Now, when some dairy farmers may still be questioning their future I challenge all within the dairy industry to work with each other in collaboration to
show our farmers what we can provide for their future.

The future of dairy must become exciting and rewarding. It needs to be driven by smart business decisions, strong leadership and the willingness to work
through our differences to get the job done.

This will not happen by accident, rather through visionary people working across the whole supply chain.

We realise that some dairy farmers have reached a ‘fork in the road’ and are looking for immediate answers. It would be wrong of us to say we had all the
answers, which we don’t.

Let’s get our collective efforts behind something we can do in partnership for our industry.

Advancing dairy farming is our top priority.

David Inall

ADF Chief Executive Officer


Federal Senate Passes the Effects Test

On August 14, legislation passed in the Federal Senate that will help level the
playing field for small businesses, including farm businesses.

Included in section 46 of the Competition and Consumer Act 2010, the misuse of market power provision will help address the current unequal distribution
of market power and encourage transparency to the benefit of producers, consumers, and retailers.

This tool will make available to regulators the capacity to judge whether a company is acting to unfairly reduce competition, regardless of intent. It
allows them to look at both the actual and likely impact on a market.

Small Business Minister, Michael McCormack said a fairer playing field is a big issue raised by small business people.

“From farmers to small supermarkets, from consumers to suppliers, many Australians tell me how these changes will stop firms with substantial market power
from engaging in conduct which reduces competition”, said Mr McCormack.

The effects test, as an additional tool for the ACCC, will address issues where a company with a considerable degree of power may be engaging in conduct
that pushes out smaller businesses or forces them into devaluing their product with lower prices.

With the potential for use in examining the business practices of the large supermarkets in Australia, the effects test could determine their impact on
a market and influence the development and marketing of products such as $1 per litre milk, and $6 kg cheese for example. Milk products at these prices
are unsustainable for all involved and the predatory pricing tactic has seen hundreds of millions of dollars lost from the dairy value chain.

Australian Dairy Farmers (ADF) has advocated strongly for this change since 2011. We believe the effects test will assist in preventing damaging practices,
including predatory pricing in future.

The introduction of an effects test is in line with competition policy around the world – Australia will be joining the clear majority of nations in the
Organization for Economic Cooperation and Development (OECD) who already have established effects tests.

The effects test is another tool to help provide integrity and transparency regarding the impact of retailer actions on suppliers.

These reforms will support consumers’ interests as well as dairy farmers by moving towards a more objective measure to assess the impact of anti-competitive

ADF would like to thank the Government and in particular the National Party, the Prime Minister, Deputy Prime Minister, the Treasurer, the Minister for
Small Business for their support and action on this important reform.

We also want to thank the Queensland Dairy Farmers Organisation and other state dairy farmer organisations for their tireless work in highlighting the
issues within the industry and working with us on this important reform.

David Inall



Happy 75th Anniversary ADF

On Wednesday 29 July 1942, the Australian Dairyfarmers’ Federation held their annual
meeting at the offices of the Victorian Dairymen’s Association in Collins Street, Melbourne.

During the meeting, one thing was certain and that was the need to bring together the different organisations and to unify the often-conflicting agendas
both at a state and national level.

Delegates from all over Australia came together to discuss the formation of an organisation that would represent the national interests of dairy farmers.

The result was the establishment of Australian Dairy Farmers’ Federation (ADFF) whose major objective was the promotion of dairy farming in the Australian
dairy industry and its place in the Australian economy.

Other than a variation in name, Australian Dairy Farmers’ (ADF) has for the past 75 years represented the interests of dairy farmers. Our organisation’s
mission is to provide strong leadership and representation for the continued growth of internationally competitive, innovative and sustainable dairy
farm businesses.

The milestones and achievements that have punctuated ADF’s rich history have been significant – not only due to the staff but largely the dairy farmers
who have contributed their time and knowledge throughout the years. Their important contribution has resulted in a strong, progressive and sustainable
industry representative of economic progress, environmental sustainability, and improved social well-being.

Now more than ever, it is essential that ADF continues to speak for dairy farmers with a unified voice.

ADF is committed to representing dairy farmers by communicating their needs to government in the areas of animal health and welfare; farming systems and
herd improvements; market, trade and values chain; natural resources; people and human capacity; and research and development.

To ensure the voice of dairy is heard, we will continue to seek government support and are committed to driving innovation, productivity, and profitability.

Our advocacy and policy work is at the heart of everything we do and is essential to ensuring Australian dairy remains competitive and well aligned for

Terry Richardson

Interim ADF President


Occupation lists offer mixed outcomes for dairy

The dairy industry has
received mixed outcomes from the Government’s 1 July amendments to the skilled occupation lists announced as part of the 457 visa reforms.

The Government’s decision in April to change the skilled occupation lists used to employ 457s and other permanent visas, introduce a Skilling Australians
Fund levy and put the Dairy Industry Template Labour Agreement under review, immediately affected dairy farmers and processors’ ability to hire overseas

The changes are being implemented in stages and the Australian Dairy Industry Council (ADIC) has been there every step of the way trying to lessen the

ADIC has been engaging in consultations with the Department of Immigration and Border Protection, lobbying relevant ministers and raising our concerns
with the Department of Agriculture and Water Resources about the impacts of these changes on the dairy sector.

We have also partnered with the National Farmers Federation and other commodities to present a united agriculture view.

On 1 July we learnt that our meetings, letters and submissions have had some impact.

Five occupations in the processing sector have been reinstated to the occupation lists, including Food Technologist – a highly specialised occupation which
processors have been unable to fill with local candidates.

There is still more work to be done.

The 1 July changes confirmed that ‘Dairy Cattle Farmers’ can only be employed for two years (with capacity for renewal onshore once only), with no pathway
to permanent residency. The announcement also confirmed the requirement for contributions to be paid to the Skilling Australian’s Fund, a levy which
could increase the cost of hiring 457s.

We are also frustrated that after initially being told our Labour Agreement would remain unchanged, we were later informed that labour market testing had
increased from six to 12 months and processing times had been extended from three to six months.

The dairy industry relies on overseas workers to fill labour shortage gaps in our $13.7 billion industry. Despite ongoing investment in upskilling and
training local people, demand continues to outstrip supply.

We must have the right policy settings in place to allow dairy farmers and processors to hire the people that they need to fill crucial roles.

ADIC will continue to make sure dairy’s voice is being heard as these visa reforms become finalised by March 2018.

By Terry Richardson

ADIC Chair


Opening Price vs Market Price

Over the past week, we have seen several milk supply companies announce their opening
milk prices for 2017-18. While there will always be some variances in the opening prices for different companies this price generally reinforces the
relative strength of market price improvement.

Further reinforced by Dairy Australia in their recent Situation and Outlook report, the improved outlook for 2017-18 offers sustainably better
returns with indicative prices for the year approaching $6 /kg ms.

Bega and Warrnambool both stated their opening price of $5.50/kg ms. Over the years both companies have been very consistent with their prices reflecting
the world market, and their farmer suppliers have been paid accordingly. We can be confident that the opening prices of both Bega and Warrnambool reflect
the steady upward improvements we have seen in world market prices over the past 6 months.

This week we also saw the release of Fonterra’s opening price for the coming year at $5.30 /kg ms, which is Fonterra’s true interpretation of the market
price and reinforces the variances in opening prices between companies.

A short while ago Fonterra announced it was going to pay an additional 40 cents/kg ms to all its suppliers for the 2017-18 year to account for the step-down
and claw back it applied to its suppliers last year.

While most Fonterra suppliers welcomed this news, there has always been concern that the 40 cents compensation payment would be marketed as part of their
price for the 2017-18 year.

In a recent meeting with Fonterra, ADF was assured the 40 cents would be defined as a payment on top of their market price for 2017-18 and not actually
part of the price. ADF was concerned that this compensation payment if marketed as part of their opening price to farmers, could be used to give Fonterra
a perceived unfair advantage over all other companies.

We believe that companies who did the right thing by their suppliers for the 2015-16 year should not be accused of lagging behind Fonterra’s price for
2017-18. The announcement of the additional 40 cents as compensation was for the major step downs and clawbacks Fonterra applied to their suppliers
during May 2016.

So, it was with considerable disappointment that we saw Fonterra’s announcement of their opening price and the supporting media release from Bonlac Supply
Company. In their communications, they portrayed their opening price to incorporate the 40 cents to make the price $5.70 /kg ms, which makes them look
like they are 20 cents/kg ms ahead of the competition.

Not only is this unfair to other companies which are above the Fonterra announced $5.30 opening market price, but it is also misleading to all their suppliers.
It is a fact that the 40 cents/kg ms to be paid to all Fonterra suppliers this year is a compensation payment for 2015-16 – and should not, at any
time, be characterised as part of the market price for 2017-18.

This past year, ADF and our state member organisations have worked in collaboration with companies to develop a Code of Practice on Contractual Arrangements.
Most of the dairy companies participated in the development of the Code and agreed that one of the most important elements of the Code was the need
for greater transparency in pricing for farmers.

By monitoring the application of the Code with farmers, we will be able to assess whether companies are conforming to the transparency principals outlined
within the Code of Practice.

There is a real danger that Fonterra’s current characterisation of the 40 cents/kg ms being added to their market price for the year will give the wrong
signal to all farmers and other companies that transparency only goes a small way.

It is important that all dairy companies remain fair and transparent in their pricing. The inconsistencies have indicated Fonterra and BSC are not being
completely transparent with their suppliers. These types of contradictions are nothing but misleading at a time when the dairy industry has committed
to rebuilding trust along the supply chain.

John McQueen

Interim ADF Chief Executive Officer


Milk Price Announcement – Murray Goulburn

The value of trust
and loyalty in any business relationship cannot be underestimated. For the dairy industry, a strong relationship, based on the pillars of trust and
commitment, has been an essential part of growth and investment.

Across a large part of the current dairy landscape, not only has trust and loyalty been compromised, but so too has confidence. We acknowledge the priority
being given to restoring relationships, but we also acknowledge this will take some time to achieve.

To ensure ongoing growth and profitability, there is agreement that our industry relies on all elements to operate effectively. Dairy farmers need processors,
processors need retail outlets and retail outlets need consumers.

The news of Murray Goulburn’s opening price and expected farm gate returns for the 2017-18 season has come as a severe disappointment to their farmers’
suppliers and the industry.

Their announcement comes at a time when their competitors have a growing demand for milk supplies, largely due to the positive movements in the world market
and the confidence that our farmgate prices will follow. Unfortunately, it appears the path Murray Goulburn has taken has left the company facing severe
commercial challenges.

This will also have a big impact on their farmers.

Almost a third of Victorian farmers, as well as suppliers in Tasmania and South Australia, will face another year of milk returns which are below their
cost of production.

Murray Goulburn has been a market leader for farm gate returns for the best part of three decades. It now finds itself unable to come close to matching
the milk prices offered by other companies.

There are no doubts the dairy crisis caused by the combination of low world market prices and last year’s unexpected price drops have impacted the outlook
of many farmers as they consider their future.

Milk production in Australia has fallen by more than 8% in 2017 compared to last year. A number of factors, including heavy culling of stock, contributed
to this. In many cases, this was in response to a need to cover costs. As a result of these events, confidence and loyalty to companies have taken
a heavy toll.

The ongoing growth and profitability of the Australian dairy industry are attributed to the presence of strong cooperatives and we agree that this should
continue, if possible.

Murray Goulburn’s new management team and the Board are clearly doing all they can to restore the fortunes of the company. Their immediate challenge is
to provide a competitive milk price which, if not addressed, presents a risk to the company and to their farmers.

Farm businesses and the health and wellbeing of farmers and their families must be a priority for the industry. This can be achieved by continuing our
commitment to deliver services and resources to assist farmers in their business decisions.

Competition for milk is strong and shows no signs of slowing down. Our industry needs to start growing so that we can be in a position to supply the markets
available to us – both the Australian domestic market and those around the world.

ADF cannot enter into the business decisions of companies and the business decisions of their suppliers.

What we can do is work in collaboration with our SDO’s to seek solutions which will create the right environment for dairy companies to prosper and grow,
along with a strong focus on our dairy farmers to grow their business and profits.

Now, more than ever, the industry needs to remain focused and united in its goals to achieve a strong profitable future for dairy farmers.

Terry Richardson

Interim ADF President


Farm Life – Animal Health and Welfare

Farm animal welfare is a significant issue in Australia and overseas, and consumers are increasingly interested in knowing that a high standard of animal welfare is maintained throughout the supply chain of products they purchase.

Healthy and well cared for cows are a priority for every dairy farmer as it is central to having a successful and sustainable dairy farm.

There are many on-farm practices that have been part of dairy farming for hundreds of years and we must ensure we have a social license from consumers
to continue the practices. We recognise that some things that happen on-farm can be confronting to people who are not farmers and may not understand
the reason behind them. It is up to us to ensure the public understand what we do, why we do it and that at the core of every farmer is the health
and wellbeing of their animals.

As an industry, we take our responsibilities for animal welfare seriously and are committed to continuous improvement of our animal husbandry practices.
All farm animals must be treated with care.

We want our consumers to know farmers, processors, transporters and meat processors actively engage with each other to ensure all cows and calves are treated

The Australian dairy industry supports the Australian Animal Welfare Standards and Guidelines for Cattle as well as the Land Transport Standards and Guidelines.
These were developed in partnership with the animal welfare groups and Government, and provide the industry with a clear vision that the welfare of
all animals in Australia is promoted and protected by the adoption of sound animal welfare standards and practices.

We are continuously working to improve animal welfare standards to ensure we meet consumer and public expectations and expect all persons managing livestock
abide by these standards to ensure best practice is observed on-farm.

It is a priority of the dairy industry to regularly review policies and practices in line with public perceptions and to invest in ongoing national training
and education to ensure farmers constantly strive to go above and beyond the agreed standard.

ADF, in collaboration with Dairy Australia, and other industry partners continue to work with industry, Government and animal welfare groups such as the
RSPCA to ensure the wellbeing of our herds in all farming systems.

John McQueen

Interim ADF Chief Executive Officer


Fonterra follows on from Murray Goulburn

Following on from Murray Goulburn’s (MG) announcement last week, Fonterra made a similar
announcement yesterday.

It is important to note that the actions of MG and Fonterra in late April/early May last year has caused enormous heartache for farmers and the industry.
Those impacted were hit hard and it will take a long time for the farmers to recover and rebuild not just financially but their herd sizes, their confidence,
and their emotional well-being.

These financial hits on farmers should never have happened.

Through no fault of their own, farmers who left MG or Fonterra, did so because they had no other financial option. The lack of reimbursement to these farmers
from the MG MSSP and the Fonterra Australia Support Loans Package respectively appears discriminatory and unfair.

While ADF acknowledges that both MG and Fonterra will be reimbursing existing (and retired) suppliers, they have both made a point to deny those farmers
who are no longer suppliers, yet were equally financially disadvantaged.

ADF believes that farmers who were financially forced to leave their processor should not be forced to continue to bear the cost of processor actions.
There are serious questions that must be answered about the fairness and equity of the financial impacts and treatment of those who had to move to
other processors.

Trust and respect are important parts of any business relationship and this has been lost for many farmers who supplied and currently supply MG and Fonterra.
Not only has trust and respect been damaged but so too has industry confidence, and this will take a long time to restore.

To ensure a positive future, our industry relies on all the elements to operate effectively. Now more than ever, the dairy industry needs to remain focused
and united in its goals to achieve a shared vision of improving the profitability and sustainability of dairy farmers and the entire dairy industry
in Australia.

ADF will continue to work with both processors and farmers to rebuild confidence and trust. It will take time and will require a commitment by processors
to treat their farmers as equal partners and with the respect they deserve.

John McQueen

Interim ADF Chief Executive Officer


Murray Goulburn’s pledge to rebuild

Murray Goulburn’s’
(MG) announcement on Tuesday was significant for the industry.

In their statement, MG said it would shut down its Rochester and Kiewa factories in Victoria and the Edith Creek factory in Tasmania; and ‘forgive’ the
MSSP or milk cheque clawback from farmers.

We welcome MG’s announcement to scrap the MSSP which, will bring very important financial relief to affected farmers. We believe this will be a step forward
in rebuilding trust and confidence between farmers and the processor.

Let’s hope Fonterra quickly follows suit as it did last year and reverses their cuts to farmers in 2016.

We also need to acknowledge that the factory closures will cause a significant amount of distress to the employees, dairy farmers who supply the factories
and affected communities. This is never easy and these types of transitions are difficult for everyone affected.

MG has said the plant closures are necessary to keep the Co-op sustainable and will initially cost $99m but should get a net benefit from the closures
of $15m from 2018 financial year. MG said about 360 jobs will be lost in the plant closures, which will cut costs by $40-60m over the next 18 months.

ADF recognises that these actions are designed to improve the strength of the company and ensure suppliers remain with the Co-op.

The announcement by MG has really highlighted how important a competitive and strong Co-op is for the dairy industry and we have genuine confidence that
things will change for the better.

John McQueen

Interim ADF Chief Executive Officer


Where to from here – the 457 visa

Dairy is a highly dynamic industry offering lots of opportunities for career growth and
development. However, it is no secret that we have domestic labour shortages in regional and rural areas.

Our preference is always to hire Australian workers, but there are not always enough experienced farmhands to meet the demand of our industry. This is
despite more than a decade of offering training courses and pathway programs for Australian workers to enter the dairy industry.

ADF has continued to lobby the Department of Immigration and Border Protection (DIBP) for regulation amendments to visas allowing overseas workers to fill vital on-farm and off-farm roles.

This week, the Government announced that the 457 Temporary Work visa will be abolished and replaced with the completely new Temporary Skill Shortage visa
by March 2018. ADF is concerned with the changes and is seeking clarification on many aspects from the DIPB.

We have now been advised that the current visa changes will have no impact on the Dairy Industry Labour Agreement,
which allows dairy farmers to recruit senior farm hands. We have been assured that:

  • our existing labour agreements remaining in effect;
  • our existing visa holders not impacted unless they apply for another visa impacted by the changes outside of the labour agreement programme; or
  • new nominations that we intend to lodge/related visa applications are not impacted – including applications for occupations which have been ‘removed’
    from the standard programme or are now subject to a caveat in the standard programme but remain specified in our agreement.

We also understand that under these changes, which come into effect immediately:

  • dairy cattle farmers are included on the short-term skilled occupation list and only able to apply for a 2-year visa;
  • 2-year visas can only be renewed once, which will lead to an increase in administrative burden and red tape on farmers looking to access these new
  • dairy, like other agricultural commodities is not included on the medium to long term strategic skilled occupation list to access 4-year visas; and
  • changes have been made to the Employer Nomination Scheme (subclass 186) visa and to the Regional Sponsored Migration Scheme (subclass 187) visa.

We are still in the process of gaining clarification on what will happen to current visa applicants who are waiting on approvals and the additional occupations
available to support regional employers.

ADF supports the employment of overseas workers to fill vital on-farm roles. We will continue to liaise with government to ensure dairy farmers that need
to employ overseas staff can do so.

John McQueen

Interim ADF Chief Executive Officer


ACCC now targeting Unfair Contracts

The new unfair contract terms law is a priority for the ACCC in 2017. It will ensure small
businesses, including those which are farms, receive the right type of protection.

We have been advised that the ACCC will be taking enforcement action against a number of companies across a range of industries over business-to-business
unfair contract terms this year.

For the past six months, ADF together with State Member Dairy Organisations and Processor Members of the ADPF have been working on the Code of Practice
for contractual agreements between farmers and processors. The development of this code is instrumental in protecting dairy farmers from unfair clauses
and protecting our processors from incurring millions of dollars in fines. Now with full industry support, the Code of Practice is due to be finalised

The ACCC has reinforced the importance that if you operate a small business, you may be required to enter into standard form contracts with other businesses
for goods and services. All dairy farmers should check the contracts they have with suppliers of inputs, like grain, to ensure they conform to the
new legislation. The Australian Consumer Law now prohibits unfair terms in most of these contracts.

In their communications, the ACCC stated that it was no secret that traders (typically larger businesses) put potentially unfair clauses in their agreements,
such as terms that give them:

  • an unreasonable ability to cancel or terminate an agreement
  • broad and potentially unreasonable powers to protect themselves against loss or damage
  • the ability to unilaterally change the terms of the contract
  • unilateral discretion to reject or downgrade produce
  • an unreasonable ability to limit or prevent small businesses from exiting their contracts.

To be ‘unfair’, a term must:

  • cause a significant imbalance in the parties’ rights and obligations
  • not be reasonably necessary to protect the legitimate interests of the party advantaged by the term, and
  • cause financial or other detriment (such as delay) to a small business if it were relied on.

If you come across terms in a standard form contract you have been offered or you have entered into, and which you think may be unfair, you can report
it to the ACCC Infocentre

For more information, including the definition of a small business and the meaning of ‘unfair’ contract terms, please see the ACCC website

John McQueen

Interim ADF Chief Executive Officer


Making the most of Canberra

On Wednesday,
Australian Dairy Farmers (ADF) were in Canberra to discuss a range of issues with Ministers and Members of Parliament.

Throughout the day, ADF had the opportunity to discuss what is working well within the industry and to discuss what else needs to be done.

Our advocacy and policy work is at the heart of everything we do and is essential to ensuring Australian dairy remains competitive and well aligned for

These meetings give us the opportunity to pursue important industry policy priorities and to reaffirm relationships with Ministers.

The main issues discussed included:

  • The progress on the draft Code of Practice;
  • The impact of technical barriers to trade (TBT) on the Australian dairy industry’s international trading opportunities;
  • Access to overseas workers to fill our workforce labour gaps;
  • Pathways to permanent residency for New Zealand born dairy farmers; and
  • Reiterating our support for the Effects Test currently before Federal Parliament.

ADF continues to advocate for policies which will support the industry and we will continue to seek Government support to help drive innovation, which
increases productivity and profitability.

We’re committed to ensuring the voice of the dairy is heard by highlighting the issues to Government and working with them on important reforms.

John McQueen

Interim ADF Chief Executive Officer


Australia, we are in good hands

This week, ADF President, Terry Richardson, took part in his first Animal Health Australia
(AHA) industry forum in Canberra.

The meeting was called to discuss a range of topics including the management of the Emergency Animal Disease Response Agreement (EADRA), a unique contractual
arrangement between Australia’s governments and industry groups to collectively reduce the risk of disease incursions and manage a response if an outbreak

Based on his first impression, Mr Richardson said the familiarisation and training offered to industry in the event of an outbreak is second to none.

“It is reassuring that as a collective we can come together with a shared goal of enhancing on farm bio-security practices and regulations.

“The degree of expertise and good management of our animal health and welfare issues means we are able to respond to any situation and manage any diseases
to minimise their impact on farmers.

“This high level of preparedness is vital to show just how fast we, as an entire commodities industry, are able to respond to any outbreak should an issue
arise”, said Mr Richardson.

Mr Richardson also took part in training for the National Management Group who have overall management responsibility in the event of an exotic disease
incursion in Australia.

“The spread of the white spot virus in the SE Queensland prawn industry really highlights the threat posed to all agriculture from failing to maintain
Australia’s strict biosecurity defence capabilities.

“It is important that we have adequate resources at the national and state levels, or we risk great (and increasingly) severe consequences.

“A large outbreak such as Foot and Mouth Disease would have significant repercussions and cost our economy up to $16 billion”, Mr Richardson said.

ADF has strong group of staff and farmers who are well prepared to respond to the threat of disease to safeguard the dairy industry and Australia’s reputation
as a producer of safe, clean food.

In addition, resourcing of biosecurity remains a high priority for ADF and all industry bodies including AHA Industry Forum are encouraged to continue
to pressure all governments in recognising this as a priority in the national interest.

John McQueen

Interim ADF Chief Executive Officer


What a gas

It is no
secret that gas prices are on the rise.

An essential resource, gas is used to pasteurise milk and produce the heat needed for our driers to create milk powder.

Gas is already a significant input cost for dairy processors in Australia. Based on reports, gas prices are forecast to rise between 50-100 per cent by
2019. This will impact the processing of dairy and increase the manufacturing costs of milk products. The impact of any gas price rises can and will
be felt by dairy farmers through their processors.

The rise in gas prices are due to supplies being diverted to meet international liquefied natural gas supply contracts, low levels of exploration and forecast
production, restrictions on onshore exploration and development in some states and territories, and infrastructure constraints. Tighter gas supply
translates to higher gas prices.

As the laws of supply and demand would suggest, Australians, sitting on bountiful gas reserves, should be enjoying cheap gas prices. But that’s not the
case as a high percentage of our gas is being exported overseas.

Further to this, last year, the Victorian Government with bipartisan support banned unconventional gas exploration, including the controversial process
of hydraulic ­fracturing (fracking), and extended a morat­orium on onshore conventional gas exploration until the end of the decade.

New South Wales and Tasmania also have various bans on onshore gas exploration and development in place. This means that the competition by domestic and
international consumers for gas from existing fields will intensify, which will drive up prices further.

There are surely many policy levers that can be considered in this environment. One such lever was implemented more than 30 years ago, and formalised in
2006, as the North West Shelf offshore gas production was being developed. The WA Government implemented a policy of domestic reserve of 15 per cent
to ensure their domestic market was not adversely impacted from the development of export markets.

It is understandable why many communities and farmers are concerned with hydraulic ­fracturing (fracking), and why there was bipartisan support to ban
this type of unconventional gas exploration. However, we support onshore conventional gas mining which currently has a moratorium and, according to
the Australian Competition & Consumer Commission, is needed as insufficient reserves exist for domestic and international demand.

In response, the COAG Energy Council will be implementing a package of reforms. Even so, there is still uncertainty whether sufficient gas will be available
to meet future domestic demand.

The dairy industry along with other manufacturers are concerned about the policy failures in Australia when it comes to gas availability and prices. We
need to add our voice to the growing list of industry groups who are calling for urgent action to address the shortage of gas on the domestic market.

John McQueen

Interim ADF Chief Executive Officer


Lessons learnt from the Senate Inquiry

Last week ADF were asked to speak at the Senate Inquiry in Shepparton, Victoria.

Before it was our turn, we listened to a number of dairy farmers from the region offer valuable insight into an industry that has seen its fair share of
hard knocks.

Centred around a few general themes, the dairy farmers talked about having greater transparency between processors and suppliers, contract fairness, and
a lack of faith with industry body leadership.

Firstly, we believe that the dairy industry needs improved contracting arrangements between farmers and processors; greater transparency through earlier
and clearer pricing signals for farmers; and less risk for farmers and more balance in risk along the supply chain.

In relation to greater transparency, ADF is in the final stages of completing the draft Code of Practice. We have worked in consultation with our state
member organisations, farmers and processors, and the ADIC to develop a Dairy Industry draft Code of Practice for contractual arrangements to help
ensure greater transparency and fairness in milk supply and pricing. This will also minimise the chances of what happened in April/May last year being

ADF believes that it is important that contracts are fair, simple, realistic and easily understood by both parties ensuring there is more balance for farmers
along the supply chain. The Code of Practice will help ensure that supply agreements and contracts comply with the Unfair Contracts law that came into
effect on 12 November 2016.

This unfair contracts legislation extends existing protections against unfair contracting practices and is a practical step, that when coupled with the
dairy industry Code of Practice, will provide dairy farmers with fairer and more transparent contracts.

ADF will continue to work with farmers, processors and our industry bodies to build a system that builds resilience, rather than leaving farmers vulnerable.

Lastly, while it is important to acknowledge the things we do well as an industry it is also important to recognise the things that we could do better.
The farmers have spoken and we have listened.

While we are busy working on and achieving important outcomes for farmers, a lot of work goes on behind the scenes that we don’t often communicate to our
members well enough. We hear this and are endeavouring to do better.

It’s also important to note that the ACCC Inquiry into the Dairy Industry has started. If you are a dairy farmer and can attend one of the public forums
the ACCC needs to hear from the ‘horse’s mouth’. The key issues to be considered in the Inquiry include competition between milk processors, the effects
of private label products and pricing, contractual practices, availability of price, global markets and key factors influencing the profitability of
dairy farms.


The next public forums will be held on:

  • Tuesday 14 February 2017, Traralgon, VIC
  • Monday 27 February 2017, Warrnambool Golf Club, Warrnambool, VIC
  • Tuesday 28 February 2017, Shepparton Golf Club, Shepparton, VIC
  • Thursday 16 March 2017, Mercure Sanctuary Golf Resort, Bunbury, WA
  • Monday 20 March 2017, Hahndorf Football Club, SA
  • Wednesday 22 March 2017, Burnie Golf Club, Camdale, TAS

For more information and to register your interest please visit

John McQueen

Interim ADF Chief Executive Officer


Explaining the Dairy Levy Poll

Today, it was announced that there will be no change to the dairy levy.

This decision was made by the Levy Poll Advisory Committee (LPAC), whose core role is to make recommendations regarding the level of farmer levy funding
to support the long-term research, development and extension strategy for the dairy industry.

It is important to note, per the ‘Explanatory Statement’, issued by Authority of the Deputy Prime Minister and Minister for Agriculture and Water Resources
that the changes may provide Dairy Australia with savings of up to $1 million every five years, which could be re-directed towards research & development,
plus marketing and promotion activities for the benefit of the dairy industry, including dairy farmers.

Given the announcement of the LPAC decision, there will likely be some opposition to the recommendations. Therefore, it is important that there is a good
understanding of the process which formed the LPAC and what could happen as a result of the recommendation.


During 2015, there was a levy poll review process undertaken to consider the requirement for Dairy Australia to hold a levy poll every 5 years.

That process led to a recommendation to levy payers to change the regulations and form the LPAC, which would undertake a review of levy funded activities
and make recommendations to industry on whether a levy poll to change the levy rate was required.

Levy payers voted in late 2015 to accept the proposed changes to the levy setting process. New regulations to give effect to the changes were signed by
the Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce in late December 2016.

The LPAC was convened several times in the second half of 2016 to consider whether a levy poll should proceed in 2017 as was required under the previous
regulations. These LPAC meetings were based on draft regulations which were expected to be signed off late in 2016.

Australian Dairy Farmers and Dairy Australia, under the new regulations process, were required to provide the LPAC with a joint paper and recommendation
on what should happen with the levy rate. The joint recommendation was for no change in the levy rate.

The major piece of information available to inform farmers will be the LPAC report which gives an outline of the work it did, what information it used
in arriving at its recommendation(s), who it consulted with, its assessment of the value of the DA levy, etc.

Set up and composition of the LPAC

The six initial members of the LPAC were nominated by Australian Dairy Farmers, Dairy Australia and the Australian Dairy Products Federation. The initial
members formed a selection panel that proceeded to select up to nine milk producer levy payer representatives who applied to become members of the
Committee. All levy payers were invited to apply for one of the nine levy payer positions.

All the details around this are on the Levy Poll Advisory Committee web site –

What happens next?

As required by the new regulation requirements, the Chair of the LPAC – John Lawrenson, is required to advise Dairy Australia’s Chair and Minister Joyce,
of the decision of the Committee. This happened this week, along with the media statement issued by the LPAC.

Dairy Australia has 14 days from receipt of the decision of the LPAC to advise all levy payers of the outcome.

Any levy payers wishing to oppose the LPAC recommendation and propose an alternative option can initiate a petition.

Levy payers who are Group A members of Dairy Australia and who together represent 15 per cent of total levies paid in the previous financial year, will
have 75 days to lodge a petition with Dairy Australia, requesting a levy poll to be held and specifying their proposed levy option.

If there are one or more petitions which each represent at least 15 per cent of the total levies paid, then Dairy Australia will be required to hold an
Extraordinary General Meeting (EGM) at which Group A members of Dairy Australia will have the opportunity to vote to either proceed or not proceed
with a levy poll.

If the resolution to hold a levy poll is passed at the EGM, Dairy Australia must present the petition and the results of the vote to the LPAC within 14
business days after the resolution is passed.

The LPAC must also request Dairy Australia arrange a levy poll as soon as reasonably practicable and must set out the levy options proposed by the petition
and may set out any other levy options which LPAC proposes. LPAC has an ongoing role in the conduct of a levy poll including, but not limited to, information
to be provided to levy payers to use in determining their voting intention.

In the event of no petitions which represent 15 per cent of total levies paid within the 75-day period, the levy rate remains unchanged and there will
be no Levy Poll.

What could happen

During the last levy poll, there was a reasonable percentage of farmers who voted for a zero levy, so it is not unreasonable to expect there will be one
or more groups who will organize a petition to have a levy poll with a levy rate less than currently applies, or set to zero.

To guarantee the fair and democratic rights of all levy payers who are the Group A members of Dairy Australia, ADF believes it was important that provision
was made in the new regulations to ensure there was a process to allow different views among farmers to be considered.

Whether a petition reaches the full 15 per cent threshold to trigger a EGM of Dairy Australia Group A members will be the issue.

If there is a need for an EGM because of one or more petitions to Dairy Australia, then ADF will need to be clear about why it recommended, jointly with
Dairy Australia, that the levy rate should remain unchanged.

This will be a process ADF must manage during the leadup to a required EGM of Dairy Australia but may also need to be engaged in the debate during the
75 days in which a petition can be presented.

To read the explanatory statement of the Legislation, visit

For further information regarding the Dairy Levy Poll process review, visit

John McQueen

Interim ADF Chief Executive Officer

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