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Economics & Trade, Farming operations, People & Community

Proposed super changes spark concern

November 7, 2024

By Ben Bennett, President, Australian Dairy Farmers

A government move to tax ‘unrealised gains’ has – quite rightly – ignited serious concerns among farming businesses, family enterprises, and small businesses across the nation.

In February 2023, the Australian Government announced plans to reduce superannuation tax concessions for individuals with balances exceeding $3 million.

This initiative aims to adjust the taxation framework of superannuation and is expected to significantly impact high-balance accounts.

The proposed legislation (Better Targeted Superannuation Concessions and Other Measures Bill) on unrealised gains—essentially taxing the increase in value of assets that have not been sold—could place undue financial burdens on dairy farmers.

Many of us rely on asset appreciation, particularly land value, for long-term financial stability and retirement planning.

As the National Farmers Federation (NFF) has warned – this unprecedented move could force farmers to sell parts of their farms to meet tax obligations, undermining the viability of family-owned agricultural enterprises.

It’s unfair and sets a dangerous precedent.

For farmers, whose assets are typically tied up in land and machinery, this could mean selling off parts of their livelihood just to pay a tax bill on paper profits that don’t translate into cash flow.

These apprehensions are echoed by several organisations, including the SMSF Association, the Tax Institute, the Financial Advice Association of Australia, and the Institute of Financial Professionals Australia.

They argue that taxing unrealised gains could have unintended consequences for investment and retirement planning, particularly affecting those who are asset-rich but cash-poor.

Clearly, Australian Dairy Farmers (ADF) supports this stance.

We’d like to see an immediate halt to the proposed superannuation changes, emphasising the detrimental impact they could have on dairy farmers.

Dairy farming, much like other agricultural sectors, involves significant investment in land and equipment.

The proposed tax could jeopardise the financial sustainability of these businesses, many of which are family-owned and operated.

As we know, dairy farmers already face tight profit margins and volatile market conditions.

Introducing a tax on unrealised gains would exacerbate these challenges, potentially leading to a reduction in investment in the sector and threatening Australia’s dairy production capabilities.

ADF welcomes the work of NFF in opposing the Bill, including its engagement with MPs and Senators, and their staff, as well as its collaboration with the Council of Small Business Organisations Australia (COSBOA) and the Family Business Association.

Together, they have developed a comprehensive document outlining their position, which has been distributed to lawmakers.

This united front aims to highlight the widespread concern over the potential impact of the proposed superannuation changes on small businesses and the agricultural sector.

The collective advocacy efforts have gained significant traction in the media and among policymakers.

The core issue lies in the nature of farming and small business assets.

Unlike liquid assets, such as stocks or cash, the value of farmland, equipment, and infrastructure is not easily accessible without selling the asset.

For many farmers, their superannuation is intrinsically linked to the value of their farm.

Taxing unrealised gains could force them to liquidate essential assets, disrupting operations and threatening the long-term viability of their businesses.

The proposed changes also raise concerns about intergenerational transfer of family farms.

With additional tax burdens, the ability to pass on the family business to the next generation becomes more complex and financially challenging.

This could lead to a decline in family-owned farms, which have been integral to Australia’s agricultural heritage and rural communities.

The NFF, ADF, and our allied organisations are calling on the government to reconsider the proposed changes and to engage in meaningful consultation with affected stakeholders.

We need policies that support the sustainability and growth of farming businesses and small enterprises, rather than imposing additional financial burdens.

In response to the growing opposition, some Parliamentarians have expressed willingness to engage in dialogue.

The hope is that through collaborative efforts, a more equitable solution can be found that addresses the government’s objectives without disproportionately impacting farmers and small business owners.

The debate over the proposed superannuation changes underscores the delicate balance between policy objectives and the practical realities faced by different sectors of the economy.

As the Bill moves through the legislative process, it is crucial for lawmakers to consider the far-reaching implications and to ensure that the voices of those most affected are heard.

It is imperative that policymakers carefully evaluate the proposed changes to avoid unintended consequences that could undermine the financial stability of farming industries and our hard-working dairy farmers.

The farming community and small business sector remain hopeful that through continued advocacy and engagement, the government will acknowledge these concerns and adjust the proposed legislation accordingly.

 

Economics & Trade, Farming operations

Drought plan must support fragile sector

October 3, 2024

By Ben Bennett, President, Australian Dairy Farmers

Dairy farmers in south-west Victoria, South Australia, Western Australia and Tasmania know all too well the immense challenge drought presents to the industry.

In these parts of the world, particularly south-west Victoria where farmers are battling the driest season on record, farmers are struggling.

So Australian Dairy Farmers’ (ADF) recent joint submission to the Department of Agriculture, Fisheries and Forestry’s (DAFF) consultation on the Australian Government Drought Plan is well timed.

Of course, the submission won’t make it rain and won’t deliver immediate change. But it does push to address the needs of dairy farmers.

Supporting the strong submission by the NFF, and prepared in conjunction with Dairy Australia, it calls for a number of essential changes to safeguard the dairy industry’s future.

Clear criteria in drought phases

One of the primary changes we outlined as important is the establishment of clear criteria for transitioning between the phases of the drought cycle.

The ambiguity around current definitions leaves a lot to be desired.

In south-west Victoria, farmers are experiencing the driest season on record yet aren’t considered to be in “drought”.

The lack of adequate recognition of the situation makes it too easy for governments and other institutions to believe it’s “business as usual”.

By specifying the environmental, economic, and social indicators that trigger each phase of the drought cycle, the government can ensure timely and consistent responses.

Recognising drought as a natural disaster

The submission strongly argues for the recognition of drought as a natural disaster.

Unlike other natural disasters, drought is a slow-onset event, but its impact on the dairy industry is no less devastating.

Dairy farming is uniquely fragile due to the high water and feed requirements of dairy cattle.

Establishing a threshold for recognising drought as a natural disaster would enable the provision of appropriate support to maintain animal welfare and milk production.

This change is crucial for preventing long-term productivity losses and ensuring the economic viability of the sector.

Emphasising evidence-based decision-making

Our submission emphasises the need for evidence-based decision-making in the government’s drought response.

The current approach lacks specific details on how government actions will be triggered by varying levels of drought severity.

By providing concrete examples and scenarios, the government can enhance transparency and preparedness.

This approach will also build trust with farmers.

Clarity on government support

We called for greater clarity on the specific actions the government will take during the ‘responding’ phase of the drought cycle.

Currently, the plan indicates that support is available at any time but lacks details on immediate measures to be implemented when drought conditions are identified.

Clear communication of these actions will help farmers understand what to expect and how to access the necessary support.

This transparency is vital for reducing the stress and uncertainty that farmers face during drought periods.

Enhancing coordination with state and territory support

Improved coordination between federal and state-level support is another critical change we proposed.

The current lack of coordination can lead to confusion and inefficiencies in drought relief efforts. This leaves farmers frustrated as they struggle to identify the right contacts and the appropriate times to discuss their situation.

By aligning federal and state measures, the government can ensure a more cohesive and effective response.

This coordination should also extend to the private sector, particularly the finance and banking industries, to ensure that support measures are timely and consistent across all levels.

Regular review and adaptation

The submission highlights the importance of incorporating mechanisms for regular review and adaptation of the drought plan.

Climate change is an evolving challenge, and the plan must remain relevant to address its impacts effectively.

Establishing a drought management advisory group could facilitate continuous assessment and adjustment of the plan based on new data and emerging trends.

This proactive approach will enhance the resilience and sustainability of the dairy industry in the face of changing climatic conditions.

Pushing for action

The changes proposed are not just recommendations; they are essential steps towards securing the future of the Australian dairy industry.

They reflect critical components of a robust drought plan.

Implementing these changes and those highlighted by the NFF, will provide the dairy industry with the support it needs to navigate the challenges of drought, ensuring its resilience and sustainability for generations to come.

Caption: ADF hosted Australia’s Minister for Agriculture, Julie Collins, at president Ben Bennett’s farm in early October.

Economics & Trade, Farming operations, People & Community

Dairy policy by dairy farmers

September 16, 2024

By Nathan Pope, Policy Manager, Australian Dairy Farmers 

Australian Dairy Farmers’ (ADF) commitment to farmer-driven policy is evident in the rigorous and responsive discussions held during our recent Policy Advisory Group (PAG) meetings. 

These meetings are not just routine; they are critical touchpoints where the experiences of our dairy farmers directly influence the policy direction of our organisation. The three PAGs are each led by dairy farmers. 

People and Communities PAG

Under Michele Lawrence, the People and Communities PAG has taken significant steps to address pressing issues impacting farms and communities. 

The decision to pursue ADF’s membership in FarmSafe was a key outcome of the group’s recent meeting. This move is particularly timely as the industry faces increasing scrutiny over farm safety practices.  

The membership allows ADF to leverage FarmSafe’s resources and expertise to enhance safety protocols across dairy farms, directly addressing the rising concern about workplace injuries and mental health challenges in rural areas. 

The PAG also discussed the working holiday maker visa review, highlighting the critical nature of this labour source for dairy farms, especially where seasonal labour shortages have been a persistent challenge.  

The group emphasised the need for ADF to advocate for visa conditions that are flexible enough to meet the demands of dairy farming while ensuring fair treatment for workers. 

In addition, changes to industrial relations laws, particularly those affecting casual and part-time workers, were scrutinised. The group expressed concerns about the potential impact on labour costs and the administrative burden on farm businesses.  

Farm Operations PAG 

The Farm Operations PAG, led by Andrew Aldridge, addressed several critical issues during its recent meeting, particularly in the context of emergency preparedness.  

A briefing from ADF’s water taskforce was a focal point of the meeting, with in-depth discussions on the implications of water policy reforms within the Murray-Darling Basin. 

There is concern among dairy farmers in that region about the long-term viability of their operations due to fluctuating water allocations and the rising costs of water. The taskforce provided updates on ongoing advocacy efforts, emphasising the need for a balanced approach that considers both environmental sustainability and the economic realities of farming.  

This briefing reinforced the importance of ADF’s role in lobbying for fair water distribution policies that support the dairy sector. 

The PAG also delved into antimicrobial labelling, with members noting the increasing consumer demand for transparency in food production. The discussion was framed around maintaining Australia’s high standards while avoiding unnecessary regulatory burdens that could disadvantage local producers in the global market.  

The group’s exploration of carbon trading and energy policy reflected dairy’s broader commitment to sustainability, recognising that these areas are not just regulatory challenges but also opportunities for the dairy industry to lead in environmental stewardship. 

Trade and Economics PAG 

Under Paul Mumford, the Trade and Economics PAG tackled several strategic issues with significant implications for the future of the Australian dairy industry.  

The announcement of Indonesia’s policy to provide free milk in schools was identified as an opportunity for Australian dairy exports. The group discussed how this policy could open new markets for Australian dairy products, particularly given the strong trade ties and the existing framework of agreements between Australia and Indonesia.  

The PAG recommended a proactive approach to engaging with Indonesian authorities, government and local dairy stakeholders to secure a significant share of this market, emphasising the need for competitive pricing and high-quality standards to meet the expected surge in demand. 

The declining milk pool was another critical issue on the agenda, with group analysing the factors contributing to this trend.  

The discussions were informed by data showing that rising input costs, changing consumer preferences, and increasing competition from plant-based alternatives are all exerting downward pressure on milk production.  

Members stressed the importance of policy interventions to reverse this trend, including measures to support farm profitability. 

National Council – bringing PAG outcomes together 

ADF’s National Council has met twice in recent months. Its purpose is to synthesise the outcomes of the three PAGs. 

These meetings were significant events, particularly in light of the upcoming reviews of Dairy Australia. These are important for the industry, as they will shape the strategic direction and effectiveness of our key research and development body.  

The council also reviewed updates on the Australian Dairy Sustainability Framework – a key initiative that tracks the industry’s progress towards achieving sustainability goals.  

The discussion highlighted the need for continued efforts to promote sustainable farming practices that are both environmentally sound and economically viable. The council emphasised sustainability is not just a regulatory requirement, but a core component of the industry’s value proposition to consumers and markets. 

Each of these five meetings helps inform ADF’s policy development process, driven by the insights and recommendations from our grassroots members.  

They help ADF advocate for policies that support the long-term success and sustainability of the Australian dairy industry. 

 

Caption: Australian Dairy Farmers’ three Policy Advisory Groups each met recently, along with two meetings of its National Council (pictured).  

Labour, People & Community

Farm safety: still more to do

August 1, 2024

By Michele Lawrence, People & Communities Policy Advisory Group Chair, Australian Dairy Farmers

Australia’s dairy farmers are committed to the safety and wellbeing of their people.

As an industry we’ve done a lot of work to build safe work culture and equip farmers with tools to assist compliance.

While there might be a silver lining in the latest statistics for dairy, it remains a serious issue, but as an industry we are proud of our progress in reducing injuries.

Fresh out of Farm Safety Week, Australian Dairy Farmers’ People and Communities Policy Advisory Group received a briefing from Farmsafe Australia.

Overall, it’s shaping up to be a bad year for workplace deaths and injuries in agriculture. But there are promising signs for dairy.

The presentation highlighted that agriculture makes up less than three per cent of Australia’s workforce, but accounts for nearly 30% of all workplace deaths.

Up to July 1, the industry had lost 30 people to workplace deaths this year. That compares with 32 deaths in Australian agriculture in 2023.

In the same time frame, 74 people in the ag industry had been injured while on-the-job, compared to 122 the year prior. This is not the trajectory we want to be on.

In case you’re not convinced that we need to do more to slow these numbers, here are a few more statistics Farmsafe Australia presented from 2023:

  • 9% of fatalities were children under 15 years
  • 12% of injuries were children under 15 years
  • 91% of fatalities were male
  • 86% of injuries occurred in New South Wales and Queensland

However, thankfully, dairy makes up a small component of these statistics.

That’s not to say we can take the foot off the pedal and become complacent. One death is too many.

There’s been a great deal of work done embedding a safety culture both across the industry, and also by individual farm managers.

But safety systems don’t make us safe alone. They help guide our daily thoughts and actions. Our actions on-the-ground are key, we need to balance compliance with on-the-ground action. Implementing simple systems can help us reach safer outcomes.

The farmers I know understand they and their teams are key to embedding a safety culture on-farm. If management don’t set a good example for their staff, the systems are compromised.

There is inherent risk in farming, including from working with animals, machinery and often working solo. But we can drive these numbers down through better ways of working.

Protecting those we care about

Farming has changed, and as businesses have grown farmers have recruited staff from outside their family unit.

Wherever I go, I see dairy farmers who care deeply about their staff – regardless of whether they started out as friends, family or strangers, from in-town or overseas.

Unfortunately, this is reflected in the statistics. Because of that care, farm owners and managers often take the dangerous jobs upon themselves.

Because they’re doing the dangerous jobs, the statistics show it’s the owners and managers who are more likely to be injured on-farm. They work to shield younger, less experienced staff from risk.

It’s never acceptable for someone to be injured or killed on-farm, but I take solace from the fact dairy farmers are continually improving their safety systems and the numbers for our industry are relatively low.

Resources available

Our industry has dedicated resources available to help improve your approach to safety.

Whether you need a farm safety starter kit, farm safety manual, workplace policies or safe ag systems, The People in Dairy website (thepeopleindairy.org.au) has it all. You can then document these approaches through the resources from Our Farm, Our Plan (gardinerfoundation.com.au/ofop).

Again, and thankfully, the statistics tell me that most farmers are using these resources and acting in the best interests of their staff, family and businesses.

Technology and new ways of working are also helping the industry reduce injuries through innovations like roll over protection on tractors. The same step-change is afoot for quad bikes.

On our farm, we provide workers with a safety induction that sets the tone and embeds our safety culture. For example, I get a text message when the tractor is being driven too fast; and that we follow best-practice, low-stress livestock handling practices. Each of these little things help build our level of safety resilience.

While we celebrate our achievements, we must remain vigilant.

The pursuit of safety is an ongoing journey, and complacency is our greatest adversary.

Continuous improvement, regular reassessment of safety practices, and the willingness to embrace new innovations are essential to maintaining and furthering our progress.

Importantly, it also helps everyone make it home safely from the farm each and every night.

This piece was published in ACM newspapers on Thursday, August 1, 2024.

Economics & Trade

ADF statement on live sheep export ban

July 8, 2024

Australian Dairy Farmers statement regarding the passing of legislation through the Federal Parliament to end live sheep exports:

Australia’s peak representative body for dairy farmers stands united with the livestock sector in opposing the Federal Government’s ban of live sheep exports by sea.

While the decision directly concerns live sheep exports, Australian Dairy Farmers (ADF) says the ban exposes a number of other sectors and international trade partners to significant trade risk.

This risk extends to the dairy industry and has the potential to adversely impact Australia’s dairy farmers.

ADF is concerned the views of a small segment of the Australian community has been empowered through Government policy and imposed on international cultures and trading partners. Australia is well placed to feed the world. We can’t do this with ill-informed Government policies based on emotion over fact.

Policy & Advocacy

Nuanced needs call for specialised advocacy

July 5, 2024

By Ben Bennett, President, Australian Dairy Farmers

Australia is full of many different professional, vocational and trade groups, each with their own representative bodies.

Farmers are similar, in that they have their particular commodity sectors, each with their own inherent production systems, array of associated inputs, markets, pests, diseases, and supply chain risks.

If you get a dairy farmer, a cropper, a wool producer and a grazier, from each of the six states, and put them together in a room, after the initial socialising they’re usually in their respective commodity groups by the second round of drinks.

It is not just a natural social community behaviour. You see it reflected across society and across industries, not just agriculture.

Whether it be professional advocacy associations, trades, research and development organisations or, dare I say it, unions.

Within agriculture, our production sectors are reflected across our different commodity supply chains, buyers, traders, transporters, processors, marketers, through to peak industry bodies, or different research and development corporations.

These sectors underpin the $81 billion generated across sectors in farmgate value in 2023-24, including $6 billion at dairy farm gates across the country.

Thats billions – these are significant figures!

They’re figures we would not realise if we did not have commodity-level representation, driving the hundreds of millions of dollars in investment for each sector

We’d not be able to realise this revenue if we didn’t have a strong cohort of dairy processors vying for our product.

We also need strong farmer and industry representation, as each commodity has a nuanced set of challenges.

The people on commodity representative boards have a variety of experiences and perspectives but are united by their common interest in their specific profession or commodity. That’s how they gain and maintain the backing of farmers.

If farmers lose confidence and feel these boards and bodies are not representing them, they can be ousted, sparking a change in focus.

Nuanced needs, challenges

Meanwhile, a concerning wave of power is washing over our businesses. It comes from government and within the dairy supply chain.

Governments are piling on the red tape for farmers, while major players in the supply chain consolidate and grow their operations.

Government regulation has traditionally been science-based. But we now see the very real influence of often fringe groups, representing a minority of the Australian population influencing policy particular in governments that lack a balance of power.

These groups or entities are politically intelligent and will play one party off against another.

It is the individual commodities who have their expertise and knowledge, which is second-to-none, that can push back with conviction on the “facts” and emotional gymnastics preached by these new groups.

In other sectors of the supply chain, the big players are being influenced by third parties demanding social licence.

Perception of social licence, or a lack of it, is usurping the due process of our democratically elected governments.

When these issues reach the media, industry is treated as being guilty until proven innocent, so it’s imperative we focus on this.

Empowered by the masses

Farmers still have the high ground. Let’s remember, an overwhelming majority of Australian consumers buy dairy products each week.

Consumers understand that it takes all sorts of different farmers to produce different parts of their diets – just as they know it takes all sorts of different professionals to provide personal advice and care through to tradies to fix their house and car

Yet all these professions, vocations and trades all have their own specialist professional associations.

These differences make us collectively stronger. Individual representation allows for a more specialised, nuanced, effective, and focused approach to addressing the needs and advancing the interests of each agricultural commodity group right around this large continent.

Putting all our representative groups into a blender and making a soup won’t deliver a dollar more to Australian farmgate incomes, yet it will put those very commodity sectors at far greater risk.

The argument goes that trying to dismantle all these specialist professional commodity bodies and roll them into one would save administrative costs. But it would also place at risk $81 billion in production.

Let’s allow the farmers to determine how they want to be represented!

This piece appeared in ACM Agri newspapers.

Uncategorized

Mastitis treatment under threat

June 6, 2024

By Ben Bennett, President, Australian Dairy Farmers

One of the active ingredients in popular mastitis treatment Mastalone is under threat, and Australian Dairy Farmers (ADF) is proactively defending farmers’ access.

Australia’s agvet chemical regulator, the Australian Pesticides and Veterinary Medicines Authority (APVMA), is reconsidering the registration of the antibiotic neomycin – one of the key components of Mastalone.

In real terms, this means the sale of Mastalone could be banned simply because of, as APVMA puts it, a lack of data to enable it to assess potential risks to trade from chemical residues.

ADF has made a submission to APVMA outlining the importance of this veterinary chemical product to dairy production in Australia.

As the national representative body for dairy farmers across the six dairying states, ADF’s mission is to improve the productivity and sustainability of dairy farmers in Australia. Critical to this mission is to maintain and improve Australia’s animal health and welfare systems.

The proposed decisions, if implemented, would change the conditions of registration and/or cancel the registration of Mastalone and other vital products.

In our submission on behalf of Australia’s dairy farmers, we reminded APVMA that mastitis is a painful disease, causing significant animal welfare and economic losses on every dairy farm, and that deregistration of this product would have a counter-intuitive impact on production and animal welfare.

Australian dairy farmers must be able to use Mastalone because it contains ingredients (Oxytetracycline, Oleandomycin and Neomycin) that are not available in other registered intramammary products and cover a broader spectrum of mastitis pathogens compared to other products.

Importantly, these medicines are of low importance to the development of human antimicrobial resistance.

Therefore Mastalone provides an important alternative product to other intramammary lactating cow products that contain beta-lactam active constituents. Dairy farmers need both tools in their toolkits to ensure their animals remain healthy and don’t develop resistance to either category of antibiotic.

ADF appreciates the APVMA’s responsibility to assess the efficacy, safety and risks to trade.

But we think it is deeply unfair that APVMA would propose to cancel the registration of Mastalone primarily due to a lack of data.

Mastalone has been used under veterinary prescription by dairy farmers in Australia for over 50 years. The industry has a very long, recorded history of successfully managing the risks of antimicrobial residues in both milk and meat products traded domestically and around the world.

Overall, the Australian dairy industry has a very low use of antibiotics compared to other countries.

We are proud of our industry’s efforts to use antibiotics sparingly and correctly, through which we minimise the risk of antibiotic resistance and protect our international reputation.

Through the Australian Dairy Sustainability Framework, the industry has committed to use antibiotics responsibly, as little as possible, as much as necessary, to protect the health and welfare of our animals.

Of its own volition, and through government systems, the industry has been monitoring for antimicrobial residues in its products for many years. If Mastalone posed a significant risk to consumers or trade it would have been identified through the industry’s established and robust chemical residue risk management procedures and brought to the attention of the ADF, Dairy Australia and food safety regulatory authorities.

We support the ongoing registration of this vital product.

Economics & Trade, Policy & Advocacy

Time to come clean on code claims

March 8, 2024

By Ben Bennett, ADF President

They say transparency builds trust.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It’s time to come clean and be transparent!

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

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

Been here before

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

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

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

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

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

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

Economics & Trade, Policy & Advocacy

In defence of the Code

February 1, 2024

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sustainability

Dairy profitability and sustainability linked

January 8, 2024

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

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

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

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

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

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

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

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

Trust is strong in dairy industry

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

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

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

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

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

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

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

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

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

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

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

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

Policy & Advocacy, Sustainability

Ag needs a seat at the Murray Darling Basin table

December 7, 2023

BY ANN GARDINER, ADF Water Committee Chair

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Economics & Trade

EU deal no winner for agriculture

November 2, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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