Posts by

Administrator

Home / Blog Archive
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.

Policy & Advocacy

New Murray-Darling Basin plan ignores farmers

October 5, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It might not be the ‘simple’ solution.

But you know what? It might actually work.

Policy & Advocacy

Dairy voice eyes reset

September 7, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

Policy & Advocacy

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

August 3, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Economics & Trade

A new era of potential for Aussie dairy exports

July 6, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

Free trade deal a saviour for dairy exports

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

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

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

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

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

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

Dairy scholarship program pays dividends

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

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

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

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

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

Policy & Advocacy

Coles’ dairy deal sparks concern

June 1, 2023

By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS

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

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

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

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

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

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

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

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

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

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

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

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

A chequered past of milk discounting

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

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

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

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

A vote of confidence in dairy’s future

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

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

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

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

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

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

Economics & Trade

Australian Dairy Farmers warns about impact of inflation, interest rates

April 26, 2023

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

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

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

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

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

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

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

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

Why the inflation?

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

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

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

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

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

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

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

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

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

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

Future fiscal policy

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

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

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

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

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

People & Community

Celebration of Dairy event held at Parliament House

April 11, 2023
By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT
Australians often take the dairy industry for granted as they tuck into their breakfast, lunch, dinner, desserts, or a nice cheese platter.
Having returned recently from trade missions to Asia and Europe, I can say with confidence that Australia is blessed with its huge array and ample supply of fresh, nutritious dairy food.

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

UK deal welcome

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

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

Time to work together

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

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

Leading the way

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

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

Worth celebrating

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

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

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

Australian feta cheese under attack in EU free trade deal

March 2, 2023

By RICK GLADIGAU, AUSTRALIAN DAIRY FARMERS PRESIDENT

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

Not a fair claim

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

A poor case

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

Consumer confusion

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

Open trade support

Just as Australians value a fair go and share our produce with the world, we value a fair trading environment.
ADF supports free and fair trade, and we look forward to continuing to work with government on this FTA, to achieve a win-win outcome in the best interests of the Australian dairy sector.
The GIs claim represents millions of dollars the industry can’t afford to lose.
1 2 3 4 5 … 23 24
About ADF
Cart Overview