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.

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.

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.

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!

By CRAIG HOUGH, DIRECTOR STRATEGY & POLICY, AUSTRALIAN DAIRY FARMERS The federal Treasurer Jim Chalmers faces the challenge of balancing geopolitical tensions, global economic uncertainty, the inflated cost of living and