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

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

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

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

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

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

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

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

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

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

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

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

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Stakes high in election

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

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

– Terry Richardson, ADF President

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Battles on many fronts

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

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

– Terry Richardson, ADF President

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Checkout milk price key factor

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– David Inall, Australian Dairy Farmers CEO

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Firm trade stand vital

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

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

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

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

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

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

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

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

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

This is a nightmare scenario we cannot let play out.

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Learning from crisis

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Dairy’s watershed year

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Drought policy priority

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Retailers must do the right thing by dairy farmers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Time for young dairy representatives to step forward

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– Terry Richardson, ADF President

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Dairy Code of Practice must address key concerns

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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United we stand, divided we fall

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our industry depends on our ability to unite.

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