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.

– Terry Richardson, ADF President

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

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

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

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

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

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

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.