THE Australian dairy industry is pushing for the Australian Competition and Consumer Commission (ACCC) to fast track its investigation of the water market to ensure greater transparency in water trading in the Murray Darling Basin, ahead of Sunday’s meeting of federal and state water ministers.

Peak advocacy group the Australian Dairy Industry Council (ADIC) is arguing that an extensive examination of the market is needed to validate assumptions of water use along the Murray River system, including irrigation and environmental demand and the impact of constraints.

Also integral is the Murray Darling Basin Authority (MDBA) independent assessment of social and economic conditions in the Basin.

“These inquiries will provide valuable insights to improve water conditions in the Murray Darling Basin but the timeframe for reform is narrow,” ADIC Chair Terry Richardson said.

The Murray Darling Basin is home to 1,330 dairy farm businesses with a value of production worth more than $2.6 billion, supporting over 3,000 direct jobs in the region, which Mr Richardson said was evidence of dairy’s importance to a resilient Basin community.

Yet Dairy Australia data shows the average water price in Northern Victoria was a huge $526 per megalitre (ML) in June 2019, 212 per cent higher than last year.

Mr Richardson said the high prices were far above what dairy farmers in the Murray Darling Basin could pay.

“Many irrigators and water traders find it difficult to understand the market dynamics surrounding this change, which makes it hard for them to manage risk,” he said.

The ADIC push comes on the back of an MDBA audit report which revealed significant shortcomings with market transparency and water trade price reporting from all states.

The dairy group is also urging Basin ministers to agree on Sunday to implement all recommendations made by the Productivity Commission in its five-year review of the Basin Plan.

Previously, the ADIC argued that any move to recover an additional 450 gigalitres (GL) of water from the Basin must only occur once the primary 2750GL target has been secured and when appropriate environmental benefits have been demonstrated.

“There is compelling evidence that recovery of water for the environment from the consumptive pool beyond the agreed 2750GL target will erode industry profitability,” Mr Richardson said.

“Dairy farmers value our rivers and support the improvements that have been made to the Basin, but there may be more pain to industry with little gain for the environment if we try to take out an extra 450GL of water before we even reach the legislated target.”

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

A new report on the state of Australia’s dairy sector lays bare the impact of several tough years on the industry and the necessity for it to pull together in developing the Australian Dairy Plan.

The report Australian Dairy Situation Analysis provides an overview of key issues and conditions across a range of metrics including farm profitability, milk production and global competitive position (summary included on following page).

It was produced by partner organisations of the Australian Dairy Plan to inform discussions at over 20 nationwide consultation workshops in May and June, commencing next week.

Speaking at the launch of the report, Australian Dairy Plan Independent Chair, John Brumby AO, commented:
“The report provides a snapshot of the current state of Australia’s dairy industry. While flagging many positive factors for the industry that point toward a positive future, the report also provides an honest assessment of challenges that we hope will be addressed during the course of the consultations.

“Market volatility, challenging conditions on farm and a breakdown in trust between farmers and processors have taken a toll on where the industry stood a decade ago. It is vital that all sides now pull together to agree a roadmap of priorities and actions, in order to reset the direction and confidence of the industry.

“In my view, the challenges we face today are bigger and more complex than the industry has faced before. If we are to write the next chapter of dairy’s story, we not only need to be honest about the issues we face, but also open to taking difficult decisions and supporting radical change if required.

“A series of over 20 nationwide consultation workshops commence next week and we are calling on everyone in dairy to get involved and get your views heard.”

A copy of the report and locations of nationwide consultation workshops during May and June 2019 can be found along with other information at https://www.dairyplan.com.au/.

Media Contact:

Susan Hunter, Dairy Australia Media Relations Manager

M: 0417 540 059

E: media@dairyplan.com.au

ALL remaining tariffs on dairy exports into Indonesia will eventually be scrapped as part of a new economic partnership agreement signed today by Trade Minister Simon Birmingham.

As part of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA- CEPA), tariffs will be removed on entry into force for skim milk powder (SMP), whole milk powder (WMP) and grated and powdered cheese, while remaining tariffs will be eliminated by 2026 for non-liquid milk and by 2033 for liquid milk

Peak dairy industry body the Australian Dairy Industry Council (ADIC) welcomed the deal, saying it will create a closer relationship with one of Australia’s largest trading partners.

“As Australia’s close neighbour with strong existing ties with our dairy industry, the conclusion of IA-CEPA will enhance the naturally emerging opportunities that are presenting themselves in Indonesia,” ADIC Chair Terry Richardson said.

“The Australian Government should be congratulated for achieving this positive result.”

The agreement also includes a cooperative mechanism to enable regular discussion of non- tariff measures (NTMs).

“These NTMs, including measures such as licencing arrangements and product testing regulations, can be significant hurdles for Australian dairy exports into markets like Indonesia and add significant costs to doing business,” Mr Richardson said.

Indonesia is a major destination for Australian dairy exports and ranks only behind Greater China and Japan as Australia’s third largest dairy export market on value terms. In 2017/18, Australia exported over 60,000 tonnes of dairy to that market, valued at over A$200 million.

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

THE Australian Dairy Industry Council (ADIC) has urged the Australian Parliament to expedite binding treaty action on the already-negotiated trade deal with Peru.

Negotiations were completed with Peru in November 2017, and the agreement has twice been reviewed by the parliamentary Joint Standing Committee on Treaties.

ADIC chair Terry Richardson said the industry had been advised that Peru has already signed off on the agreement and does not want Australia to be seen to be lagging behind where improved market access is at stake.

“This agreement includes a good outcome for Australian dairy,” Mr Richardson said.

“It in fact provides better dairy market access when compared to the recently signed Comprehensive and Progressive Trans Pacific Partnership (CPTPP) agreement – of which both Australia and Peru are member countries.

“Peru has historically been a sensitive market for Australian dairy exports, but this agreement gives our industry Country Specific Quota access, which actually exceeds the volume of trade in recent years.

“This provides improved certainty for Australian exporters into Peru, and helps keep Australian dairy on a level playing field with competitors such as the EU and the USA, who already have their own deals in place with Peru.

“We have been advised that there are a couple of issues such as ISDS (Investor State Dispute Settlement) which seem to be holding up the progress of implementation by our parliament, but our advice is that these issues are no different to provisions included in recently ratified agreements, such as CPTPP.”

Mr Richardson said the ratification of the Peru-Australia Free Trade Agreement would be positive news for the Australian dairy industry, as dairy farmers continue to face a particularly challenging season.

“International trade is essential for the growth of our industry,” he said.

“Increased market access promotes demand for Australian products, which helps support farmgate milk returns and profitable industry growth.”

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

AUSTRALIA’S dairy industry could soon face a “nightmare scenario” if locally produced cheeses including feta, parmesan and Haloumi are banned under a new Australia-European Union free trade agreement.

The Australian Dairy Industry Council (ADIC) has warned that locally produced cheese varieties with a value of production worth $180 million and export sales averaging $55 million each year, would face extinction if the EU succeeds in forcing Australia to accept and implement strict labelling rules, called geographic indicators (GIs), as part of the trade deal.

The EU has argued that GIs are intended to “protect distinctive EU food and drink products from imitations in Australia”, but in practice Australian dairy manufacturers will be forced to change the names of locally produced common cheese brands.

“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. It is an absolute nightmare scenario,” ADIC Chair Terry Richardson said.

“Not only that, but consumers will be confused and frustrated at no longer being able to find some of their favourite dairy products on supermarket shelves.”

Added to this, attempts by the EU to extend the scope of labelling restrictions to include colours, flags, and even symbols that might evoke regions in EU countries would hit a further 45,000 tonnes of Australian cheese production, averaging $300 million in domestic and export sales per year.

Mr Richardson said the federal government needed to take stronger action during trade talks to ensure the local dairy industry would not suffer under a new trade agreement.

“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,” he said

“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.”

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

The Australian Dairy Industry Council welcomes the release of the draft clauses for a Dairy Code of Conduct by the Department of Agriculture and Water Resources yesterday.

Terry Richardson, ADIC Chair said ‘generally, the draft clauses proposed by the department are consistent with the draft clauses released by ADIC in November last year. We commend the department for recognising our industry code of practice review work by using our draft code as a basis for its industry consultation and analysis.’

‘A successful code will be one that addresses the issues identified by the ACCC in its Dairy Inquiry and the gaps identified by ADIC in its industry code review,’ Mr Richardson said. ‘We believe the department’s draft clauses achieve these outcomes.’

Yesterday’s release opens the department’s second round of industry consultation on the code.

Three meetings have been scheduled from 29 January to 1 February 2019 in the Victorian towns of Warragul, Echuca and Warrnambool. These will run in parallel with receipt of online submissions until 15 February 2019.

Further details on the department’s process, including access to the draft clauses and Regulatory Impact Statement can be found at https://haveyoursay.agriculture.gov.au/dairy‐code‐conduct.

Media Contact:

Australian Dairy Farmers

E: media@australiandairyfarmers.com.au

AUSTRALIA’S dairy industry is warning that any plan to drain an extra 450 gigalitres (GL) of water from the Murray Darling Basin for the environment must be viewed as a last resort, once the primary 2750GL target set by the Murray Darling Basin Plan has been secured and only if there are no negative socio-economic impacts.

Peak advocacy group the Australian Dairy Industry Council (ADIC) has urged, in a submission to the Department of Agriculture and Water Resources consultation on efficiency measures, for a stronger socio-economic test to assess the neutral or positive impacts of all efficiency projects, including a cost- benefit analysis and consideration of any future effects on communities.

The ADIC submission stated that there was “compelling evidence the loss of up to 450GL of water in the absence of a robust social and economic test would have severe impacts on milk production, processing and the viability of communities in the Basin.”

The Murray-Darling Basin is home to approximately 1,405 dairy farms, representing more than 1.8 billion litres, around 20 per cent of Australia’s total milk pool.

ADIC Water Taskforce Chair Daryl Hoey said while the organisation supported the goal of achieving better environmental outcomes, there was little evidence that extracting 450GL of water out of the consumptive pool before first securing the Basin Plan’s 2750GL target would benefit the environment.

“Dairy farmers value our rivers and support the improvements that have been made to the Basin, but there may be more pain to industry with little gain for the environment if we try to take out an extra 450GL of water before we even reach the legislated target,” Mr Hoey said.

“The Australian dairy industry is our third biggest agricultural industry, worth $4.3 billion at the farm gate, and we must cautiously assess the potential effects on farmers the broader Basin communities.”

The federal Government previously compiled a report capturing feedback from Basin communities regarding the current socio-economic neutrality test.

Mr Hoey said the ADIC was pushing the Government to immediately release the report.

“All information and relevant reports need to be made available to ensure that industry, Government and communities have an informed debate; this is only fair,” he said.

The ADIC is also requesting that the proposed timeframe for constraints projects be pushed out from the mandated 2024 deadline, in line with a recommendation handed down by the Productivity Commission in its five-year review of the Basin Plan.

“We acknowledge there is a great degree of difficulty associated with assessing the impacts of projects on the viability of the connected irrigation system in the southern Basin,” Mr Hoey said.

“It is necessary to review the original timeframe to accommodate the delivery of constraints projects.”

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

Dairy Associations representing the majority of global trade in dairy products are calling on G20 Ministers to prioritise maintaining, reforming and reinvigorating the multilateral rules-based trading system.

We have come together as representatives of the dairy industries in Argentina (Centro de la Industria Lechera); Australia (Australian Dairy Industry Council); the European Union (European Dairy Association and Eucolait); New Zealand (Dairy Companies Association of New Zealand); the United States (International Dairy Foods Association, National Milk Producers Federation and U.S. Dairy Export Council) and Uruguay (Camara de la Industria Lactea del Uruguay) because of the collective importance we place on there being a rules-based multilateral system which is respected and adhered to.

We strongly agree with the G20 Trade Ministers statement of September 2018, that international trade is an important engine of growth, productivity, innovation, job creation and development. The multilateral trading system has supported trade and contributed to unprecedented improvement in standards of living around the globe over the last 60 years. Since Agriculture was brought under the WTO framework, by the 1995 Uruguay Round agreement, dairy trade has nearly doubled, as regional and global food chains have expanded to provide high quality dairy products to an increasing number of consumers at affordable prices.

We also agree with G20 Trade Ministers that Agro-Food Global Value Chains are one of the most important means to achieve a sustainable food future. It is therefore important that all WTO members respect their WTO commitments and work collectively to strengthen and advance the WTO frameworks.

Our organisations collectively call on G20 leaders to reject trade distorting actions, such as imposing unscientific, overly burdensome or trade-distorting nontariff regulations; unilaterally raising tariffs in ways that are not WTO-compliant; or providing WTO illegal export subsidies. These actions undermine the functioning of value chains, lead to trade diversion, more volatile commodity prices and lead to a less efficient allocation of resources with higher costs.

We urge G20 members to intensify efforts to establish a roadmap for the WTO that cements its important role into the future.

We recognise that the WTO needs to continue to adapt to changing global economic and trading circumstances to address current concerns, maintain its relevance and lay the basis for future, sustainable growth in trade, including for dairy. We consider the changes needed include:

• reform of the dispute settlement system;
• improving transparency and timeliness of subsidy notifications;
• clarifying the procedures for administering tariff quotas to markedly improve fill rates; and
• additional improvements to address trade-distorting practices.

RETROSPECTIVE milk price step-downs should be banned and contract disputes between farmers and processors handled through a thorough complaints and mediation process, according to Australia’s peak dairy lobby.

The Australian Dairy Industry Council (ADIC), which comprises peak industry bodies Australian Dairy Farmers (ADF) and Australian Dairy Products Federation (ADPF), representing farmers and processors respectively, has submitted a draft code to the Department of Agriculture and Water Resources to be considered during the consultation process.

Under the proposed ADIC Code:

The draft ADIC code is the result of an extensive review the organisation conducted into the dairy industry’s current voluntary code and addresses the recommendations handed down by the Australian Competition and Consumer Commission (ACCC) in its report into the dairy sector.

“The ACCC identified a number of areas that need fixing and our aim is to help the Government implement a code of practice that improves the relationship between all parties,” Mr Richardson said.

Farmers and processors are encouraged to provide feedback on the code, either by attending regional meetings being organised by the federal Department of Agriculture and Water Resources, calling 1300 044 940, emailing dairycode@agriculture.gov.au or visiting the website https://haveyoursay.agriculture.gov.au/dairy-code-conduct for further information.

The Department has committed to release a detailed draft mandatory code for feedback later this year.

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

The Australian Dairy Industry Council (ADIC) welcomes the signing of the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA). The IA-CEPA will see the ultimate elimination of all dairy tariffs, building on the outcomes of AANZFTA – the ASEAN Australia New Zealand Free Trade Agreement, Australia’s existing trade agreement with the ASEAN member states.

Indonesia is a major destination for Australian dairy exports and ranks only behind Greater China and Japan as Australia’s third largest dairy export market on value terms. In 2017/18, Australia exported over 60,000 tonnes of dairy to that market, valued at over A$200 million.

Indonesia’s demand for dairy is set to continue to build on the back of its increasingly affluent 260 million strong population.

As Australia’s nearest neighbour with strong existing ties with our dairy industry, the conclusion of IA- CEPA will enhance the naturally emerging opportunities that are presenting themselves in Indonesia.

Specifically, the IA-CEPA will deliver the following benefits for Australian dairy exports destined for Indonesia:

• Elimination of remaining tariffs on entry into force for SMP and WMP;
• Elimination of remaining tariffs on entry into force for grated or powdered cheese; and
• Elimination by 2026 for remaining tariffs on non-liquid milk, (6% or less fat) and by 2033 for tariffs on liquid milk (6% or less fat).

Dairy is also pleased to see that that under IA-CEPA, a cooperative mechanism to enable regular discussion of non-tariff measures (NTMs) will be established. These NTMs, including measures such as licencing arrangements and product testing regulations, can be significant hurdles for Australian dairy exports into markets like Indonesia and add significant costs to doing business.

The Australian dairy industry congratulates the Australian Government and the Australian negotiators for their contribution to this positive result.

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au

A robust and transparent test to determine the socio-economic impacts of removing an additional 450 gigalitres (GL) of irrigation water from the Murray Darling Basin is critical if the impacts to local communities are to be full understood, according to the country’s peak dairy industry body.

The Australian Dairy Industry Council (ADIC) is urging state and federal water ministers to consider any impacts the test would have on dairy jobs and local communities ahead of Friday’s Ministerial Council meeting in a bid to beef up the socio-economic neutrality test currently in place under the Murray Darling Basin Plan.

ADIC Water Taskforce Chairman Daryl Hoey said the current test was measured at an individual level rather than a community level.

“At the moment, a farmer might sell their water to the Commonwealth and because the farmer received payment, it is considered to have a positive outcome,” Mr Hoey said.

“However, there is no evaluation of what the loss of water means for the region and its future viability.

“Dairy farmers value our rivers and support the improvements that have been made to the Basin, but irrigation communities are worried the current ‘neutrality test’ does not consider community impacts when water is removed.

“Any socio-economic test must be fair for all farmers because, as it stands, local dairy dependent communities cannot tolerate more job losses.”

Data released last year by the Murray Darling Basin Authority (MDBA) revealed job losses in Basin communities of up to 40 per cent in agriculture, and up to a 60 per cent loss in irrigation employment in some regions.

The MDBA also estimated future water recovery measures would lead to a further 9 per cent slump in the gross value of irrigated production. Analysis by consultants RMCG found that milk production would be slashed by 235 million litres in the southern Basin alone, putting around 500 jobs at stake in the district.

The deal struck between the federal Government and Opposition also includes expressions of interest for on-farm projects which would involve farmers receiving funding to upgrade their irrigation practices providing they return a portion of their water to the Commonwealth.

“Unfortunately, these projects simply take irrigation water out of production. The Commonwealth and States must look for water projects that do not take water from the consumptive pool,” Mr Hoey said.

“We certainly understand the long-term desirability for all irrigation districts to be as efficient as possible. But unless individual programs can demonstrate that they will not produce negative flow on impacts for communities they are unlikely to gain support.

“Ministers should also recognise that the social and economic neutrality impact test must consider impacts beyond the farmgate. Farm services, processing and transport jobs will reduce if an on-farm efficiency project removes water from the irrigators pool. The economies of scale for dairy processing sites will be compromised and maintaining local infrastructure will become less viable”.

The ADIC will continue advocating ensuring the neutrality test is measured at a community level.

Media Contact:

Ashley Mackinnon, Public Affairs Manager

M: 0407 766 153

E: media@australiandairyfarmers.com.au