Dairy

UDV calls for simple milk price structure

By Sophie Baldwin

The UDV recently held a series of meetings across Victoria calling for a simplified milk payment structure from processors.

The UDV believes the current system is hurting the dairy industry by encouraging farmers to produce milk at times when it may not be profitable for them to do so and, instead of improving efficiency, this is actually pushing up the cost of milk production, to the extreme detriment of the industry.

The information in the presentation was compiled by dairy consultant John Mulvaney who put forward the Manika milk pricing system — a system which consists of two prices, one for the three months of spring and one for the rest of the year.

Under the system, farmers would be paid the same price regardless of processor.

Penalties would still apply for elevated cell counts and a loyalty bonus of three cents per year, capped at 20¢, was also available.

More than 250 farmers from across the state attended the meetings and UDV president Adam Jenkins said the feedback was extremely positive.

Kyabram farmer Susan Wearden said there was a lot of angst out in the dairy community regarding milk price.

‘‘Milk price is full of deception and this meeting was a bit of a lightbulb moment to show we can actually do better than this — it showed a way forward and illustrated the risks if we don’t do anything.

‘‘The information focused on a profitable way forward to produce milk, and the factories need to work with us on this; this is a real opportunity for our industry as a whole,’’ Mrs Wearden said.

Dairy farmer Craig Emmett, from Stanhope, was in attendance and he agreed the current milk price structure is too confusing.

‘‘Today was terrific. I think with the current set-up we have, we are in a race to the bottom if we continue on without any change,’’ Mr Emmett said.

He said he would like to remain in the dairy industry and this had given him some hope for the future.

There is no denying the industry is in crisis.

According to Dairy Australia, milk production in the Goulburn-Murray Irrigation District has fallen from 2.3billion to 1.74billion litres during the past five years.

Mr Jenkins said because milk production had fallen, processors were trying to keep their facilities operating at an efficient level by holding onto existing milk while attracting new milk.

‘‘The pressure on processors to find replacement milk as farmers swap factories leads to confidential deals and we are left with an unjustifiable spread in prices between farmers supplying the same processor.

‘‘We need a payment system that allows us to maximise our comparative advantage.

‘‘One that encourages farmers to produce milk efficiently and at a time that suits their natural resources, while also acknowledging the requirements of the processors,’’ Mr Jenkins said.

He said the current system penalised new entrants with an unfair payment system that limited growth and caused them to leave the industry when times were tough.

‘‘With fewer young farmers entering and staying in dairy, we need to decide how to rebuild the industry or if we should just sit by and watch it dwindle,’’ Mr Jenkins said.

Processors are also under pressure to adapt their pricing structures after the Australian Competition and Consumer Commission recently released a report into the dairy industry in which it recommended re-regulation as a feasible path for the sector.

Mr Jenkins said the industry must unite to support a simplified milk payment system to improve confidence between farmers and processors.

■Farmers can find out more at: www.FairPayments4Dairy.com