What’s next? Insight into QDO’s next steps to increase the farmgate price.

In March this year, QDO achieved a significant success with removing $1 litre milk from supermarket shelves.

This was not our end game; it was our start.

The campaign was intended to remove the artificial floor price created by marketing $1 milk. The incremental price increase that farmers have received as a result of this campaign is by no means enough.

Over the last few months we have had a few members ask what QDO is planning to push for a higher, sustainable farmgate price.

Our first campaign capitalised on consumer awareness and support for farmers facing drought conditions to spearhead the push to increase the farmgate price. While over 65% of Queensland is still drought declared consumers, those who live in our major population centres are receiving steady rain and don’t see that the drought continues and continues to put the future of our industry in jeopardy.

Is it fair? No. Is it logical? No. Unfortunately for us all, it is simply the fact that we are faced with.

While they may seem far removed from the negotiating table that we are used to, the first campaign showed us that the 24 million odd Australians consuming our product daily, are powerful allies for our industry.

Educating consumers about the impact that their purchasing behaviour has, is vital to negotiating a higher farmgate price and this is our first step.

QDO is working with other state organisations to develop the strategy. A lot of planning, meetings, consultations etc are taking place in the background as we develop the next campaign to increase the value across the whole dairy cabinet.

We will be consulting with processors, supermarkets, relevant politicians and government bodies over the coming months so that the campaign has the best chance of lasting success.

Simply put, there is no quick fix. Drought and many other factors continue to put pressure on farm production costs, and these won’t end any time soon. But to ensure that we get farmers a sustainable price, we need to work smarter and we need to work together.

If you would like to help once the campaign kicks off, please get in touch with the QDO office.

QDO President – Brian Tessmann

 

Access to skilled overseas workers now easier for Australian dairy farmers.

Dairy farmers now have more opportunities to attract and retain staff, after skilled overseas workers employed under a Dairy Industry Labour Agreement were made eligible for permanent residency.

The changes were successfully progressed by the Australian Dairy Farmers, working closely with Dairy Australia, making the Australian dairy industry more attractive to skilled international labour.

The pathway gives dairy farmer Kristen Clark, from Finley, NSW, the opportunity to retain her skilled overseas worker who has developed a strong understanding of her farming system.

The fifth-generation dairy farmer milks 900 cows in the Riverina region alongside her mother, Helen and sister, Donna, producing more than eight million litres per year.

Kristen employs four family members on the farm, as well as five long-term local staff.

With farm workers increasingly hard to find in her local area, Kristen has employed a farm hand from Guatemala for the past five years under a temporary visa through a Dairy Industry Labour Agreement.

"We have always struggled to build our workforce and fill positions by getting locals on the farm," Ms Clark said.

"We fill the gap with overseas workers, but the issue is that is they're only able to be here for a limited time and they're generally unskilled.

"The person we've employed has a built her skill base working for us -- when she finishes up, we have to start from scratch with someone else."

For each new farm worker Kristen employs, she estimates the cost to her farm business to be about $2000 in recruitment and training.

As well as reducing the cost of hiring new farm workers, the permanent residency pathway gives Kristen the opportunity to give her staff more training, building their capacity to learn new skills as her mum takes a step back from hands-on tasks.

Kristen also sees permanent residency as an opportunity for her overseas workers to get more involved in the local community.

"We want to employ people who live in our community, so we can give back to our community, but there will always be gaps to fill," she said.

"People with permanent residency can fill that gap, because they get involved in the community as well."

Farm hand Janeth Ventura is excited by the opportunities a permanent residency pathway will bring for her family and her dairy career.

The 36-year-old has raised her two children, aged 3 and 6, in Australia and hopes a permanent residency pathway will allow her to continue living in rural Australia, creating more stability for her family and her role on-farm.

"My father had a small dairy farm in my home country, so I'm in my element with this job and I love working with Australian dairy cows," Ms Ventura said.

"I think working in Australia has improved my skills -- I've learned new abilities because the farming system is so different."

Through a permanent residency pathway, Ms Ventura hopes to upskill and pursue further training.

To vary existing labour agreements or apply for a new labour agreement to enable a pathway to permanent residency for their valued staff, farmers should email: labour.agreement.section@homeaffairs.gov.au.

More information on the Labour Agreement can be found at the People in Dairy website at thepeopleindairy.org.au/visa.

Source: FarmOnline.com.au

Dairy groups split on Coles move to buy directly from farmers.

The Coles move to buy milk directly from farmers has split dairy advocacy groups.

NSW Dairy Connect was glowing in its praise of the move, Australian Dairy Farmers cautiously welcomed it ,while the Queensland Dairyfarmers Organisation said it was difficult to trust the intentions of the supermarket giant.

As the new arrangements will apply only in Victoria and central and southern NSW, the QDO stance at this stage is largely academic as its members won't be affected but it reflects the Queensland organisation's moves to position itself as a leading national organisation.

Coles announced last week it would start sourcing milk directly from farmers in Victoria and southern and central NSW from July.

Saputo Australia would continue to pack the milk for the supermarket chain's discount lines, which have sold for $1.10 a litre since March.

Coles has put out the call to Victorian and NSW farmers interested in contracting their milk production to send in an expression of interest.

It said was also "looking for opportunities" to expand its direct buying footprint to other milk-producing regions.

Dairy Connect welcomed the announcement that Coles was side-stepping the processor in NSW and Victoria.

"While stakeholders had yet to have access to the fine print involved with the proposal, on face value, it provides a pathway to the future for the milk supply chain," Dairy Connect president Graham Forbes said .

"Notionally, the proposal should deliver price-certainty for up to three years for dairy producers supplying Coles house brand milk."

The plan would address a number of complaints the farmers had about the existing system.

But QDO said while Woolworths had a direct relationship with farmers through its Farmers' Own brand, this was a premium brand that sold at more than $1.50/L, while the Coles deal would apply to its private label milk, that sold for $1.10/L.

QDO said it expected dairy farmers who supplied Coles to receive the full 10c/L the supermarket had promised would be directly passed on to farmers when it lifted the retail price earlier this year.

It also expressed concern about the potential power imbalance between Coles and its suppliers.
The QDO said farmers, as small business owners, already struggled to negotiate with multinational processors for a fair farmgate price. 

It asked what hope would an individual farmer have to negotiate a fair and sustainable farmgate price when up against the might of Coles.

"At this stage, the nuts and bolts of how and what this relationship and process will look like is pure speculation, with only Coles knowing truly what its intentions are," QDO executive officer Eric Danzi said.

The supermarket should be lifting its price of fresh milk to pre-2010 levels.

"What we need to ensure is that this does not give Coles even more power over dairy farmers and does not allow Coles to revert to $1/L pricing," Mr Danzi said.Australian Dairy Farmers said more competition for milk was healthy and the Coles deal had the potential to provide greater transparency within the dairy supply chain between farmers and retailers.

But although saying it was hopeful, it wanted further information about how the deal would work.
It also called on Coles to commit to ensuring that $1/L milk never returned to its shelves.

The most unsustainable part of the dairy industry was the lack of value being returned to farmers through the domestic market.

ADF said it was imperative value was delivered through the supply chain, with farmers receiving their fair share for the hard work, risk and investment they had in this industry. 

This included farmers securing their fair share of future retail price increases across the dairy cabinet.

Source: Farm Online. This story first appeared on Australian Dairyfarmer

Can we trust them? QDO takes on watchdog role following Coles' announcement.

Coles’ announcement that they intend to bypass processors and start a direct relationship with dairy farmers came as surprise to most within the industry and many are trying to determine what position to take. Given Coles’ previous history with the dairy industry, it is difficult to trust the intentions of the supermarket giant.

While Woolworths has had a direct relationship with farmers through Farmers’ Own, this brand competes with other premium branded white milks at a price point above $3 for 2 litres. Coles, however, intends to sell its farm direct milk as its private label.

Coles has previously committed to ensuring all of the additional 10c/L added to its milk price is passed through to farmers. It would be expected that this latest announcement will see dairy farmers who supply Coles receive 10c/L, or around $1.30/kg of milk solids, above previous prices they received.

In their statement, Coles cites its existing ‘successful’ direct producer relationships to show that this proposed model can work to provide health profit margins for both retailers and the farmers.

The 2018 ACCC report into the dairy industry identified the imbalance of power within the value chain as the key to the failure of the dairy industry. The Mandatory Code of Conduct for the dairy industry, that is currently being drafted as a direct result of this report, seeks to address the imbalance of power between farmers and the processors.

As individual small business owners, farmers have struggled to negotiate with multinational processors for a fair farm gate price. One must question then, what hope an individual farmer will have to negotiate a fair and sustainable farmgate price when they go up against the might of Coles.

 The fact is that Coles is capitalising on consumer sympathy for the dairy industry. The massive support that consumers gave dairy farmers during last year’s Drought Relief campaign has prompted Coles to use this to boost sales of its discount product lines over branded milks. Consumers will undoubtedly believe that this new arrangement has been designed to benefit the farmer and therefore support it.

 “At this stage, the nuts and bolts of how and what this relationship and process will look like is pure speculation, with only Coles knowing truly what its intentions are” said QDO Executive Officer, Eric Danzi.

 “We need to work with the supermarket giant to increase the RRP price of fresh milk to pre-2010 pricing. In today’s market that would equate to around $1.50/L. which would allow farmers to receive a fair farmgate price.

 What we need to ensure is that this does not give Coles even more power over dairy farmers and does not allow Coles to revert to $1/L pricing”.

 <ENDS>

 For media enquiries please contact Sarah Ferguson 0424 416 317.

World Milk Day to highlight the crisis within the Queensland dairy industry. What you need to know.

Saturday June 1 is World Milk Day. It is meant to be a celebration of the dairy industry and an acknowledgement of the value of dairy in our diet and lifestyle.

This year however, we need the International Milk Day to be used to highlight the desperate state of the dairy industry in Queensland.

The bald fact is that the Queensland dairy industry can no longer meet its domestic market consumption requirements and we are unlikely to recover production volumes to meet domestic demand.

Drought conditions and the poor farmgate price for raw milk have led many farmers to sell up and leave the industry. Not only is this devastating for the farmers, their family and communities involved, but it is sad for all Queenslanders who love their dairy.

On average, Australians consume 102 litres of fresh milk per person, per year.

In years gone by, around 95% of all milk produced in Queensland went into fresh milk product; that is, fresh bottled milk. The 5% remaining was used by small processors manufacturing boutique cheeses, yoghurts and ice-cream. Now, milk needs to come from interstate to meet our state’s consumption.

Consumers and the media are somewhat fickle in their attention to the climate conditions that farmers are still facing. The rain received in the coastal regions over the Easter period led most Queenslanders in major cities to believe that the drought that was so widely covered by the media in 2018, was over.

Only one month ago, the Queensland Government was forced to extend the drought declared mapping area to include all the Scenic Rim and Lockyer Valley, Burnett and Rockhampton regions. Now a staggering 65% of Queensland is drought declared and the Bureau of Meteorology do not have any hopes of unseasonable falls over the coming months.  

Farmers continue to struggle with the price of feed and now water for irrigation is fast becoming a point of major contention across Australia.

The end of $1/L milk was certainly a win for dairy farmers in Queensland. It not only gave farmers a price increase but clearly showed the market that farmers would no longer accept retailers setting a minimum RRP for fresh milk.

One thing however still mars the success of the campaign. It is a widely held misconception that those farmers supplying a processors without a generic contract currently receive no income from the 10-cents a litre.

It is in fact only a portion (around 30%) of most farms’ milk that is allocated to private label (Coles/Woolworths/Aldi and IGA home brands) receives the 10-cent price increase. What this means is that farmers are on average receiving only around 3-cents more per litre across their full volume.

“We didn’t hear a single complaint from shoppers when the price of private label milk increased by 10 cents. As our research showed, shoppers are happy to pay more if it helps the farmers and helps ensure they get fresh milk in future. This doesn’t just apply to cheap milk, but to branded milk too” said QDO Vice President Matthew Trace.

“Unfortunately, help has come too late for many farmers and we’ve lost the ability to supply 100% Queensland made milk unless farmers can make a sustained profit.

While our farmers appreciate the price increase and appreciate the support that consumers have shown, the 10-cents increase needs to be applied to all the milk we produce. All processors need to utilise the opportunity that the end of $1/L milk provides them. They have to have the guts to increase the RRP for branded milk and pass that full increase back to their farmers. That way they will be able to secure their milk supplies by ensuring that dairy in Queensland is profitable” said Mr Trace.

ENDS

Thank you to the Australian media for supporting our campaign.

Ben Fordham.PNG

We want to thank the media outlets who have continued to run the story and continue to support this week’s messaging: If Coles won’t support the levy, we’re asking the public not to support Coles.

The value of the media’s support cannot be understated. They have helped make something that could have been a flash-in-the-pan story into something that continues to gain momentum two weeks in.

Last week, Prime Minister Scott Morrison said that he would support the levy, if Coles were on board. That our newly appointed leader would say such a thing, truly demonstrates just how much power we have allowed the supermarkets to acquire.

3GB host Ben Fordham went out on a limb yesterday when he interviewed QDO member Jo Bradley. For 8 ½ minutes, Ben and Jo berated supermarket giant Coles regarding their lack of commitment and according to the 3GB producers, the phone lines were jammed with callers intending to boycott Coles.

The media will have no doubt receiving pressure if not outright threats since Coles is one of the biggest advertisers in Australia; so we are truly appreciative of their ongoing support.

To listen to the interview with 3GB please listen here.

Why marketing matters

UK BRAND CRAVENDALE'S SUCCESSFUL CAMPAIGN SHOWS THE VALUE OF MARKETING TO THE DAIRY INDUSTRY

UK BRAND CRAVENDALE'S SUCCESSFUL CAMPAIGN SHOWS THE VALUE OF MARKETING TO THE DAIRY INDUSTRY

It would be fair to say that our members' knowledge and expertise is in the intricacies of dairy farming - not marketing. But in today’s market, where market forces, retail pressure and consumer fickleness effect the dairy industry, you need to be aware of how marketing and consumer behaviour is affecting your bottom line. 

Household staples such as bread and dairy are particularly prone to being categorised as commodities, as their very popularity and naturalness works against them. They are bought frequently, but without a great deal of thought as they are seen as raw materials which are essentially alike.

An international survey by a leading market research consultancy saw commodity products described as “overlooked, taken for granted, bland, boring” and “bought on autopilot, often on price or Best By date.”

There are several strategies that commodity products can use to change consumer behaviours. Clever campaigns that create an emotive connection or tap into leading consumer trends are the key to reset consumer indifference towards commodity products and their brands.

The providence of locally-sourced foods becomes one of the key deciding factors in fresh food purchase – particularly dairy. According to leading research institute Canstar, 10% more Australians feel that purchasing locally-sourced food is important to them compared to five years ago – a promising trend that continues to grow.

UK brand Cravendale, used a clever idea to justify the price differentiation for their filtered milk and changed the way shoppers perceived the brand versus private label and saw “The cows want it back" campaign (click to view) run effectively for over 5 years and was noted to be the one thing that the company did that could be directly attributed to its sizeable profit margin increase.

Any member who would be interested in implementing their own marketing plans or participate in the Buy Local campaign should email her at comms@qdo.org.au or call 3236 2955.