Consumer Confusion

By Brian Tessmann, QDO President

There is a plethora of voices in the media these days trying to influence consumers in their buying choices. Just in the last few weeks I have seen conflicting views on television where one show says eating a certain food is beneficial for your health while another show says the opposite. Some media sources advocate for one-production systems saying a small, raw, and organic or cottage-type production system is best for the environment only to see other experts emerge with opposite views. On top of this, the thinking consumer is concerned about what effect their purchase has on farming families, regional communities and the economy at large.

Many members of the industry claim that all consumers want is the cheapest product, but while this may be the main purchasing consideration for some, there are many for whom the type of considerations above mean more than saving what may be just a few cents on their weekly shopping. One clear example of this has been the response of consumers to the buy-branded milk campaign which has lifted sales for a number of smaller local based brands by as much as 70%. What these discerning consumers need from the industry and the government is factual, reliable and easy-to-understand information right there on the product. This is of course exactly what the proposed sustainable milk mark is designed to do by informing consumers where the milk comes from and whether the farmer received a regionally sustainable return. The campaign has the opportunity to be very valuable to Queensland farmers if only enough consumers are willing to buy local milk and support growing dairy farms in our regional communities. However if the consumers don’t care as some say, then it will not be worth much at all.

Mixed Fortunes from Debbie

By Ross McInnes, QDO Vice-President

When Tropical Cyclone Debbie crossed the North Queensland coast two weeks ago, it looked almost as through the major dairy regions had dodged a bullet. However, as the system moved inland the true impact of Cyclone Debbie, both positive and negative, become apparent. Many dairy farmers on the Darling Downs welcomed much needed rain while others in the South East corner were inundated by localised flooding events that resulted from the record rainfall.

Major flooding occurred in many catchments in SEQ and Northern New South Wales with the Logan, Tweed and Richmond river systems measuring record flood heights. This resulted in utter devastation for many of our members. Over 30 farms were severely impacted in Scenic Rim and Logan City with most of the damage to crops and fencing.

One of the things that Dairy does very well is pull together in traumatic times. A team effort across the industry organisations of Queensland Dairyfarmers’ Organisation, Subtropical Dairy, milk processing companies, Queensland Department of Agriculture and Fisheries and Dairy Australia helps to ensure the immediate welfare of all farmers is addressed and crucial information regarding damage and impact is assessed. This information is extremely important to build a case for disaster relief that agriculture can apply for.

Queensland farms impacted by Tropical Cyclone Debbie represent some $45 million in GVP. QDO welcomes the announcement by the government to initially activating Category B assistance.  The industry will continue to assess the impact of recent events in order to activate Category C assistance.

The immediate damage bill looks to be in excess of $4 million on the dairy industry. It will be a tough road ahead with many lingering production impacts and feed gaps resulting from the floods.

QDO is working closely with the Scenic Rim Regional Council and local State member for Beaudesert Jon Krause to get assistance through organisations such as BlazeAid to help with the restoration and recovery works across farms.

You are not going through this alone, QDO is here and available to help Queensland dairy farmers, just like it has in the past.

Canberra Wash Up

By Brian Tessmann, QDO President

Queensland Dairyfarmers’ Organisation’s (QDO) visit to Canberra last week not only provided our national representatives with a better understanding of the issues affecting our domestic dairy industry, it also gave QDO some fresh insights into the rationale behind current policy positions.

Some positive news from our visit was that the ‘effects test’ Bill passed the House of Representatives. The challenge now is getting the laws through the Senate.

During our visit to Parliament House a number of members or advisors challenged us on our views on how to fix the domestic dairy industry. The one thing however that everyone agreed upon was there was something fundamentally wrong with the domestic dairy market and it is wasn’t the dairy farmers.

Labor appears to have locked itself into opposing the ‘effects test’, however most others across the political spectrum support the much needed change. What we were told by Labor and many others was that the ‘effects test’ was no silver bullet and that more needs to be done. QDO agreed in principle, but remains resolute in getting the ‘effects test’ passed as an important piece of an industry remedy.

Many politicians were keen to zero in on the relationship between farmers and processors and I believe this is key to the current ACCC inquiry into the industry. It was also interesting that one Coalition member said, while the ‘I buy branded milk’ campaign was good, they felt we should have a brand or logo on bottles to indicate that buying this bottle was positive for farmers. I informed them that is was exactly part of what the proposed Fair Milk Logo here in Queensland was designed to do.

While there was considerable debate in our discussions I would like thank those members who have long supported both the ‘effects test’ and other measures to repair the domestic dairy industry. QDO will continue to advocate for a fairer system on behalf of our dairy farmer members at both a state and federal level.

QDO in Canberra

By Brian Tessmann, QDO President

This week Queensland Dairyfarmers’ Organisation (QDO) is in Canberra to sure up support for the vital changes and improvements the northern dairy industry needs to operate sustainably in a free and fair market.

Unlike the many previous visits QDO has made to Canberra on domestic market issues this time QDO is being assisted by the team at Ethical consulting. These guys have been of assistance in first opening the doors to the necessary modifications so Eric and I can explain why they are needed and how they should be implemented.

Our priorities for this trip include articulating our position around key issues such as the ‘effects test’, the ACCC Dairy Inquiry and the ongoing Senate Inquiry.

We will be visiting members and senators from right across the political spectrum but as Labor is currently still the major obstacle to the implementation of the effects test. Convincing the Labor party members of the merits of the ‘effects test’ will be the focus of our efforts. Without the Labor party support there is no guarantee that the laws will pass parliament. This will be a major step backwards in our efforts to address the many issues affecting the viability of the dairy industry in Queensland. 

QDO has not forgotten the support it has received from Queensland LNP senators Matt Canavan and Barry O’Sullivan. Both have been great supporters of our industry and reintroducing the ‘effects test’. On behalf of our members we thank them for their work to date on the issues affecting our industry.

The fact is that we need a free and fair market for our members to operate in. This will create an environment that will be mutually beneficial for suppliers, processors and the major retailers. QDO is working hard to represent its members and the industry as a whole as we seek to get the support we need to make the real and lasting changes for the industry.

Dairy farmers and processors need to work with not against each other

By Brian Tessmann, QDO President

The Queensland Dairyfarmers’ Organisation (QDO), alongside the entire dairy industry, were surprised and disappointed with Parmalat Australia’s unprecedented attack on Queensland’s dairy farmers by labelling the farm sector “unwilling to make itself competitive”.

Unfortunately, the cost of milk production rises the closer you are to the equator. The warmer climate, lower quality tropical pastures and fodder all contribute to an overall higher cost of milk production. In addition, processors in Queensland require constant year round milk production to ensure shelves can be stocked 365 days per year.

The lower production costs in southern Australia stem from the cooler climate and the seasonal spring production system that relies on the availability of temperate pasture. Queensland farmers are currently involved in the same dairying improvement programmes including those made with animal genetics.

Since 2011, times have been tough for both processors and farmers’ alike. Both farmers and processors have shared in the pain caused by the introduction of $1 per litre milk. At that time Parmalat was forcedto implement a 3 cents per litre drop on the price it paid its suppliers.

QDO is committed to seeing all milk sold in Australia sold for a sustainable price that equally benefits both farmers and processors and ensures a fair rate of return for the industry as a whole.

It is indeed strange that the Fair Milk Logo bill would evoke such concern from Parmalat. The logo wouldexist solely as a voluntary consumer information tool, not in any way resembling a compulsory ‘quasi regulatory’ system. The Fair Milk Logo simply empowers consumers to identify and hopefully support local fresh milk products or processors that pay a sustainable price to Queensland dairy farms. QDO continues to work with Parmalat and all processors to improve the sustainability of Queensland milk production to ensure all sectors of the supply chain improve the viability and longevity of the state’s dairy industry. The Fair Milk Logo simply builds upon this this commitment and will in the long term deliver for consumers, retailers, processor and farmers. 

Prices up, volume down in South

By Brian Tessmann, QDO President

While Queensland dairy farmers continue to worry about price drops in the local milk market, the call for supply to meet demand in southern Australia is very much on the rise.

Although the export focused market is coming off a low base following last year’s price drops with Murray Goulburn, the latest Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) report indicates that milk prices in southern Australia are now rising by about 2% and are forecast to rise by another 7% in 2017/18.

These forecasts suggest that milk prices in the region will be headed back to attractive levels as early as 2020.

Meanwhile, milk production in Victoria has collapsed with a fall of 7.2% in January contributing to a year to date (YTD) drop of 9.5%. The drop was particularly severe in Northern Victoria where there was a drop of 17.2% for January and a YTD drop of 17.5%. By the end of the year, the drop could accumulate to include over 350 million litres.

The production drops did not stop at the Murray River either with southern New South Wales dropping a YTD total of 9.7% and 11.4% in January leading to a collective drop of 8.4% across the state for the month. This is predicated to encompass a total reduction of over 70 million litres.

In the past, most autumn periods in New South Wales and Queensland combined did not produce enough to supply their combined domestic demand. On top of this, southern NSW is committed to extracting a significant volume of milk for manufacturers at that time of year.

The southern shortage came into focus last week with United Dairyfarmers of Victoria (UDV) blasted the supermarkets for sourcing cheap international cheese for their stores’ brand after Australian product became no longer available.

Surely then, any northern processor looking to source milk from a weakening southern dairy industry would need the senses of a bloodhound to find any spare milk without a good home. Even them they would need a full wallet to boot.

Milk Mark gets another Tick

By Brian Tessmann, QDO President

It’s time for voters to call on their state MPs to take decisive action on giving dairy consumers clearer and simpler choice on which milk they put they should put in their shopping trolley to support Queensland farmers.

Last Wednesday (1/3/17) I once again represented QDO in presenting our case to the Queensland Parliamentary Agriculture and Environment Committee, this time speaking in favour of the proposed ‘Fair Milk Price Logo’. The committee also heard from the Australian Competition and Consumer Commission (ACCC), the Department of Agriculture and Fisheries (DAF) and local government. 

The bill is based on a voluntary system and designed to give milk consumers reliable information to assist in their milk purchasing decisions. The ‘Fair Milk Price Logo’ can go on bottles as long as the requirements that the milk has been sourced in Queensland at a recognised sustainable price have been satisfied.

Some processors have indicated that they would not participate as they cannot identify milk from outside Queensland in their system. There have however been some recent notable examples of brands playing off the back of Queensland produced milk. 

It was disappointing to see a processors such as Parmalat make a submission opposing the Bill. Its submission describes the ‘Fair Milk Price Logo’ bill as ‘quasi re regulation’ and infers that Queensland dairy farmers have shown ‘no interest in being nationally or internationally competitive’. The submission also questions the future for dairy farming in Queensland by drawing comparisons to its viability as growing bananas in Victoria. I urge all Queensland dairy farmers to read the submissions to the committee to see the regard some processors have for them and our state’s industry.  

Most presenters at the committee gave either cautious or enthusiastic support for the bill. In fact, representatives from the ACCC said while they had not studied the bill they understood it was about giving better consumer information on how the product was sourced, a concept in principle they supported. Put simply, this bill empowers consumers to support local fresh Queensland milk. It gives consumers a clear choice of supporting a local and successful dairy industry that employs and supports Queenslanders.

International Dairy Prices Heading Upwards

By Brian Tessmann, QDO President

The findings of Dairy Australia’s latest Situation and Outlook (S&O) Report paints a picture of a domestic industry struggling while there’s a recovery underway in the international export focused sector.

Last Wednesday Dairy Australia’s John Droppert presented the S&O findings to the Australian Dairy Industry Council (ADIC) workshop in Melbourne. The main takeaway was that Australian industry had endured a ‘full cream milk’ crisis that had now entered recovery in recent months.

Global

  • Global dairy supply and demand balance is better than it has been for some time and prices for most products are now above five year average levels. While the Russian sanctions issue had not been resolved, there remains hope in the market that Donald Trump would soon bring Russia and its demand for dairy back into the fold.
  • The ongoing situation in European meant countries like Holland that were expanding rapidly two years ago now need to reduce production to conform with European Union (EU) rules.
  • Dairy fat with butter and other fat products continue to be the hot items with significant growth in value.

Australia

  • Australian production looks to be down by around 9% this year to as low as 8.8 Billion litres.
  • Gains made from the sales of branded products last year through the ‘I buy branded milk’ campaign continue to hold reasonably well above averages seen prior to the campaign, however there has been some drop off.
  • Cheap or dumped low quality dairy products landing on our supermarket shelves will be a threat to local product

Dairy Australia’s S&O noted that while the world market is looking up there is still pressure on prices for farmers supplying the domestic market. So while market forces may be improving international prices, the domestic market clearly requires our governments to help facilitate a fair framework that repairs the blatant imbalances that become so glaringly obvious to everyone during the dairy crisis.

Electricity charges increase 324%

By Ross McInnes, QDO Vice-President

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If a dairy farmer wanted to increase their return on investment, considering that their income cannot increase due the fixed nature of supply contracts, one creative way would be to devalue the farm assets to make the imaginary returns look better.

If the electricity industry wanted to make more money, but the regulator set the rate of return, the creative way to achieve this would be to inflate your asset value so in turn higher rates can be charged for maintenance. This is the kind of creativity Queensland’s electricity sector has been thriving on for some time now.

This has resulted in unmanageable increases in electricity charges for rural industries year after year that appear not to have any no end.

Consecutive Queensland Governments squeezed unsustainable performance dividends from the electricity industry. This resulted in a substantial long term underinvestment in the electricity network requiring a surge in network charges to compensate for the overdue catch-up maintenance.

Because network charges began to form a larger proportion of the total cost, the Queensland Competition Authority (QCA) formed the view that off peak charges were suddenly being overly subsidised. For irrigators trying to minimise costs and increase water use efficiency, this resulted in the unsustainable increases seen over the past decade.

In December 2008 the off peak charge was 7.1 cents per KWh. The current charge is 23 cents per KWh– an increase of 324%. This level of increase regardless of the industry is totally unacceptable. A farmer operating one 30KW irrigation pump, 10 hours a night 5 nights a week on off peak power is paying $238 per week more than 2008 on that component of the bill alone. Minister Bailey needs to explain where we are heading with prices for the next decade.

More than a decade ago, then Premier Peter Beattie promised cheaper electricity by bringing in more competition. However, when prices spiked, the Premier’s excuse, reminiscent of a line from Animal Farm, was simply, “prices are cheaper than if we had done nothing”. Sadly, this same dismissive attitude still dominates the Government’s response to this crisis.

ACCC gets message loud and clear

By Brian Tessmann, QDO President

Over 100 dairy farmers attended Australian Competition and Consumer Commission (ACCC) Queensland hearing in Toowoomba last week and around 200 dairy farmers packed the recent New South Wales hearing in Taree. The size of these turn outs shows just how frustrated and desperate dairy farmers are to see governments address the current market power imbalances plaguing the industry.

While dairy farmers primarily laid the blame on the major supermarkets $1 per litre milk for the gutting of value from the dairy supply chain they also took aim at other market power imbalances. High on this list was the lack of transparency in the industry value chain which resulted in difficulties when negotiating farm gate prices. Inconsistent and varying contract terms reduced farmers’ market options, including the ability to easily transition and change between different dairy processing companies, lowering farmers’ negotiation power.

Additionally, most milk supply contracts currently claim exclusivity of supply so farmers are unable to supply milk to a local cottage dairy manufacturers. These lost opportunities impact upon local communities and dairy farmers’ abilities to diversify their income.

There was widespread disagreement on the figures processors had been used for setting farm gate price when costing milk sourcing and transporting. Examples of this have played out in the ongoing Parmalat farm gate price negotiations.

At the end of the day the message was clear. It was the same message Queensland Dairyfarmers’ Organisation (QDO) gave at the Senate inquiry, that it’s time for both state and federal politicians to stop sitting on their hands and listening to the supermarkets and large milk processors. It is time to take action and give farmers the opportunity they have been crying out for, a fair go.

Listening to the heads of large companies only interested in short term corporate gain will only spell bad news for our dairy industry. It is time to give farmers the power to rebuild the Queensland and the Australian dairy industry otherwise consumers will no longer have access to local fresh milk.

Dairy Inquiry given fair market message

By Brian Tessmann, QDO President

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After the turmoil of last year’s southern dairy crisis, both state and federal governments committed to conducting investigations into the state of the dairy industry. The purpose of these was quite clear, ensure that the dairy industry doesn’t simply become historical footnote.

One such inquiry is the Senate Economics Reference Committee that recently held a hearings at the Royal on the Park Hotel in Brisbane on Tuesday the 31st of January. Queensland Dairyfarmers’ Organisation (QDO) was called as first witnesses for the day after the submission we made earlier this year. At the committee QDO prosecuted the case for Queensland dairy farmers to be given a fair go by highlighting the damage caused to domestic suppliers by $1 per litre milk by Coles in 2011.

When asked if QDO wanted a return to a regulated market, we were very clear that we did not. However we again reiterated our support for rebalancing the current market to deliver free fair markets where farmers had more bargaining power. We drew attention to the fact that in almost every other western economy that retailers often had less control and farmers had more bargaining power.

Dairy Connect, Premium Milk and Norco Co-op each proceeded QDO and took time to answer the Inquiry’s questions. The major theme throughout their sessions was ensuring that the industry and processors continued to deliver upon consumers expectations of high quality local fresh local milk. This for each of these dairy groups meant continuing to deliver and produce local milk for consumers rather than milk trucked hundreds from down south. Senators were also told that for every litre of milk lost in Queensland production meant there was less from down south available for export.

As QDO and the local dairy industry completed yet another inquiry hearing into the sector our hopes turn to seeing some action and results for our farmers, rather than just continued talk. We need to ensure we have a fair market for the sake of our consumers, our farmers and economy.

Your chance to tell the ACCC

By Brian Tessmann, QDO President

Farmers often tell me how much they’d like to give the Australian Competition Consumer commission (ACCC) and the Government ‘a piece of their mind’. Well, for farmers in southern Queensland, you now get that chance. The ACCC Dairy Inquiry into competition and market fairness in the dairy supply chain is giving individual farmers the opportunity to have their say at a public forum being held 11.30am, Monday 6th February 2017 at the Toowoomba Golf Club. 

This ACCC inquiry is one of a number of investigations into the dairy industry that will hopefully deliver the much needed changes required to the disproportionate levels of market power in the industry. In fact, as I write this I am also preparing to appear at the senate committee inquiry on behalf of Queensland Dairyfarmers’ Organisation (QDO) inquiry being convened in Brisbane.

The major issues that need to be raised at all inquiries are the continued strangle hold and abuse of market power by the large retailers and the fairness and equity outlined in all contracts between processors, retailer and farmers. In particular scrutiny should be applied to how prices are determined alongside supply conditions imposed as part of milk supply contracts. QDO in particular takes exception to the inequitable power imbalance that is created through the exclusivity clauses and processors ability to alter prices every six months without re-negotiations.

At the end of the day, as with all inquiries and investigations, we have assurances that there will be a number of findings and recommendations. What we cannot assure on however is that the governments will listen to its own investigations and to act on them. Even though Agriculture Commissioner Mick Keogh has assured us that ‘this is different to the others’ and that the ‘ACCC inquiry has teeth’, time will have to tell.

All we can do as farmers is get out in force and make sure our voices and opinions are listened to when the ACCC comes to town and make sure the message is clear on what is broken and how to fix it.

Milk producers fear shakeup

By Brian Tessmann, QDO President

Farm gate contract negations between farmers, represented by Premium Milk, and dairy processor Parmalat are headed towards dispute resolution. The worst case scenario would be an outcome that delivers a further collapse in farmer confidence and long term damage to Parmalat’s traditional brands support from consumers.

Media reports over the past two weeks noted that if Parmalat is successful in having arbitrator agree with their proposal for a drop of over 1.5 cents per litre then it will collectively cost the 190 Parmalat suppliers, who make up nearly 50% of Queensland’s dairy farmers, more than $3million in lost revenue.

This farm gate price drop will send financially struggling dairy businesses over the edge. Others will look for either a new processor or a new enterprise for their farm. The sad reality is that $3million is a drop in the ocean for a processor who has now spread its business into every mainland state, yet is has the potential to unravel a substantial portion of the Queensland dairy industry.

Queensland Dairyfarmers’ Organisation (QDO) want to thank the other northern processors who last year decided to hold their farm gate prices. The question still remains however, whether or not processors will remain fair dinkum about sourcing milk in Queensland or whether they want to see the local industry wither so they can truck milk in from down south.

This entire issue would be resolved if as an industry we stopped trying to transfer the current shortfalls that continue in an industry where milk continues to be undervalued and sold at unsustainable low prices. This turmoil and buck passing could be avoided if the major supermarkets raised the price of milk and transferred this value onto the processor and farmers.

Telcos not meeting user expectations

By Ross McInnes, QDO Vice-President

Credit: Fairfax Media

Credit: Fairfax Media

I certainly hope that Minister for Communications Senator Mitch Fifield, Telstra Chair John Mullen and Telstra CEO Andrew Penn had a wonderful Christmas with family and friends.

And I am quite sure if they were near a shop, they would have been able to buy fresh milk anytime, anywhere. It is this strong and reliable relationship between dairy industry and consumers that continues to deliver upon the community’s expectation that fresh milk always be available.

After the 2011 floods milk was in short supply in many shops due to the very real physical barriers present during the disaster. This shortage fuelled competition for product that the community was not used to having in scant supply.

Given our increasing reliance on smart phones telecommunications technologies, there has developed a similar expectation from consumers for this product to be available every minute of every day.

For most of December, everyone in my region (The Scenic Rim) using their mobiles turned into a running joke as to how many minutes before the phone cut out. I personally had one day when the phone cut out 22 times making 4 phone calls.

After talking to my telco I was assured that the problem would probably be fixed within 3-5 working days. Taking into consideration the holidays and weekends during the festive season it had the potential to blow out to 12 days before the issue was fixed!

I wonder what the reaction would be if there was a breakdown in the dairy supply chain and farmers and processors said, we will rectify the problem in 3-5 working days? The consumers rightly would be absolutely livid.

So, is it fair and reasonable to accept this level of services from the telecommunications sector when there is clear expectation from consumers for a 24/7 service, just like milk.

I am sure that while Messer’s Fifield, Mullen and Penn were all able to enjoy fresh milk for their coffee each morning. It’s just a pity that everyone in my region had their expectations let down through the “call failure” screen on repeat. 

Onward and upward in 2017

By Brian Tessmann, QDO President

Fairfax media image. 

Fairfax media image. 

As they are tasked with keeping fresh milk on retail shelves all year round there would have been little rest over the past few weeks for Queensland’s dairy farmers. Queensland Dairy farmers’ Organisation (QDO) is looking forward to the year of exciting opportunities as well as considerable challenges for the organisation and the industry as a whole.

Our industry will continue its calls for fairer and more sustainable domestic milk and dairy market. We firmly believe that for this to become a reality, the support of government will be vital. While we appreciate the efforts of Deputy Prime Minister Barnaby Joyce in getting the ‘effects test’ changes to the Competition Act into parliament, we acknowledge that the reforms still need to pass both houses of parliament. Ensuring these reforms pass will be a QDO priority and look forward to working with the government to deliver this outcome for farmers.

It was reassuring to hear Mr Joyce recently reiterate his position that if supermarkets did not put an end $1 milk, then he would. To date the supermarkets are continuing to thumb their noses at his warning. It was also most disappointing to hear Labor’s Andrew Leigh defending $1 litre milk.

Our state parliamentarians too need to play in helping dairy farmers by supporting the Sustainable Milk Price (Fair Milk Logos) Bill which will go to a vote in state parliament in the next few months. This bill is about empowering the consumer through information so they can make the decision at the checkout to support our farmers.

There are other major state issues that require further government attentionaround biosecurity particularly Bovine Johnes Disease and Cattle Tick Management and Eradication. These are both major issues for the dairy industry that QDO will continue represent. It is essential that government get the right balance that delivers on farm protection and not burdensome over regulation. For its part QDO will continue to develop its industry services to assist farmersmanage biosecurity threats that had previously been managed and delivered by government.

New Technologies on the Horizon

By Ross McInnes, QDO Vice-President

If the dairy industry did not have access to artificial insemination today, would it have consumer support to use it? On face value it may seem unlikely that such a beneficial practice could ever be questioned, but there is a strong lesson from 1945 when A.I. was being introduced into the United States when there was a common misconception that the its’ use would cause birth defects in calves. These ‘facts’ were broadcasted by bull breeders, who stood to lose significant market share and income from A.I. Whenever new technologies emerge, there are always legitimate doubts around safety and benefits, but there will always be some scaremongers raising doubts only to protect their patch.

Australian dairy research has had a proud and successful role to play in the many animal and plant DNA sequence advancements that continue to deliver substantial gains for our industry. One of the new plant technologies that shows the most promise is Genome Editing (GE). This process can change the genetic structure of plants by removing genes that are not required. This process allows the changing of genes within a plant rather than transgenic processes that insert gene material into the plant. GE could provide a quantum leap for our subtropical and tropical feed base by reducing the indigestible fibre portion of our plants.

Reducing our forage Neutral detergent fibre (NDF) from 50% to 40% give dairy farmers the potential to reduce feed costs by up to 50 cents, per cow, per day. There also have been exciting developments around drought and frost resistance in wheat and canola that will potentially help protect dairy from crop failure and associated spikes in feed prices.

These advancements might all be at risk if we do not bring the community and our consumers along with us. The increasing urban disconnect from modern rural practices mean we as an industry must continue to explain how dairying works. If we don’t, we risk getting caught up in the old saying – “a half-truth goes further and faster than a full one”.

QDO: 2016 In Focus

By Brian Tessmann, QDO President

QDO members at the 2016 AGM held in Toogoolawah

QDO members at the 2016 AGM held in Toogoolawah

It is important as we look over the past 12 months that many of the ‘surprises’ be put in perspective. While some of the global political events have caused considerable angst for some, they represent a clear change in direction that puts our current elected representatives on notice that the status quo will not stand. For instance, Britain voting to leave the European Union and the election of Donald Trump in the United States Presidential election came as a surprise to the ‘experts’ and described ‘political establishment’, however others saw the results as a manifestation of long term dissatisfaction with governments. Voters are sending a clear message that they are sick of the major parties ignoring the real issues that matter to and affect ‘grass root’ communities.

Likewise in Australia while we saw the Coalition Government returned with a decreased majority at the expense of a growing band of minor party vote. This is a trend may well continue at state and federal level that needs to be heeded by the larger parties.

From dairy’s point of view we congratulate the re-elected Turnbul government and particularly Barnaby Joyce for sticking to its promise and introducing a bill into parliament to introduce an effects test into competition law. Once passed, this, in combination with unfair contract provisions overseen by an improved rural focused section of the ACCC, should help make the domestic market fairer for all players.

During the year we saw the collapse of farm gate milk prices in Victoria combined with some serious internal issues at the processor Murray Goulburn. This was not an extraordinary fall by world milk standards, but it had a profound impact on southern farmers. While this was a shock to some, for many it was expected when considered against the weakening the domestic market that exposes the industry of international movements.

Overall, while 2016 has been a year of building hope it also contained some surprising events and difficult lessons. The real question now is whether our dairy industry can learn from these lessons.

Parmalat: All I want for Christmas is a fair farm price

By Brian Tessmann, QDO President

Normally the Christmas and New Year period is a period of reflection on the year that has passed and the year to come. It is often for many too, a time of rest and a little indulgence as we give and receive gifts to our friends and family.

This year however, milk and dairy producer Parmalat, makers of the popular Queensland dairy brand ‘Pauls’, is planning on slashing its price it pays to dairy farmers suppliers for its milk. In an action that would fail to satisfy even the Grinch’s definition of ‘Christmas cheer’, Parmalat is looking to lower its farm gate price 1.6 cents per litre. This could mean as much as $16,000 could be slashed from an average farmers revenue. While these negotiations are usually concluded between Parmalat and the Premium collective bargaining group this year likely to go to arbitration for the first time.

This means that the current 190 Parmalat suppliers in Queensland, just under half of all farmers in the state, could be facing a significant undercut to their balance sheets. This move looks cynical when all other Queensland processors, both major and minor, have maintained or raised farm gate prices for their dairy farmer suppliers.

It is difficult to reconcile Parmalat’s claim that the recent surge in branded milk sales from the ‘I Buy Branded Milk’ campaign has not directly benefited its bottom line. It is almost as if Parmalat has rode the wave of public support for its branded product under the guise of supporting local farmers, only to dump its hard working farmers when it came time to share the profits. Any reduction in prices paid to farmers sends a confusing message to consumers that might impact on brand loyalty at the checkout.

On a lighter note, I would like to wish all QDO members a happy and holy Christmas. Take the time to thank your local dairy farmers for supplying the dairy we all enjoy this time of year.

What QDO wants for Christmas is for no farm gate milk price drops in the New Year.

Farmers Mark the Politicians

By Brian Tessmann, QDO President

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A changing feature in Australian politics over the past couple of years has been decline of major party vote making way for the rise of smaller political parties and independents. This national trend must be viewed alongside the international exodus from the political centre where support for the major political parties and establishment are on the decline.

The surge in support for political parties such as One Nation in Queensland and the Xenophon party in South Australia clearly demonstrates this loss of faith. With a Queensland state election looming on the horizon it’s time for state parliamentarians to get serious about the livelihoods and concerns of voters.  Voters want to throw aside politicians who engage in the political games of George Street in favour of those ready to listen and act.

The numbers don’t lie, voters are fed up with politicians and parties that oppose good policy simply because it was proposed by their opponents or cross benches. A litmus test for this will be the upcoming vote on the Sustainable Queensland Dairy Production Fair Milk Price Logo’s Bill. The Bill will be a chance for state MPs to do something of substance that both benefits the Queensland dairy industry as well as give support to more transparent labelling for consumers to make informed decisions.

All rural voters’, not just dairy farmers, will judge both the ALP and the LNP on how they respond to this Bill.  Particularly attention will be given to whether our MPs will take the opportunity to support the good policy rather than simply rejecting the Bill because it was moved by the Katter Australia Party (KAP); even though the legislation has its origins with the national dairy industry.

This is a call for our major parties to put the petty games aside and back this Bill for the benefit of famers and consumer. A failure to do so will undoubtedly only fuel rural voters discontent with the major parties and the ineffective status quo they represent.

Testing the Effect

By Brian Tessmann, QDO President

In what was a tumultuous time in Federal Parliament last week, the introduction of the important s46 ‘effects test’ legislation was somewhat unfairly overshadowed by the backpacker tax headlines.

The addition of the effects test provision to s46 of the Competition and Consumer Act has been designed to help address the current unequal distribution of market power between different market players. This market power correction will directly assist the milk and dairy markets which are currently suffering from such imbalances. By restricting overtly dominate and anti-competitive actions by powerful players such as large supermarkets, the ‘effects test’ will encourage more transparent market actions mutually benefiting producers, processors, consumers and retailers.

Queensland Dairyfarmers’ Organisation (QDO), alongside our national body Australian Dairy Farmers’ (ADF), have strongly advocated for these changes since 2011. We see the ‘effects test’ as one of the measuresurgently needed in preventing the ongoing predatory pricing practices that have severely impacted our industry.

You would be remise to confuse the ‘effects test’ support as simply a farmer support mechanism, rather, the reforms will benefit consumers and other market sectors by moving towards an objective measure to assess the impact of anti-competitive behaviour.

It has been a long hard road to get this legislation to where we are now, however it is far from a done deal. Both sides of politics and the cross bench need to support this vital change that will bring Australia into line with most other developed economies.

QDO would like to thank the Deputy Prime Minister Barnaby Joyce, the Prime Minister, Treasurer and the Minister for Small Business for their support and delivering on their election commitment to introduce this important bill. Let’s hope this bill does not become the victim of politicisation like other agricultural bills have in recent times.

It’s time for Australia to catch-up with the rest of the world on competition policy. It’s time to implement an ‘effects test’ to deliver the certainly and fair playing field consumers, producers, processors and retails deserve.