QDO welcomes new Natural Resource Manager.

Tony Mills.jpg

In light of the major environmental disaster and public outcry over the Murray-Darling Basin, water quality and our responsibility to ensure healthy waterways is more important than ever. Farming practices have been widely blamed for much of the damage. Ongoing management, trialling new methods and providing advice and assistance to our industry members must be the responsibility of industry bodies like QDO, particularly when key heritage listed sites like the Great Barrier Reef are at stake.

 Last week, Tony Mills started in the role of Natural Resources Manager at QDO. Tony takes over the role and brings with him extensive knowledge and practical experience in Agriculture and Agribusiness. Starting in the Burnett-Mary region Tony will conclude the final phase of the 3-year Reef Alliance Project to reduce the sediment and nutrient load entering the Great Barrier Reef.

 Tony has worked with some of Northern Australia’s larger beef and sheep producers while being based in Quilpie and Charleville. He has also worked with producers across key agricultural areas in South-West Queensland, Mackay and the Coalfields, Northern Slopes and Plains of NSW and the Falkland Islands aiding them to deal with issues related to marketing, production and finance.

 While new to dairy, Tony has spent 30 years working in the agricultural sector working with businesses to realise their development and investment strategies. With a thorough understanding of a range of agribusinesses, the keys to profitability and sustainability and the challenges they may face, Tony is expected to make a significant impact on our members farms.

 In his role, Tony will work alongside farmers to implement a suite of on-farm services, which may include farm consultancy services, all aspects of farm finance and investment, recovery and resilience, nutrition services, agronomy services, such as Soil & Nutrient Management Planning, grazing management assistance and financial incentives for water quality risk management.

 Brian Tessmann – QDO President.

The drought is not over. QDO calls to renew Coles boycott. 

Drought conditions on the Darling Downs

Drought conditions on the Darling Downs

Throughout 2018, shoppers petitioned the supermarkets to assist dairy farmers in drought by supporting the 10c/l Drought Levy. Woolworth’s already raising over $4.5million to date. While we do not reject the $4 million raised by Coles, everything Coles has said and done in response to the 10c/l Drought Levy has been opportunistic and tokenistic to say the very least.

Case in point:

  1. Coles waited until Woolworths announced its Drought Relief Milk range before it offered support;

  2. Coles put the Drought Levy on a single line, that is, their 3 L Coles brand;

  3. Coles refused to distribute the Levy back via Norco who supply their private label milk; instead of making it a convoluted and frustrating process for farmers;

  4. Coles held on to the funds (and any interest) raised between September and December 31 and only distributed in mid-January whereas Woolworths were giving the funds raised back to their Parmalat farmers monthly via their milk cheques;

  5. Farmers were forced to apply - read beg - for a slice of the funds, resulting in meagre $6,219 per farm being given to anyone that applied; and the final blow,

  6. Coles stopped its Dairy Drought Levy on 31 December whereas Woolworths have extended their commitment to the Drought Levy until at least June 30 this year – acknowledging that the drought is far from over.

Prior to the Drought Levy campaign, the three major processors operating in Queensland and NSW were paying farmers roughly the same base price. Now there is a significant discrepancy, particularly the price being paid to Norco farmers who supply for Coles private label which currently sits 6.5c/l below Parmalat and Lion.

Put bluntly, unless there is a price rise of at least 5c/L in the very near future many Norco farmers will stop dairying and given the seeming instability of the co-op, Norco will find it hard to replace those farms that leave.

If Coles doesn’t reinstate the Drought Levy and pay it to Norco farmers; they simply will not be able secure enough milk to fulfil contracts.

With the Murray Goulburn debacle, floods, cyclones and the ongoing drought, our industry has suffered enough without losing our remaining iconic Dairy Cooperative.

It is time once again to call on the Australian public to make a stand against the tyranny of Coles and yet again, boycott the supermarket giant until they reintroduce the Dairy Drought Levy and give the funds raised to the farmers who are supplying them through Norco.

94% of responders to our social media poll want a return of the boycott of Coles. It is Australian shoppers want to support us. We need to utilise their power to create lasting change.

The supermarkets’ response to drought are chalk and cheese.

No wonder everyone is confused about who is helping our drought-stricken farmers.

Just before the end of 2018, Woolworths’ announced that it would continue to run with its Drought Relief range until June 30, 2019. On the other hand, Coles has made no extension to the levy which closed on 31 December.

Given that we are still heavily in drought this demonstrates just how much value Coles has for our dairy farmers.

To date, Woolworth’s has paid out $4.5 million to 286 dairy farmers across Queensland, NSW and northern Victoria via Parmalat. As the supplier of Woolworth’s private label milk, payments via Parmalat was the fastest, most reliable channel to get every cent raised back to the farm gate. The amount given to each farm is being calculated based on volume.

Woolworths has been paying the levy to farmers monthly since they began in October. Coles only advised successful recipients last week which means that the money collected from customers has been sitting within Coles’ coffers for a spell, gaining a good wad of interest.

The $3,974,292.30 collected by Coles is to be divided between the 639 farmers that applied for the fund. That equates to $6,219.5 per farm. With the price of Lucerne hay being over $800 incl GST, the amount paid out by Coles to each farmer equates to around 7 tonnes – a pittance given the amount of feed a herd goes through.

While it is great that non-Norco farmers applied and received funding from Coles, it was an illogical way to administer the fund and for many it’s a case of too little too late.

While hard to do a clean comparison, there is little doubt that Coles treated the Drought Levy as a stunt. Due to public and media pressure, they had to capitulate but did so reluctantly and as minimally as possible.

Shoppers truly want to support our farmers and are happy to pay more for their milk to do so and are not affected by a 10-cent price rise. It is certainly time for change.

Mr Matthew Trace – Vice-President Queensland Dairyfarmers’ Organisation.

Australian Day celebrations marred by the anniversary of $1 litre milk.

On January 26 2011, dairy farmers across Australia woke to news that changed the face of the industry.

In truly un-Australian fashion, the then Coles' director of merchandise, John Durkan and CEO Ian McLeod felt $1 a litre private label milk had a nice ring to it and decided to announce milk price cuts - on Australia Day.

Under the pretence that the price cut helped the average Australian shopper, the strategy was in truth, designed to take market share from Woolworths and the up-and-coming new kids on the block, Aldi.

At the time, Coles were warned of the potential consequences to the dairy industry but insisted that keeping prices down for customers was more important. At the time they also argued that farmgate prices and price paid to processors were fair.

Fast forward to 2016 - the virtual collapse of Murray Goulburn due to mismanagement and the increased milk production in the EU, meant that the price paid back to farmers at the farmgate was significantly slashed.

And now here we are 2019 and our industry is still in crisis.

Australia Day should be cause for celebration. It is a timely reminder of the importance of mateship, fairness and the necessity to be as one in times of trouble.

We live in a land of highs and lows; of drought and flood. It has always been our perseverance and strength of character that has seen us through. Despite everything, most of us wouldn't want to live anywhere else.

We have seen the Australia spirit shine with the amount of public donations, business and community support right across the country to our farmers doing it tough in these drought conditions.

Even though the new head of Coles, Mr Steven Cain is another import from the UK, we ask that he embrace the Australian ethos and put an end to $1 litre milk.

Mr Brian Tessmann – President Queensland Dairyfarmers’ Organisation.

Call for a united dairy industry.

In spite of the traditional State of Origin rivalry between Queensland and New South Wales, dairy farmers from both states have a strong bond. 

There are so many similarities in climate, pastures, temperature and biosecurity issues that it’s important to keep an eye on the situation for our southern counterparts.

Shane Hickey of You Tube fame and ironically, the face of QDO’s 10cent/litre Drought Levy campaign, lives in Kyogle – 32km from the Queensland border.

Shane is a regular (and welcome) correspondent with QDO and recently caught up with us to give us the gossip from down south.

Sadly, the predictions are not good. Without rain, up to half dozen farmers from northern NSW will leave the industry by April.

Given the latest Dairy Australia production and QDAS profitability figures released late last year this is disturbing but unsurprising to hear.

On our side of the border dairy farmers are struggling to survive the drought conditions, with many dairy regions seeing a tantalising glimpse of rain but without the windfall. 

Late in 2018, QDO said goodbye to several farmers, many located on the Darling Downs which has been badly hit by the ongoing drought.

Regardless of what state or region farms are located, our industry is in crisis. 

So it’s even more important than ever that we approach the value chain issues on a national scale.

The meeting of state dairy representatives chaired by the Australian Dairyfarmers Federation late last year was a significant step towards developing a unified national front. 

Having key politicians like Federal Agricultural Minister David Littleproud, Deputy Prime Minister Michael McCormac, LNP’s Shadow Minister for Agriculture Tony Perrett and MP Llew O’Brien publicly support a call for a Royal Commission into the predatory pricing of supermarkets gives a glimmer of hope that change may be possible.

Matthew Trace – Vice President

2019 another year of challenges for dairy industry.

2019 shapes up as another challenging year for dairy farmers and the dairy industry. As has been the case for the past eight years, retail pricing and the impact on dairy farmer and processor incomes is still by far the biggest challenge to overcome. Other key issues include the Australian dairy industry plan and biosecurity.
After many years of no change re retail milk prices, finally in 2018 some movement occurred largely as a result of a concerted campaign by QDO. This has led to an increase in prices received by Queensland dairy farmers. For some this increase was very short lived while for others it will lead to an increase in price of around 5 cents a litre for almost a year. 

The challenge in 2019 is to turn these temporary increases into a permanent long-term solution. This needs to occur for all dairy products, across all of Australia and lead to more sustainable prices for both dairy farmers and processors. For this outcome to be achieved we need to have a united industry and run a concerted campaign across Australia.

The dairy industry will develop a plan for the entire Australian dairy industry in 2019. It is very important that this process leads to a small number of clear priorities to help farmers significantly increase profits and manage risk. In addition, there needs to targets set, clear plans to achieve targets and responsibility with resources given to organisations best able to achieve these targets. We need to ensure that significant outcomes for farmers are achieved given the significant investment made by farmers in industry organisations.

In the first half of 2019, QDO will undertake free Johnes disease testing for QDO members. This needs to be undertaken by June 2019. It follows the considerable effort made by QDO, with the assistance of the Department of Agriculture and Fisheries, in providing education workshops on Johnes disease and helping farmers develop farm biosecurity plans

Eric Danzi - Executive Officer


New procurement commitment to Go Local a huge opportunity for the dairy industry.

On the 19 December, Minister Mick De Brenni announced the Queensland Government’s commitment to using local food and beverages at all Queensland Government facilities and sponsored or run events whenever possible. This means every effort must be made to have products in, for example, Queensland public hospitals, to be local.

As part of the Procurement Advisory Board, QDO had the opportunity to help develop the parameters around what constitutes local. According to the newly released guidelines, for dairy products, local means that a minimum of 85% of raw (fresh milk) product must be from Queensland and that 100% must be processed and manufactured in Queensland.

For the dairy industry, in particular, for the small and independent processors, this is a huge opportunity for growth. It may allow them to break into new markets and to consider alternate value-add product lines.

For some larger processors who are currently making many products like flavoured milk, cheese and yoghurts interstate, this policy may make them reconsider their current production arrangements.

Not only does it give our processors the opportunity to increase their volume sales, but also a chance to employ more people and potentially pick up additional farms currently supplying to one of the big three.

The procurement policy will cover everything from boardroom lunches, to banquets for visiting dignitaries, to sporting events and the arts. This is also a terrific way for our brands to gain exposure and be promoted to visitors to our state.

Sensibly, the Government is intending to take a softly-softly approach to the launch of this initiative, as there will be teething problems as caterers, restaurants and facilities operators come to grips with how to access local produce.

The government is cautious about making it difficult for the small-scale caterers to procure Queensland product when they more than likely purchase from supermarkets where, with the exception of milk, there is a glaring lack of locally produced dairy.

Contracts on sponsorships of stadiums and other major government-owned facilities will need to finish before the policy can be implemented in these places and these things will take time.

QDO has already begun the process of working with small processors so that they can take advantage of this opportunity. The independent dairy processor summit in late November was the first chance to discuss how they could potentially ramp up production and get their product into stores and locations across Queensland. Quality and quantity are key if we as an industry intend to differentiate our dairy products from other states.

Certainly, this announcement brings a level of optimism that hasn’t been seen in the Queensland dairy industry for a number of years, so we intend to take full advantage of it and ensure that our processors are in a position to meet demand with great Queensland products.

Queensland Dairyfarmers' Organisation Vice President: Matthew Trace.

Farm margins severely cut.

The release of the report from the Queensland Dairy Accounting Scheme (QDAS) for the 2017-18 year showed a significant drop in profitability for Queensland dairy farms.

 The average Dairy Operating Profit (DOP) per cow reduced from $758 in 2016-17 to $400 this year.  Drought, lack of home-grown forage and high prices for all concentrates increased the feed related costs by 3 cents per litre.

 The current high grain prices haven’t shown through yet and estimates by Departmental staff indicate extra feed costs of around 3 cents per litre for the 2018-19 year.

The Top 25% of QDAS farms achieved a DOP of $928 per cow and the remaining 75% was $149.  The main difference and drivers for this extra margin are in 4 main areas - bigger herds, higher production per cow, lower feed costs and better labour use efficiency. Milk price and investment per cow do not have strong correlation to farm profitability.

The Queensland dairy industry has used $1,000 DOP as a fully sustainable figure which allows appropriate business reinvestment. A group of 32 long term QDAS farms were benchmarked over the last 5 years and the average DOP was $602.

These farms averaged 248 cows and 6,100 litre per cow. The performance of these farms would indicate a higher margin than the average Qld dairy and yet these same farms need between 6-7 cents per litre margin to achieve the $1,000 DOP. This more than anything else highlights the challenges for all dairy farmers operating in a dysfunctional market. 

QDAS has operated since 1976 and currently is supplied with figures from 50 of the 390 Qld dairies. As a comparison, the Victorian Dairy Farm Monitor Project (DFMP) had 75 farms contributing data out of a total of 3, 880.

All of this data then contributes to DairyBase for national benchmarking.

QDO Board member: Ross McInnes

2018 – a year in review for the dairy industry.

It has been a year of highs and lows and a few frustrations for the dairy industry.

There was some optimism at the start of 2018, as the Australian dairy industry waited for the final ACCC report into the value chain. While not a complete surprise, it was disappointing that there was little difference between the Interim Report released in 2017 and the Final Report of April 2018. The only major difference between the two was the ACCC’s insistence on a Mandatory Code of Conduct between farmers and processors.

QDO and farmers are certainly disappointed that even after the first round of consultations held in November, the retailers been ‘let off’ their responsibilities to the dairy supply chain with the ACCC insisting that the voluntary Grocery Code of Conduct was enough.

Interestingly last week, the NSW Parliament released its own report into their state dairy industry. It was no surprise to QDO, nor to any dairy farmer experiencing current conditions that the findings state “The Australian Competition and Consumer Commission found that this practice does not directly impact the price paid to dairy farmers for their milk supply. This committee has found, based on the evidence before it, what is intuitive to even the casual observer and abundantly clear to farmers themselves: that retailers selling milk for $1 per litre has removed considerable value from the dairy value chain.”

With the rising costs of feed caused by drought and unsustainable farm gate prices, QDO felt that something more had to be done to provide immediate relief to our farmers.

In recent years we have come to appreciate that political advocacy can only change things so far. The decision was made for QDO to push for 10 cent/litre Drought Levy imposed for all fresh milk in supermarkets and it caused a significant stir.

The campaign received significant media and consumer support and it was with a degree of optimism that we pushed forward. Unfortunately, the might of Coles’ and Woolworths’ proved too great as they used their considerable influence to bury the campaign by promoting what was little more than PR stunts by placing the levy on single size and private label brands only. 

When some rainfall events occurred in the south east of the state, consumer and media support unfortunately waned, even though the rain did little to alleviate the conditions.

Ministerial calls for a Royal Commission into the predatory pricing of supermarkets have been a welcome renewal of interest in our industry. As one, we see that the Commission needs to investigate this issue for all perishable goods since bullying by the supermarket giants is well known by many agricultural industries.

As we enter the final weeks of the year, national and state dairy bodies have come together to work on a national campaign and we would hope that in the early months of 2019, we can work at a national level with ADF and the NFF to force the Federal Government to approve the Commission.

QDO would like to thank everyone who through kind words, sharing stories or buying Queensland brands, has supported our dairy industry through a tough 2018. Here’s looking forward to 2019 with optimism.

Queensland Dairyfarmers' Organisation President: Brian Tessmann

Annual general meeting held for Australian Dairyfarmers Federation and Dairy Australia.

The last week in November this year saw two of our national dairy bodies each conduct their Annual General Meetings in Melbourne. The first of these on Thursday the 29th was the Australian Dairy Farmers which is the QDO’s national affiliated advocacy body. This meeting included the election of one board director which occurs in rotation each year. This year National President Terry Richardson was challenged by Victorian Dairy farmer Darryl Hoey. Mr Richardson was re-elected for three years with a comfortable margin and went on to again be elected by the board and delegates as National President for the next 12 months.

Friday Morning saw the Australian Dairy Industry Council (ADIC) Industry breakfast happen at Flemington Racecourse where speakers including Earl Ratray focused on the future. A key point made by Earl and others was that while China is putting considerable effort into growing milk production their demand for milk is growing three times faster than production. Troublingly though, Australia is now a significant importer of dairy products including cheese and milk powder in a dramatic change from being a sizeable exporter. This was because of Australia’s falling milk production and lack of product for export. This was causing even high value overseas customers to consider Australia may be an unreliable supplier and was leading them to look to others including the EU.

Later on Friday the 30th Dairy Australia held its AGM which saw the election of some new directors including David Lord the past CEO of Warrnambool Cheese and Butter who is well known in Queensland from his previous time as Parmalat CEO. There were certainly many questions both off the floor and on notice asked of Chairman Geoff Odgers and new CEO David Nation. A key theme in these was where DA was focused in regard reducing Australia’s cost of production and improving farmers profitability while increasing market opportunities. There will be considerable focus over the coming year on how David, Geoff and the DA board address those issues.        

Queensland Dairyfarmers' Organisation President: Brian Tessmann

Outtakes from the Mandatory Code of Conduct consultations.

Three consultations on the Mandatory Code of Conduct for the Dairy Industry were held in Boonah, Gympie and Malanda over the last 2 weeks. Facilitated by Jo Grainger, Assistant Secretary for the Department of Agriculture and Water Resources, the consultations were open and transparent, and it was felt that the Department genuinely wanted to know what the industry believed should and shouldn’t be included in the Code.

The first question that was asked at each consultation was ‘What are we trying to achieve with a Mandatory Code for the dairy industry?’ It wasn’t a question that was expected or that has been asked before. The answer was simple – fairness for all players across the supply chain. Unfortunately, it is clear that the Code will not cover the conduct of retailers as they are theoretically covered by the voluntary Grocery Code of Conduct.

What Queenslanders call Step downs were perhaps the major concern and were a key talking point. Certainly, there needs to be a provision to allow alterations to the pricing in the major processors long term contracts to allow for clear market changes.

If such a step down (price reduction) is required due to market forces, then there needs to be a threshold where suppliers have the option to leave. We believe that a 5% drop on the contracted price should be the threshold for farmers to match or leave without penalty. 

Clearly the current practice of multiple-year lock in contracts with a processor when the contracted price is only set for 12-months cries out for an agreed mechanism for setting future price whether up or down. Also having bonuses and penalties means that there is constant uncertainty and using loyalty payments (and penalties should you leave) to lock in suppliers is something that the Code needs to address.

Currently, the loyalty payments are not a reward for loyalty, but are part of the non-contract base price. There is no intention of trying to make loyalty bonuses illegal, but we should call a spade a spade and call them supply contract bonuses.

Resolving these key points would be a major win for suppliers.

Another key area for discussion was the process of dispute resolution; specifically, who would be responsible for and fund mediation. For the large processors, it would be expected that they would employ an officer to handle disputes. But independent and smaller processors were unlikely to afford a full-time staff member. It was suggested that as a way of encouraging supply to smaller processors, that those processing somewhere between ½ to 1 million should be exempt.

Overall, this first round has been handled extremely professionally by the Department and QDO hopes that this transparency and true consultation continues.

Queensland Dairyfarmers' Organisation Vice President: Matthew Trace.

All types of dairy at processor summit.


Queensland Dairyfarmers’ Organisation with the assistance of the Queensland Government Office of Small Business, held the first summit of independent dairy processors at Portside in Brisbane on Tuesday last week.

While traditionally, QDO has represented only dairy cattle farmers, the invitation to attend the summit and mentoring workshop was extended to farmers of buffalo, goat, sheep and camel dairy farmers.

The issues that face our traditional membership base including fodder prices, freight, irrigation, biosecurity and animal welfare are also faced by these farmers. Currently there are less than a dozen farmers specialising in non-dairy cattle farming and processing in Queensland, so it made sense to extend the invitation so that they too can benefit from the assistance that QDO offers its members.

Most of these farmers, including the Thompsons from Maleny Buffalo, are former bovine dairy farmers who, at the time of deregulation, decided to look at alternative herds in order to remain profitable and to continue farming. While the market for these products is quite young in Queensland, the appetite for alternative artisan cheeses, milk and yoghurts is growing.

Peter Gross from Black Pearl Epicure, Wendy Downes from The Cheeseboard, Dr Jonathon Staggs from the University of Queensland led the morning session with the discussion largely around the importance of developing and marketing Queensland cheeses and other value add dairy products and building a strong national reputation for quality.

The afternoon’s session had Office of Small Business, Mentoring for Growth mentors Darren Walsh and Joe Barnewall provide strategic advice on business development and expansion. It was interesting but not surprising to hear that the same key issues including maintaining supply of product, finding appropriate staff, the cost of compliance and frustrations around finance were raised by most attendees. 

Feedback from attendees has been overwhelmingly positive. There were some pivotal introductions made and a commitment from the Office of Small Business of ongoing assistance to processors. A huge thank you to all the speakers and mentors and to the processors who took a day out of their busy schedules to attend the workshop and summit.

Queensland Dairyfarmers' Organisation Marketing Manager, Sarah Ferguson

Update from up North.

Our focus for the last few months has been on our drought declared regions, but we always need to pay attention to the situation for our members in the North.

The Atherton Tablelands are experiencing an extended extremely dry period. Good rain was received across the region until the first week of July, but since then there has been little rain to report. A lack of consistent rainfall fails our free draining soils which are usually so good for our industry.

Pasture has been extremely short and good quality hay has been very hard to source and much dearer than normal. Grain prices have risen by up to 20% due to higher input prices for the grain millers. Until new season crops come in, and assuming the weather allows large scale planting of those crops, the Far North’s situation is likely to last for at least 12 months.  Water for irrigation is lessening as stream flow decreases putting further pressure on those farmers wit access to irrigation.  Milk production volumes are dropping and costs are increasing which is putting increasing pressure on farmers and the business community from a financial and mental strength point of view.

While not drought declared the situation for the far north is far from secure.

Lion, the processor that owns the Malanda factory, has put its entire dairy and juice business up for sale. The successful purchaser is unlikely to be known for about 6 months. Lion have been proactive in advising farmers of the process that they are going through and the progress so far. DFMC, the supply co-operative that aggregates the milk from farmers for the Lion factories, has a Milk Supply Agreement with Lion that will guarantee right of supply until June 2022.  Milk from our farmers will be required regardless of the sale outcome.

The Federal Government is moving to implement a Mandatory Code of Conduct for the dairy industry. This Code must cover from farm to processor to retailer.  The retailers are saying they already must abide by the Grocery Code of Conduct—obviously, from their behaviour, the Grocery Code is not enough to ensure good behaviour. So while we represent only a small number of farmers, we are pleased that we will be able to have our voice at a consultation meeting scheduled to be held on Monday 26 November in Malanda. 

Queensland Dairyfarmers' Organisation

District Councillor for Far North Queensland James Geraghty

Mandatory codes of conduct need to include supermarkets.

Between the Drought Levy, Mandatory Code and calls for a Royal Commission, there is certainly a lot of noise in the dairy industry at the moment.

Details of when and where the consultations regarding the Mandatory Code of Conduct for the dairy industry went out last week with the final meetings to be held at the end of November.

While we wholeheartedly welcome the ACCC’s call for a mandatory code of conduct, having that code simply be between farmers and processors fails to address a key part of the problem.

 Through recent discussions with state and federal politicians, processors and dairy farmers its clear to all that we need to extend the mandatory code to cover the relationship between processors and retailers; in particular the relationship with major supermarkets.

 The call for a Royal Commission into Supermarkets is because the issues we have been talking about are not confined to the dairy industry, but extend to all perishable products including all meat, fruit and vegetables.

In recent weeks, we’ve seen reports of the tough times faced by the pork industry due to feed prices. At the end of the day the bulk of meat, fruit and vegetable sales in the domestic market are through the supermarkets which this gives the major players like Coles and Woolworths the power in any negotiations regarding pricing.

Currently supermarkets are under the Food and Grocery Code of Conduct which is voluntary not mandatory. It is hard to believe that the dairy industry is alone in taking the supermarkets to task with regards to their role.

The slow wheels of bureaucracy mean that we are unlikely to get the Royal Commission into the supermarkets passed before the new year.

QDO would like to encourage all those industry bodies that represent other agricultural and horticultural industries like National Farmers Federation to contact our Federal politicians and tell their accounts of the bullying practices of the supermarkets.

A concerted whole of agriculture approach will ensure that the Commission happens. In the meantime the mandatory code as proposed in its current format can provide some, but not all the solutions to our industry’s woes.

Queensland Dairyfarmers' Organisation

QDO President Brian Tessman.

If the supermarkets won’t help, we need the Government to implement a drought levy.

In modern society, we all suffer from information overload. According to IBM, 2.5 quintillion bytes of data are produced every day. So we can forgive the average person for their seemingly short attention span.

It is hard for people living in the currently grey and rainy coastal regions of Queensland and New South Wales to believe that we are still in drought. Meteorological drought is rarely broken in a single event or month; typically regular rainfall over a period of several months is required to remove rainfall deficiencies of the magnitude of those currently in place.

But the politicians who supported drought relief efforts 2 months ago, need to take concrete action, not just sympathise.

Unfortunately for our farmers, the cost of feed and freight and general production costs are still too high and will stay that way for months. It is not as if the small amount of rain has solved our problems, if anything, it has masked the magnitude of the issues we face.

It was 8 weeks ago that QDO called for the supermarkets to raise the 10 cent/litre drought levy. This was not a marketing stunt, though Coles and Woolworths have certainly made it into one. This levy was a very real plea to the supermarkets and to the Australian public to help those dairy farmers affected by the drought.

In every media statement put out by Coles since we called for the levy, the supermarket has quoted that it is already doing its bit with its $12 million Drought Relief program. According to the National Farmers Federation, Australia has 85,681 farms. While some farms are not in drought declared areas, I would hazard a guess that at a minimum 25% of all farms are being affected by the drought due to the costs of feed and irrigation.

Taking that number and divvying up the Coles fund, each drought affected farm would receive $560 – an embarrassingly small amount and a tokenistic gesture.

Recent calls for a Royal Commission into the predatory practices of the supermarket are welcome and we ask that this is pushed through. But we have to ask how many farms will go under by the time a Commission is done?

While QDO never wanted an official “levy” imposed by the Federal Government, the situation is now at a point where Minister Littleproud needs to consider it seriously.

Queensland Dairyfarmers' Organisation

QDO Vice President Matthew Trace

Don’t let the call for a Royal Commission into Supermarkets be in vain.

The interim report of the Royal Commission into the Australian banking sector was released last week and is evidence of long-term corporate bullying. What it also tells us is that we do have a system whereby even the most powerful companies can be brought to account for unfair practices.

While Llew O’Brien’s call for a Royal Commission into Supermarkets was made based on evidence of the underhanded tactics that Coles and Woolworths have used against the proposed 10 cent/litre Drought Levy, rumours of bullying have been around for a number of years. It doesn’t take a genius to guess that threats to reduce shelf space of branded product if private label contracts are not met, is being applied across the board.

In Australia, we have only a handful of dairy processors, all of whom rely on contracts with the big supermarket chains to remain profitable. We don’t expect the processors not to make money; they are a business as are the dairy farmers that supply to them. It is a case of ensuring everyone can have a sustainable future.

Though dairy is the only industry which has had a cap placed on its retail price for the last 7 years, it would be a surprise if other suppliers, in particular, those whose products have a finite shelf life, are not forced into unfair contractual agreements.

Now, we can only hope that firstly, the Royal Commission is approved by parliament and secondly, that all suppliers – be it meat, eggs, fruit and vegetables, dairy and even packaged goods come forward. Only with strong evidence across all sectors will the supermarkets be made accountable.

It has been over a week since O’Brien called for the Commission and as yet, nothing has come to fruition. We urge the public to push their local members – federal and state to get it enacted so we can stop the supermarkets dictating the supply chain.

Queensland Dairyfarmers' Organisation

QDO President Brian Tessmann

Royal Commission needed into supermarket pricing.

Last week, Wide Bay MP Llew O’Brien called for a Royal Commission into the predatory pricing practices of the supermarkets.

As one example of their unconscionable behaviour, O’Brien called out the recent way that Coles and Woolworths have handled QDO’s efforts to have a 10 cent/litre Drought Levy imposed on all milk.

O’Brien was quoted as saying that “Coles and Woolworths have completely bastardised” the proposal. His call was backed several other politicians, who have called the Drought Levy PR stunts pulled by Coles and Woolworths among other things a “farce”.

Currently, Coles has put the levy only on their 3L private label which has simply led shoppers to by a 1L and 2L to save them the 30 cents; that way Coles can say that consumers do not want to support the levy since sales won’t reflect this.

We can’t help but question why it took less than 72 hours for Coles and Woolworths to back down on the plastic bag ban and yet the campaign for a Drought Levy across all brands that was started seven weeks ago by QDO is still not producing a fair outcome for farmers. Customer outrage towards the duopoly’s grab for profit in the bag saga seems to outweigh any interest in developing sustainable relationships with its suppliers and their primary producers.

The major dairy processors have said they want to support our farmers with a price increase and are open to audit, but they are hamstrung in a poor game of piggy-in-the-middle. Lion Dairy and Drink has announced a 6 cents/litre increase and Norco a 5 cents/litre increase to help assist with Drought. It’s good news but even they admit that it can only be temporary unless the retail price is increased permanently to meet rising production costs.

And still there is the unanswered as to why Coles insists on paying the levy through an application process rather than distributing back through Norco who supply their private label milk.

QDO is certainly delighted that O’Brien, Littleproud and others are looking at ways to deliver practical outcomes. We need them to continue to hound the supermarkets, to vote through a Royal Commission so that it can expose the supermarkets' predatory practices towards its suppliers.

Queensland Dairyfarmers' Organisation
QDO Vice President Matthew Trace

Labor summit a good sign for the Australian dairy industry.

Last week Shadow Minister for Agriculture Joel Fitzgibbon; Senator for Queensland, Chris Ketter and Senator for Victoria, Kim Carr invited the various state and national dairy farming organisations as well as representatives from Coles and Woolworths to meet with them in Brisbane to discuss the crisis within the dairy industry.

The consensus from all organisations except for the retailers naturally, was that the mandatory code of conduct recommended by the ACCC report into the dairy industry, needed to be extended across the value chain and not be confined to the relationship between processors and farmers. The imbalance of power that has been so often quoted from the report, exists at all levels and needs to be addressed.

Representatives from the major processors were frank. As much as they want to support our farmers with a price increase, unless the real issue of current retail pricing is fixed they also see no future for their businesses.

When you have representatives from multinational corporations acknowledging their own frailty due to retail pricing, you see just how dire the situation has become.

While there is speculation as to when the next federal election is called, fixing the Australian dairy crisis needs to become a key election promise for all parties.

No government wants the collapse of an industry on their conscience. As we’ve seen from the petitioning that QDO has undertaken over the last 5 weeks, this issue is something that the Australia public believe in and are passionate about.

It was good to see Labor taking the initiative with calling the summit, but if we wait much longer or have to wait for the election to bring about change, we won’t have a dairy industry to defend.

To date, no federal government has taken real action to fix the retail pricing issues of the dairy industry. We continue to hear words of support, but words are not enough.

QDO President Brian Tessmann

Recovery and Resilience programs needed for the Downs.

It seems such a short time ago that QDO provided its first report on its Industry Recovery and Resilience Project (IRRP) funded by the Department of Agriculture and Fisheries in response to Cyclone Debbie.  

How quickly our need for an IRRP can change from cyclone damage to drought.

Funding for this program was earmarked for dairy farmers in the Scenic Rim/Lockyer Valley region. As the name suggests these projects have the scope to assist farmers in many aspects and across all stages of their business.  Improved skills in business management and how to gain finance are just a couple of ways that an IRRP aims to give in the pocket results for farmers as they face an almost never-ending cycle of weather-related disasters – not only cyclones and flooding but drought and feed shortages.

Through the workshops run in Beaudesert, Marburg and at the QDO AGM and Forum, QDO spoke with 86 farmers affected by Cyclone Debbie.

QDO project officers Torie Harrison and Damien Ferguson followed up the workshops with phone calls and one-on-one on farm session, so that almost 95% of all dairy farmers in the region were contacted and offered assistance.

A follow up survey showed that farmers needed ongoing financial analysis of their businesses; assistance with developing a business action plan to help improve the financial position of the farm and improve their resilience and preparedness for future weather or market risk.

While the Scenic Rim/Lockyer Valley have been hit with a double whammy of the cyclone followed by the drought, it is other regions, namely the Darling Downs where we need to extend this project.

QDO is seeking funding to extend the project so that those facing severe financial hardship caused by the high cost of feed and the ongoing drought conditions in regions like the Downs can also have a chance to recover.

QDO President Brian Tessmann

Why the National Farmers’ Federation should not be involved in the 10 cent / litre Drought Levy.

It is as clear as the skies above drought-stricken Australia, that Coles’ publicity stunt to put the 10-cent levy on a single line of their private label milk is a slap in the face to our farmers. Because they have not put the levy on all brands and all sizes, the amount that would come back would be a fraction of a cent.

That’s bad enough, but what makes it worse is their announcement that they would deliver the pittance that would be collected back through the NFF as opposed to using the correct protocol which would be to pay it directly to their suppliers Norco and Saputo who would then be able to simply pass it on to its members by way of their milk cheque.

The NFF have not made any public statement as to why they agreed to be Coles’ lackey but as the national advocacy body that’s supposed to represent all farmers, it makes you wonder exactly who is in control and where all our primary industry sector is heading.

This week, I was on a young QDO member’s family farm just south of Toowoomba to launch the new campaign Queensland’s dairy farmers. The Cream of Australia. We had a half dozen additional young farmers join the launch to allow the media to ask what they think of their futures in dairy.

I hate to say it, but the interviews were bleak. Not one of them could honestly say whether they would be operational in 2 years or even 12 months’ time because of the drought and the unsustainable price paid for milk. These weren’t the old farmers who are ready to hang up their boots, these were farmers in their twenties and thirties who are giving up hope.

You can talk about the responsibilities of the processors in the situation we are faced with we need to remember they are just the middleman getting equally bullied by the supermarkets.

As farmers and as consumers who shop, we need to stand up to the bullies. We need to say to Coles that we’ve had enough. 

QDO President Brian Tessmann