Nowhere Budget​​​​​​​

By Brian Tessmann, QDO President

The State Budget handed down by Queensland Treasurer Curtis Pitt last Tuesday has done little to give clear direction for the state’s economy or provide a better deal to its efficient but struggling dairy farmers. While we appreciate the government’s continued drought assistance, many of our industry’s real priorities have not been addressed.

High on the agenda for farmers is a reduction in electricity costs that are crippling many agricultural industries, including dairy. It has been disappointing that much of the hype around power issues has been driven by advocates for the coal industry rather than those looking to build an efficient and sustainable electricity system.

As power generation costs amount to around a quarter of our electricity bills and most generation sourcesrelatively comparable the state government needs to proactively look at costs in the rest of the electricity supply chain. These range from electricity distribution costs to the network valuation and dividends returned to the government on power assets post the generation units, as well as profit levels of electricity retailers. It is essential that government works alongside industry to continue assisting farmers to reduce their electricity use through implementing efficiencies and adopting renewable alternatives.

Also absent in the State Budget was government support to help inform consumers about what is sustainably priced fresh milk from Queensland. It was disappointing that the members from both major parties on the parliamentary Agricultural Committee backed away from recommending the Fair Milk Logo Bill as a vehicle for informing consumers and helping their state’s dairy farmers.

Considering there is a state election approaching, we remind both sides that support is a two way street before they consider not passing the bill. There needs to be a significant and effective plan B if the decision is made to sink the Fair Milk Logo. Queensland Dairyfarmers’ Organisation (QDO) is ready and willing to work with both parties to ensure our farmer members get a fair go.

Looking for Guidance on Electricity Pricing

By Ross McInnes, QDO vice-president

Energy prices are at the forefront of peoples’ minds these days with consecutive price hikes and wild fluctuations all part and parcel with what farmers have come to expect.

Australian Chief Scientist Alan Finkel released his much awaited Energy Report last week, but anyone who was expecting substantive information on which to base business decisions would have been left disappointed. The perceived trigger for conducting the review was the 50% rise in consumer electricity costs and the appraisal that this review would be better than doing nothing at all.

However, this is underwhelming for agricultural businesses that have seen their off peak charges rise by 300-400% in the last 8 years. I am sure the 4.9 million Queenslanders who contribute an average $265 per year to the Queensland Government’s $1.3 billion dividend from the electricity sector must be thinking the same thing.

Ever since we signed up to achieve the Renewable Targets to reduce CO2 emissions, there has been a complete vacuum of information coming from all levels of government. There is a universal view that renewable sources of energy will become cheaper by comparison. If the cost of electricity is continually gouged by 20 or 40 or 50% per year, then renewables will certainly appear cheaper.

In a recent survey by a national paper, it was revealed many people believe the price of electricity will increase if we don’t have a renewable target, but the facts do not back this up.

Professor Finkel said to the Senate the other day “renewables are cheaper than coal”, but he doesn’t know how much electricity prices will rise, which is difficult to comprehend.

If Professor Finkel is correct, why does solar get a guaranteed feed in tariff three times higher than the present cost of coal generation?

Some clear guidance from our elected representatives and scientists would be very welcome.

ACCC meet with Tableland dairy farmers

By QDO North Queensland State Councillor James Geraghty

QDO State Councillor, James Geraghty 

QDO State Councillor, James Geraghty 

The Australian Competition and Consumer Commission (ACCC) recently held a forum in Malanda to hear from local dairy farmers as part of its national inquiry into the dairy industry. The Tableland dairy farmers who attended the meeting joined a total of over 600 farmers who had already attended one of seven forums held throughout the country.

The national inquiry focuses on the fairness of contracts between farmers and processors as well as other sections of the industry. This includes an analysis into distribution of profits; investigating milk swaps between processors;  transparency of pricing calculations; and whether or not collective bargaining is working within the dairy industry.

The difficulties with shifting from one processor to another was of particular concern to dairy farmers who expressed dismay that one major processor in Queensland renews contracts in July while the other major processor renews in January.  Furthermore, government bodies are under pressure to make amendments to current legislation that outlines processors have no obligation to listen to or negotiate with collective bargaining groups.

The main conversation around the distribution of profits in the dairy industry concentrated around issues associated with $1 per litre milk, $6 per kilogram cheese and the negative flow on effects these products can have on the supply chain in different dairying regions. 

Once again the question was asked of whether farmers were living on the depreciation of their assets. The amount of depreciation accumulated on an asset is meant to be put aside and used to purchase a replacement asset when needed. However, in most cases, this is not happening.  The assets are wearing out and farmers are being forced to borrow money to buy new ones. This is opposite to how a viable ‘business’ should be operating.

On behalf of dairy farmers on the Tablelands, I want to thank Queensland Dairyfarmers’ Organisation (QDO) and the ACCC staff for facilitating the Malanda meeting and allowing local farmers to have their say on this very important inquiry.

Milk Price Dispute Drags On

By Brian Tessmann, QDO President
 


The ongoing milk price dispute between Parmalat and the collective bargaining group that represents the majority of their Queensland dairy farmers, Premium Milk, continues to cause considerable financial and emotional distress to affected dairy farmers. Since the beginning of the year just under half of all Queensland dairy farmers have technically been without a contract despite still supplying Parmalat.

This uncertainty has been compounded with the absence of the three-cent per litre incentive in last year’s contract which is no longer being paid. While reports suggest refunds will be paid once the price determination is settled, many suppliers in their current state are really hurting. Like many farmers, I believed once the old contracts ended without agreement on December 31 last year that the arbitration process would then be initiated, progressed and finalised within a few months. Currently we are approaching the five-month mark without a contract resolution in sight and consequently no three-cent incentive refunds.

While Queensland Dairyfarmers’ Organisation (QDO) strongly holds the belief that any decrease in farm gate price is not warranted, QDO is legally prohibited from directly participating in price negotiations. Around deregulation in 2000, QDO and its then president Pat Rowley, were instrumental in achieving Government approval to establish the limited present day collective bargaining arrangement which resulted in the establishment of Premium Milk.

Clearly more needs to be done to improve the efficiency and effectiveness of our collective bargaining groups. This should and will hopefully be addressed in the Australian Competition Consumer Commission’s (ACCC) ongoing review of the dairy industry. A vibrant and robust collective bargaining system is in both our farmers and the broader Queensland dairy industries immediate and long term interests.

Judging from the volume of calls to QDO alone, it is vital for Parmalat suppliers that this current process is brought to a fair, prompt and just conclusion. This will give Queensland dairy farmers the certainty and stability they need to continue supplying high quality and reliable fresh milk to our consumers.

Dairy all in the same boat

By Brian Tessmann, QDO President

It has been disappointing to hear some media misrepresenting the current state of the dairy industry in Australia. There has been a misunderstanding of the factors that have led to the recent decline in Queensland’s dairy industry.

Particularly disturbing was one reporter’s assertion that although the northern industry may be failing, there was nothing to worry about because the southern industry was growing and would supplement these losses. A proclamation such as this is comprehensively inaccurate. Unfortunately, the Dairy Australia spokesperson failed to properly articulate the real situation to the reporter and their audience.

To properly understand the current state of Queensland’s dairy industry, some historical context is required. There have been three great downturns in the Queensland industry since WWII. There was a severe decline in the 1970’s following Britain joining the European Community (EEC). Next came industry deregulation in 2000 followed by the current decline after the introduction of $1 milk per litre in 2011.

Notably, there was once a corresponding increase in production in southern Australia following Britain entering the EU. However in the years since the introduction of $1 milk, there has been significant reductions in dairy production Australia-wide, both in Victoria and Queensland.

The facts are that despite the losses of farmers last century, the 1999/2000 year was the biggest milk production year Queensland has ever with a total of 848 ML of milk produced. However, since then over half of that milk production has been lost. In 1999/2000 Australia’s milk production was close to 12 billion litres, but has since struggled to stay above 9 billion litres. The recent Murray Goulburn led crisis looks to be lowering the national production toward 8 billion litres.

With most alternative sources of milk over 1000 km away from our market and overseas markets growing rapidly, the southern dairy industry is looking like an uncertain place to rely on for this state’s future fresh milk needs. Our state’s local fresh milk should always be the first choice for Queensland processors, retailers and consumers.

Dairying on the Budget

By Brian Tessmann, QDO President

Along with many other rural industries and small businesses the dairy industry cautiously welcomes the 2017 federal budget that was handed down by Treasurer Morrison.

Queensland Dairyfarmers’ Organisation (QDO) acknowledges that the federal government needed to strike a balance between the necessities of rural industries alongside the important debt reduction agenda. Despite this delicate balancing act it was encouraging to see a number of worthwhile initiatives and projects get approval or extra funding.

QDO welcomes the 12 month extension of the short term asset write off equipment under $20,000 for business with under $10 million turnover, an increase from the previous $2 million turnover cap. Funding of major regional projects along with the Building Better Regions Fund and the extended eligibility for the Farm Business Concessional Loans Scheme is also welcomed by QDO.

The budget also included funding for a number of very worthwhile work programmes and initiatives ranging from getting serious about the inland rail project to putting some much needed funding into fire ant control. It was however disappointing that there was no new funding for better telecommunication services in the bush.

Also lacking were any plans to address the ongoing and burdensome energy costs currently strangling Australian farmers businesses. It is a shame this debate still revolves around political games about generation fuel sources when generation remains less than a quarter of costs incurred on electricity bills.

One way QDO is directly assisting members to reduce their electricity costs is through a recent partnership with ‘Make it Cheaper’. This partnership is providing our members with access to comparison across all types of electricity and gas accounts to help identify potential savings. This will be particularly useful wherethe market is offering regional competition for energy supply. This service could allow some members to make significant savings on their energy accounts. QDO is currently disseminating information and I encourage farmers to make the most of this membership benefit. For further information on how to save on your on farm electricity bill call the QDO office.

Dairy the focus of Food Heroes campaign

QDO's Ross McInnes presenting at the QCL Fodd Heroes event

QDO's Ross McInnes presenting at the QCL Fodd Heroes event

By Ross McInnes, QDO Vice-President

Dairying in Queensland will be the focus this week’s Queensland Country Life (QCL) Food Heroes series being held in Beaudesert. The campaign which is hosting a series of forums throughout the state is promoting the connection and relationship between the foods we consume and enjoy with the industries that produce them. The forum has offered tremendous opportunities for different commodities to not only promote their industry, but highlight the issues confronting them as well.

The Thursday, 11 May Beaudesert Dairy forum will be held at Mark and Colleen Platell’s farm. The day will provide an excellent opportunity for our sector to discuss and promote the issues affecting our industry to decision makers. Queensland Diaryfarmers’ Organisation (QDO) thank the Platell family, QCL and the Beaudesert Times for enabling this event to get off the ground.

The Platell farm was one of many on the Logan River that was devastated by major flooding from Cyclone Debbie in late March, so it is a credit to them for offering up their property despite the recent events.

Founder of Daughters of Dairy Farmers (DDF), Lisa Harrison will be speaking at the forum discussing the importance of bridging the gap between farmers and consumers. DDF is a wonderful example of how some in the dairy continue to use their absolute passion to highlight concerns confronting our industry. Well known Gympie dairy farmer John Cochrane will be present to give his views on market conditions and opportunities going forward.

I will be representing QDO and providing industry wide perspective on the Australian Competition and Consumer Commission (ACCC) and Senate inquiries as well as highlighting what I see are the upcoming issues confronting our sector. I will also outline the inflationary effects that have hit the industry in the last 6 years.

QDO look forward to a constructive forum that will highlight both the positive and negative factors at play within our sector. It will be a fantastic opportunity to have a candid and real discussion about the challenges and future direction for Queensland dairy.

Pollies must deliver on fair go for dairying

By Brian Tessmann, QDO president

It seems that quite a few state and federal politicians remain out of step with community expectations when it comes to addressing the issues affecting dairy farmers in supplying the domestic market. 

Recent media appears to be back on board with the campaign to support dairy farmers in their struggle against a broken market. This manifests in getting rid of $1/L milk, and introducing and passing the ‘effects test’ by empowering consumers through the Queensland ‘Fair Milk Logo’ Bill.

This was particularly evident with the recent visit by Channel Nine’s the Today Show to the McInnes brothers’ farm in Harrisville. Just like the ABC Radio interview with Steve Austin the previous week, the Today Show host Karl Stefanovic was shocked that little had been done by government to help dairy farmers.  

While Karl assured  QDO vice-president Ross McInnes that consumers were behind him and all dairy farmers, it seems that government instead chooses to listen to other more powerful voices.

One particular issue that seemed to shock many, including ABC’s Steve Austin, was that despite all that Queensland dairy farmers have been through, both major parties at state level still refuse to recognise the problem. 

In fact, as Steve Austin said, government continues to refuse to provide consumers necessary information on which brands help local dairy farmers. It is crystal clear to the media that consumers want clarity on how they can make better informed decisions at the supermarket to support Queensland dairy farmers.

It’s time for our Queensland politicians to disregard the flawed logic of the Parliamentary Committee Report and pass something of substance at state level that will actually benefit struggling dairy farmers. It’s time for our federal politicians to listen to farmers and the broader community and show leadership to take on the supermarkets and get rid of $1/L milk.

No fair go for Logo

By Brian Tessmann, QDO President

Disappointment and bewilderment sum up the reaction from local dairy farmers after the Parliamentary committee report into the Fair Milk Price Logo Bill recommended that it not be passed. The report did not even attempt to amend the proposed legislation as is convention with other bills. The only takeaway for Queensland dairy farmers was a flat ‘no’.

It is clear the committee did its best to find reasons not to pass the bill. The few reasons it gave resemble a joke rather than the respectful response our industry deserved. The claim the logos would be in breach of section 92 of the constitution, the section that guarantees free trade between states, was an exaggeration of the highest order. Section 92 restricts states from excluding product from other states or imposing disincentives such as tariffs. The Fair Milk Logo Bill would assist in identifying local product, not restrict or impose any tariffs. If the supposed legal advice the committee received was real it would have been made in writing and made public.

The report misappropriated my claim that the logo may lead to an increase in value of Queensland produced milk as evidence of ‘restricted trade’.  Most people would see this as simply a result of positive consumer reaction from the logo, rather than a constitutionally contentious outcome. The committee’s rejection of the Fair Mark Logo Bill is the equivalent of questioning the merits behind the ‘Made in Australia’ logo because it would discriminate against imported goods.

Farmers have been shocked that the two major parties have, to date, not been prepared to assist consumers to identify local Queensland milk. As with the previous attempt to get the logos through the parliament, the idea has been thrown back to the industry. Promised support has never materialised and we have no belief this committee’s words have any more meaning than last time. The only workable outcome is for Parliament to pass the Bill and finally do something for dairy farmers in the state they claim to represent.  

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

elect.jpg

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.