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.