A fresh start for dairy.

There are big changes happening in the Australian dairy industry and QDO is optimistic that they will be for the better.  After gaining ACCC conditional approval and shareholder support, the price setter for much of our industry will come under new ownership as Canadian owned Saputo will purchase the largest dairy co-op in Australia Murray Goulburn.  While some within the industry are upset at a foreign purchase of a farmer owned business, this will clear the air for the future.  We can now leave behind the dark cloud of the southern state price collapse and the demise of the largest co-op and focus on our future.  

Since almost no Queensland raw milk leaves the state, why does this matter to QLD Dairyfarmers? It’s often said that it’s not the best price available to farmers that matters the most but rather the worst.  Low price and poor performance of a significant processor can place downward pressure on farm gate price as other processors figure they can get away with dropping the price to farmers.  It is often described as a race to the bottom. It was the poor performance of Murray Goulburn in 2016 which starkly highlighted this for the industry. 

Now that the sale is going ahead what impact can we expect from Saputo on the Australian dairy industry and subsequently QLD milk price?  Given QLD reliance on the drinking milk market and the devastating effect of discount private label milk pricing and poor contracts, comments from Saputo Dairy Company boss Lino Saputo Jnr can give us confidence that change is coming.  “We don't give our products away" and “when you can get water at $3-a-litre and perhaps soda at $5-a-litre, for all the energy and effort that farmers are putting into producing milk, I'm not sure that it is the right value" said Mr Saputo Jnr. 

Lino Saputo Jnr

Lino Saputo Jnr

This is perhaps the first time we have heard a processor indicate that they are unwilling to have the price dictated to by the retailers without fair and respectful consultation with others within the supply chain. This is the common sense approach needed as processors can play an important role in changing the market place to see true supply and demand signals and a better return for QLD dairy farmers.  

Matthew Trace – QDO Vice President