Last week, QDO published a notice that some milk processors were looking for new suppliers to fulfil current milk contracts. So far, we have received over a dozen calls from farmers interested in talking to other processors who are prepared to give them with a better deal.
In the past, farmers have been doggedly loyal to their processors choosing to stay with the devil they know. However, a lack of support and lack of competitive pricing has forced farmers to look at other processors offering a better farmgate price.
As Australia’s milk production figures continue to fall, consistency of supply volumes will continue to be an issue for all processors. The latest Dairy Australia figures show that production across Australia is down 7.3% for 2018/19. Unsurprisingly, given the continued drought conditions and the number of farms we have seen shut down over the year, Queensland’s production volume is down by 10.3% year to date.
While this may improve over the coming months, Queensland’s production is unlikely to ever recover enough to fulfil 100% of the state’s domestic consumption. So future negotiations over the farmgate price is likely to be favourable for farmers.
While this is good news it is frustrating for those locked into contracts for at least another 6 months. However, there is a silver lining.
In Queensland, independent brands have increased their market share as consumers look for products that are supporting farmers with higher than average farm gate prices.
QDO is now just a few months off launching the fair farmgate price logo. The logo’s primary purpose is to assist consumers at point of purchase in choosing the brands that pay farmers a fair and sustainable farmgate price for milk.
Those processors currently seeking new milk suppliers are likely to meet the criteria to use this fair farmgate price logo. It is expected that the logo will start to appear on packaging towards the end of the year and it’s anticipated that sales, and therefore volume, for those brands able to use the logo, will increase.
While we cannot afford to lose any more farms through drought conditions or general unprofitability, it does seem that there may be some good news for those farmers who have been able to hang on.
QDO Vice President – Matt Trace