We're getting close to the peak of the production season in southern Australia, in one of the most tumultuous periods in the recent history of the industry. In the past 18 months, an unprecedented volume of milk has moved between major dairy companies in a short space of time, and most likely has some way to go yet, as the aftershocks of the major step-down in milk prices towards the end of the 2015-16 season continue to reverberate.
On the surface 20 cents a litre going into a farmer’s fund sounds like a positive step.
The Victorian Coles contract is about 100 million litres with widespread reports that Coles are paying 15 cents per litre less than they were 2 years ago.
This deal budgets for sales of 7.5 million litres to raise $1.5 million plus another $1 million From Coles.
When you begin to peel away the layers of ‘PR spin’ you see that Coles will pay out about $2.5 million this year and $1.5 million per year thereafter with one hand and receiving $15 million with the other from their cheaper milk contracts.
Perhaps the 5,000 dairy farmers in South Eastern Australia who are eligible for the $20,000 grants should all apply and see how well $100 million divides into $2.5 million.
The real question is how many of that region’s financially struggling farmers will be looking for grants to fund new projects in a low milk price year.
Phil Tracey, chair of Murray Goulburn has publicly stated that $1 milk is good for farmers.
When he says ‘good for farmers’, I can only assume he believes it is good for MG farmers and not the industry as a whole.
Perhaps saddest for southern dairies battling with the scourge of low prices is that even though the domestic market should be helping, it can’t because the unnecessary devaluation of milk for selfish corporate motives.
QDO will never do a deal with Coles that did not increase farm gate prices for our farmers or improve the value of the industry.
The only obvious outcomes from the Victorian milk deal are increased supermarket market domination, confused consumers and the VFF’s reputation amongst dairy farmers in question.
This article first appeared on the Queensland Dairyfarmers’ Organisation website.