Murray Goulburn will consider debt funding of up to $100m to shore up the current farmgate price of $5.20kg milk solids (MS).
A very important factor on is the cause of our current woes was identified.
It showed the early days of the dairy industry where truly farmer owned and controlled cooperatives were established to sell their produce for the highest possible farm gate price with flow on benefits for the communities around them.
That was many years ago, when the industry was strong.
Since then we have seen the erosion one way or another of the true co-op that has created the problems we now see.
In more recent history this has been accelerated by deregulation of the dairy industry, the power of retailers and a shift by processors to corporate philosophies, including those pretending to be co-op.
The blame for the dairy price crash was placed firmly at the feet of the export market, one of the distractions from the underlying problems that are really impacting on farm gate prices.
As national production continues to decline, along with farm numbers, we now see around 70% of national dairy production consumed domestically, with a state such as Queensland now around 120 million litres per annum short of meeting its own supply requirements, with the shortfall being met from southern states.
Of equal interest is the increase of actual tonnages of imported dairy products to Australia.
Another lesser point of blame was the discount milk sales by the major chain retailers. A couple of questions arise out of this: Who bid for and signed the supply contracts? Do producers receive any more for the milk sold in branded products?
We are now getting to the core of what is fundamentally wrong with the long-term sustainability of this great industry - the lack of involvement by the producers in determining farm gate prices.
Having been involved in dairy for nearly 40 years, I’ll admit that I have been guilty of the attitude of head down bum up - stop whinging and just get on with it.
Some may have felt protected by the belief that they supplied a “farmer owned and controlled” co-op.
I’d ask those people to think honestly how much effort has gone into controlling their co-op? I understand that despite the recent disaster in the Murray Goulburn co-op the recent AGM only had a 56% voter response.
What has changed since the recent industry symposium?
Will the ACCC investigation find anything? How much damage will be done by the time it reports in late 2017?
And what happened the last time the ACCC was made aware of some of the activities of the processors several years ago, on issues such as price manipulation and preferential payment systems and confidentiality agreements? Nothing.
Is there another way forward? Yes.
The first step is for the producers to take back the control of the industry by taking back control of how farm gate prices are determined.
That’s our responsibility to ourselves, our families and communities.
How do we achieve this?
We stand together as one and take back ownership of the element of supply and create a National Milk Pool that is truly owned and controlled by farmers - equitably based on a co-op model of one farm one vote, where all suppliers are paid equally.
This would give producers the ability to collectively bargain from a position of power, not unlike what the processors and retailers currently do to the producers.
Remember, “a monopoly is only to your advantage if you hold it”.
Collective bargaining is already happening, is already sanctioned by the ACCC and is not in breach of any trade ideologies of government.
A national milk pool proposal was put to the current Ag Minister Barnaby Joyce soon after coming to government around three years ago and he rejected it.
Interestingly, in that meeting with the now shadow Ag Minister Joel Fitzgibbon a little over three years ago he seemed interested in the proposal.
It’s clear that, if we want change and long-term sustainability, that it’s up to us to drive it and fight for what is right because no one else will.
Nigel Hicks is a former dairy farmer and stood as an independent candidate for the seat of Murray in the recent federal election.