Monday, 24 April 2017 18:24

Keep it simple, farmers tell processors

Written by 
Dennis Mutton Dennis Mutton

Dairy farmers want simpler payment systems and more market intelligence from their suppliers, according to a survey commissioned by the Union Dairy Company and co-funded by the South Australia Dairy Industry Fund.

The project involved a series of workshops in the Limestone Coast region of SA and south-western Victoria, in November last year, conducted by Freshagenda.

Between 10 and 30 farmers operating diverse dairy farming systems of varying scales attended each of the workshops.

Freshagenda director Steve Spencer said that while there were no huge surprises, the workshops highlighted that the industry was going through a period of seismic change, on a scale that it had not witnessed for some time.

"Many farmers are deeply disillusioned with the status quo after events last year. They were still angry and reflected a significant loss of trust," Mr Spencer said.

"Participants in the workshops made it clear that they want open relationships with their processors - the importance of honesty, transparency and trust was raised at every meeting. They also want greater security, through better forward signals and accompanying intelligence."

The project was initiated late last year by the Union Dairy Company (UDC), which is due to start processing milk at its new plant near Penola in July, 2017.

The South Australian Dairy Industry Fund, which allocates money to projects raised from the sale of SADA Fresh milk, provided funds on the proviso key findings could be shared with the South Australian Dairyfarmers' Association and the broader industry.

Fund chair, Dennis Mutton, said UDC was keen to find out what sort of features they should be offering farmers that would be most advantageous to their businesses.

Mr Spencer said there was considerable interest in flat pricing and models that fixed a minimum price for a certain percentage of their milk, as opposed to traditional approaches that built in seasonal adjustments or were highly layered.

"Many farmers felt that volume and productivity incentives had complicated farm-gate milk prices and disadvantaged younger, smaller farmers," he said.

"There was also considerable discussion around the seasonality of pricing. Seasonal cash flows challenges have been an issue for years in some parts of Australia, with farmers having to cope with the lowest prices at a time of the year when the pressures to commit cash are high, because they are, for instance, making silage or buying supplementary feed.

"The workshops showed that challenge is widely felt in the South East and western Victoria, with several farmers commenting that seasonal incentives had in effect forced farmers to change practices and chase incentives for milk that is more expensive to produce."

Mr Spencer said farmers also wanted more transparent, simpler payment systems rather than having to work through monthly statements with multiple additions and deductions.

"And they asked for more market intelligence from their suppliers, about things like world market trends so they had more information to help them make better management decisions."

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