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.
If this exercise in is to be anything other than rhetoric, then the industry must address a few hard truths exposed since Murray Goulburn announced its second step down in 7 years, more than a month ago including: Australia is lagging behind its competitors in terms of milk price transparency and sharing risk across the supply chain.
Without reform, we stifle growth and farmers wear the burden of risk.
The events of the past month have also damaged a relationship of trust between farmers and processors, especially at Murray Goulburn and Fonterra, that may take years to repair.
Bega chairman Barry Irvin said it well at the Situation and Outlook briefing earlier this month:
“Trust is built by your actions. It’s not built by rhetoric. It’s built by actually doing things and understanding the impact of those things on those that indeed do trust you, that rely on you.”
Bega chose to wear the cost of the dairy market slump, holding its farm gate milk price at $5.60kg/MS through May and June, because that was its commitment to suppliers.
(It's opening price of $5.00kg/MS, whilst clearly still not high enough, is realistic and came earlier than most other annoucements to help farmers plan.)
It’s an approach to business that goes beyond the balance sheet. And it will pay off.
The actions of MG should signal a wake up call for all farmers and members of the co-op.
Know your budgets, check them regularly, and always know what you are signing.
Speak up. Ask questions (even dumb ones) and share information. Consider collective bargaining options. Seek out independent advice.
Because as the dairy industry becomes increasingly competitive across the globe, so too will the ruthlessness with which some operators do business. They will always be bigger and richer than you, but that doesn't mean you always have to lose.
The rallies in three cities have shown dairy farmers can mobilise to fight for a fair go. They are also mobilising online, although not in a particularly coordinated way as yet.
United Dairyfarmers Victoria president Adam Jenkins agrees farmers can use recent events to build farmer advocacy and avoid this situation happening again.
“Farmers need to understand whether it be advocacy, supplier shareholders, whatever, those decisions will be made by the people who turn up in the room. And if you’re not there you can’t whinge and complain, you need to start turning up.”
NOTE: This editorial first appeared in the June edition of Dairy News ("It's a matter of trust") before opening price annoucements. The reference to Bega's opening price was added to the online version.)