Dairy Connect throws down the gauntlet on a Royal Commission

By Dairy Connect

Advocacy group Dairy Connect today challenged political parties and Members of Parliament to signal their support or otherwise for a Royal Commission into the Australian dairy industry.

This followed a pledge yesterday by the National Party candidate for the Eden-Monaro by-election, Trevor Hicks, that, if elected, he would move a motion to enact a Royal Commission into dairying nationally.

Dairy Connect CEO Shaughn Morgan said that while the industry had been regularly inspected and analysed, there had never been a broad-ranging inquiry with powers appropriate to a critical analysis of the entire supply chain.

“There have been a number of stakeholder and parliamentary committees looking into the Australian dairy industry over many years with many of their reports now gathering dust on the shelves of Parliamentary libraries and MPs’ offices,” he said.

“Many of the recommendations from past inquires had either been paid ‘lip service’ or quite simply ignored.”

A Royal Commission would overcome the intransigence of government in implementing appropriate reform in an industry where market failure has been occurring since deregulation 20 years ago.

“Dairy Connect supports the call for a Royal Commission where the terms of reference specifically looked at ways to ensure the long-term sustainability of the Aussie dairy industry and thus kept future generations of dairy farmers on the land, providing fresh nutritious milk 24/7 to consumers.”

Shaughn Morgan said a Royal Commission would have powers of coercion to ensure appropriate information was provided to deliver well-researched recommendations that government could not ignore.

“The recommendations could set the platform by which the dairy value-chain industry could return to viability and provide a pathway to the future for the long-term growth of Aussie dairy farmers,” he said.

“It could supplement that work being done by the Australian Competition and Consumer Commission who are supervising the implementation of the Dairy Mandatory Code of Conduct.

“A commission’s terms of reference will play a vital role in setting the parameters by which any outcomes can be judged.

“It cannot be like other inquiries where information has been gathered, reports written and recommendations left to gather dust.

“The dairy industry is now well and truly ‘1 minute to midnight' and if things do not change in a positive proactive manner the industry will not exist as it is currently operating within a generation.

Graham Forbes, President of the Dairy Connect Farmers Group said a Royal Commission would need to look at differences and needs between ‘fresh milk’ states like Queensland, New South Wales and Western Australia comparing them with Victoria, South Australia and Tasmania.

“The time has come to stop importing dairy produce that is labelled as being ‘Australian’, the time has come for us to look at ways in which we can address the inequities between those who produce compared with those who process, sell and/or market our nutritious dairy produce.

Dairy Connect applauds the initiative of the Nationals candidate for Eden-Monaro, Trevor Hicks, for indicating that he will cross the parliamentary floor to ensure the passing of legislation to establish a royal commission into the Australian dairy industry.

However, any legislation will require more than 50 per cent of those in the parliament to support it and we call upon MPs and political parties to indicate their support or otherwise for a proposed Royal Commission and its terms of reference.

Shaughn concluded that “the time has come for action not words; the time has come for us to look forward to the future not the past; the time has come for us to be able to ensure that the Australian dairy industry is sustainable in the future for those in the industry but also for customers of fresh nutritious milk and dairy produce, and those who want to buy Australian milk and dairy produce.”

The Draft Terms of Reference, as proposed by The Nationals candidate Trevor Hicks, may be found below.

ROYAL COMMISSION INTO THE AUSTRALIAN DAIRY INDUSTRY - TERMS OF REFERENCE

The Australian dairy industry both nationally and internationally has encountered market failure since de-regulation in 2000. This is been illustrated by the decision of the major supermarkets to impose dollar a litre for private label milk in 2011. It was not until 2018 that there was any change in the price for this produce. Dairy farming enterprises have encountered severe financial hardships and found it difficult to remain profitable as the farm gate price continues to be below the cost of production. In more recent times this has been illustrated by the collapse of the export market, collapse of the dairy co-op Murray Goulburn in 2016 as we’ll as the declining number dairy farming enterprises in Australia.

TERMS OF REFERENCE

A review of the dairy value chain and the way in which the stakeholders (Supermarkets/processors/dairy farming enterprises) interact with one another in commercial and business arrangements.

Review the current market failure that has resulted from the deregulation of the dairy industry in 2000 and the ongoing market failure that the industry is continuing to experience with the collapse of the export and domestic markets.

A review of the prices/costs for dairy cabinet produce including fresh milk by the major supermarket chains, especially as to market share, import costs undercutting Australian dairy produce.This is illustrated by the low farm gate price that is paid to dairy farmers for their produce, particularly given the high price points (and profits) that supermarkets obtain and their relationship to their customer (purchaser) and processor (supplier) for the dairy produce/milk.

Review of 'truth in labelling’, with reference to imported dairy produce (e.g. cheese) being marketed as ‘Australian produce’ and the resulting impact upon the Australian domestic market.

Review the powers that the ACCC with respect to organisations within the value chain, ranging from supermarkets, (as currently regulated by the food & grocery code) as well as processors and dairy farmers (currently regulated by the mandatory code) and the lack of good faith between the parties and the unfair bargaining power by certain parties within the dairy value chain.

Review the business efficiency of dairy farmers and support that could be obtained to ensure the viability and sustainability into the future.

Review the effectiveness of Dairy Australia’s programs on delivering a return on the investment from the farmer ‘s levy contributions, in particular the RD&E and marketing Programs and review alternatives to the current RD&E model.

Review the good faith, efficiency and effectiveness of industry advocacy by the national and state dairy farmer representative organisations and their relationship with other members within the dairy value-chain.

Review current water management practices at both a state and federal level including the Murray Darling Basin Plan, which are directly (e.g. dairy farms within the Basin area) and indirectly (e.g.: dairy farmers who purchase fodder from within the Basin to supplement feed livestock) impacting on dairy farmers.”

https://www.dairyconnect.org.au/