Dairy Industry - Where are we at?

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By Shaughn Morgan - Dairy Connect

To say that the dairy industry has been in an ongoing crisis period is to really say what we already know. The past three years have been extremely difficult and with the devastating drought continuing to impact on farming generally, times are tough.

This combined with the current NSW state of emergency with fires throughout parts of the State continues to contribute to an industry that is under enormous pressure. Our thoughts and prayers are extended to all those who are currently suffering from the bushfires within NSW. While there is not much that can be done to prevent what is occurring, please be assured that we are here to look after your best interests however we can. Please do not hesitate to contact us if you need assistance. We will provide whatever we can to ensure that you continue to farm within NSW after these fires diminish.

I recently drove to Taree with the Dairy Connect Farmers Group President Graham Forbes and we attended the launch by Stephen Bromhead MP, State Member for Myall Lakes, for a drought appeal that the Local and Parliamentary Lions Club has launched. This recognition by the local community of the hardships being encountered by dairy farmers and their families illustrates the willingness of the local communities in wanting to assist those in need during these difficult and trying times (this may also be something that other State and Federal MPs may like to discuss with their local community organisations).

And while one can acknowledge that Bushfires, as devastating as they can be, are a natural occurrence in Australia, commencing with these thoughts must not overshadow the rather man-made difficulties that the Federal Government continues to place upon the dairy industry and farming. This is clearly illustrated by the recent release by the Federal Coalition Government of another draft Dairy Mandatory Code. As to why a further draft had to be released for further consultation is beyond me to know why (although I could possibly hazard a guess), given the extensive consultation that the Federal Department of Agriculture has already conducted over many months (and now years). What I do know is that the current draft is manifestly different to the draft that was released prior to the last Federal election. And the question to the Federal Minister for Agriculture is why?

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It contains revised and additional clauses that were not even considered from the last round of consultation (which as I say was extremely extensive with dairy farmers and industry players) and now we go into a further round of consultation when in reality the Code should've been introduced well before now. We need to start to restore the trust that has been lost as a result of the actions of Murray Goulburn and Fonterra clawback in 2016. More recently this has continued with low farmgate prices and unfair milk supply agreement by processors.

There are numerous problems wrong with this mandatory code, they range from poor drafting, unnecessarily complex clauses and not being clearly stated in 'plain English'. I would go so far as to suggest that the Parliamentary Counsel who drafted this particular Regulation (if indeed it was drafted by the Counsel's Office) should go back to the drawing board and learn their craft again.

There are substantial changes to the draft Code (from the previous draft) and the impact that these changes have upon milk supply agreements. For instance, the previous Code provided for no unilateral changes to milk supply agreements. Now we find that processors can unliterally change the agreements if what occurs is 'beyond their reasonable control'. This phase is also used in the clause dealing with retrospective step downs. Given this is not defined, what does this even mean? It is too broad and certainly unfair to dairy farmers. It needs to be changed.

If this draft Code was in place in 2016, this could have resulted in the ACCC not being able to take action against Murray Goulburn for the horrendous mistakes they made back then. If they argued at that time their actions were 'beyond their reasonable control' they could have escaped prosecution. How could this even be considered fair?

This is but one clause within the draft Code. I have not even addressed issues such as when the cooling off period starts, exclusivity clauses, unfairness in the penalties that can be imposed upon dairy farmers and other serious difficulties the draft code puts forward, including a dispute resolution scheme that has been said to me has been put "up to fail".

However, even given these issues, I remain confident that an appropriate Mandatory Code could be introduced by January next year. It requires the will of government and in particular the Federal Minister for Agriculture, Senator McKenzie, to buckle down and restore the Code back to the 9 principles that were enunciated by dairy farmers during the last round of consultation and agreed to by the Federal Department of Agriculture (find them at https://haveyoursay.agriculture.gov.au/dairy-code-conduct).

This is not rocket science. This is about fairness and equity. Our Federal Government should do this as a matter of course and not be forced to take this action.

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Do not misunderstand me, the times ahead will be difficult. Many competent and effective dairy farmers will continue to exit while other farmers will continue to cull their herds. This combined with the ongoing drought, a summer that will bring ongoing issues and the continuing severe lack of water are all going to contribute to a dairy industry that will be far different in the coming years to that that we have all known in the past.

However, I continue to remain eternally optimistic that the industry will be able to pull through and come together. To find a common cause so as to ensure that future generations of dairy farmers do indeed have that future and industry bodies like Dairy Connect will be here to ensure your best interests are safeguarded in lobbying government and stakeholders to achieve an equitable outcome on behalf of all within our community.

We know that NSW, in conjunction with Queensland and other fresh milk States, will continue to provide the fresh nutritious milk to the customers of supermarkets that is produced within Australia and only within Australia.

In concluding, I would like to express to One Nation's Pauline Hanson our appreciation for continuing to highlight the many complex issues confronting the Australian dairy industry. Through her introduction of her dairy bill (which unfortunately was lost) it highlights the continuing market failure within the industry at the current time. With the support of the Greens (Senator Rice) and the ALP (Joel Fitzgibbon), the bill almost passed.

We also acknowledge the strong advocacy of the NSW Federal Nationals Member for Lyne, David Gillespie MP, on behalf of his dairy constituents and dairy farmers generally. His support has been unqualified and ongoing.

Thank you to all those MPs who continue to believe in a strong and vibrant Australian dairy industry.

Dairy Connect will continue to monitor what occurs in the federal and state sphere and advocate strongly on restoration of equity within our industry. Our submissions to the upcoming Senate inquiry and the draft Code are being drafted now. If you have any thoughts or comments, please do not hesitate to contact me.

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

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