eastAUSmilk and Australian Dairy Farmers
eastAUSmilk President and Queensland dairy farmer Matt Trace was appointed to the board of Australian Dairy Farmers at the Annual General Meeting held on 23 November. ADF is the national peak body of state-based dairy farmer organisations.
Matt is very grateful for the solid support he received from industry across the country to take up this role, and particularly for the support from the northern industry. Former QDO Board member Joe Bradley attended the meeting and exercised a large number of proxy votes in accordance with the wishes of Queensland members of ADF.
Previously, Queensland dairy farmer views had been represented on the ADF Board by Brian Tessman, who did not nominate for re-election. We should all be very grateful to Brian for his good work on the Board, on behalf of dairy farmers everywhere.
The resolution at the AGM proposing appointment of an independent director was defeated, therefore there is currently a vacancy in that role, and a new independent director will be appointed by ADF shortly.
Because of the potential conflict of interests, Matt will stand down from his position as chair of eastAUSmilk, and from the eastAUSmilk board, in the near future. eastAUSmilk’s Gympie/ Moreton/ Burnett District Council will be asked to appoint a new member to the eastAUSmilk board, to replace Matt.
The eastAUSmilk Board will then also need to meet to appoint a new chair.
At the Annual General Meeting, ADF deferred election of their new President, to allow the Victorian Farmers Federation to fill the vacant Australian Dairy Farmers National Council positions from Victoria. Because the chair is elected by the ADF board and the ADF National Council jointly, the absence of eight National Council members from Victoria would be significant in that election, and those at the ADF AGM thought they should give the biggest milk-producing state the chance to have their full say in the ballot.
Matt Trace, eastAUSmilk President
New Dairy Industry Leadership
EastAUSmilk’s constitution requires that Directors (Board members) are nominated by the District Committees across New South Wales and Queensland, from amongst dairy farmers who are themselves District Committee members, which is a good way to ensure the organisation keeps close to grassroots members.
When long-standing northern New South Wales dairy farmer Peter Graham move north into Queensland, his director position became vacant – Peter’s contributions to the organisation have been invaluable, and much appreciated, and eastAUSmilk is sorry to see him go.
However, in his place, the Northern New South Wales District Committee has nominated a most able replacement, Tim Bale from Stewarts River near Taree in New South Wales, and he’s now been appointed a Director by the eastAUSmilk Board.
Congratulations, Tim!
EastAUSmilk has a total of six Directors – one from each of the district committees in New South Wales and Queensland.
Peter has also been Vice-President of eastAUSmilk, and this appointment also lapsed when he ceased to be a Director. A new Vice-President will be appointed at the next Board meeting.
Further congratulations go to dairy farmer and entrepreneur Kay Tommerup, who has just been elected Vice-President of Queensland Farmers Federation, the peak body representing most of Queensland’s agricultural industries. Kay has been on the Queensland Farmers Federation board for two years, representing eastAUSmilk interests. She’s from Kerry, in the Scenic Rim, and is a Director of eastAUSmilk.
National Ag Day
Dairy farmers around Australia celebrated National Ag Day each in their own way. Kay Tommerup, with daughter Georgia and son Harry, joined Queensland Farmers Federation at Reddacliff Place in the Brisbane CBD, encouraging passers by to sample dairy products, and chat about the industry. Taste-testers wanted to know where the products are made, where the farms are located, and where they can purchase products for themselves.
Mike Smith, eastAUSmilk Government Relations Manager
Government and Ministerial Meetings
eastAUSmilk’s recent round of meetings with government departments and Ministerial Offices has seen government better understand the situation of dairy farmers, but no big leaps forward.
Drought is the big issue we’ve talked about with each of the Commonwealth, New South Wales and Queensland governments, pressing them on the need for more direct assistance than is currently available. While eastAUSmilk supports governments focusing on building farm business resilience, cutting such programs as freight subsidies doesn’t make sense until resilience is further embedded.
We’ve also stressed that drought is here already – even the farmers who aren’t yet droughted are planning to follow their neighbors in de-stocking, stockpiling and sourcing fodder from other areas, and generally preparing for the worst.
We’re proposing to governments a multi-faceted approach to resolving the bobby calves/dairy beef issue, starting with investigating the extent of the problem: how many are using sexed semen and where, what stops sexed semen uptake or changing to dairy beef breeds, how many bobby calves are there annually, what has been the experience with dairy beef breeds, and more. Once we have a better handle on the size and shape of the issue, we’ll be better able to pursue relevant solutions.
The same round of meetings included Australian Competition and Consumer Commission and focused on the status of Dairy Industry Code review. We pressed how important it was for the Code to move with the times, address newly discovered problems, and rebalance negotiating power between farmers and milk processors. We’ll be collating initial code amendment suggestions and providing them to Department of Agriculture, Fisheries and Forestry in the near future, to ensure they are aware of the scope we see necessary for the review.
When talking with the Commonwealth, we also repeated our rejection of the so-called Biosecurity Protection Levy, and noted we’ll be making a submission to the Treasury review of unfair trading laws.
Mike Smith, eastAUSmilk government relations manager.
Australian Dairy Farmers AGM and board elections
The Annual General Meeting (AGM) of Australian Dairy Farmers (ADF) is being held on 23 November 2023. This is a very important meeting where the future of the Australian dairy industry will be shaped.
Amongst the important issues in front of the meeting is appointment of a further dairy farmer to the ADF board. Currently Brian Tessmann from Queensland is a board member, but has not renominated. Matt Trace, a Queensland dairy farmer and president of eastAUSmilk, is the sole nominee, and if elected will be the sole voice for Queensland on the Board.
I encourage all dairy farmers to have their say at the meeting, if possible by joining the meeting – you will receive information from Australian Dairy Farmers about how to join. Those unable to join the meeting can vote online up to 2 days before the meeting – the deadline is 9.30 AM Queensland time on 21 November. Not only can you vote on a further farmer Board member, but also another five resolutions – including electing an independent director, alignment of ADF regions with RDP regions, and examining the organisation’s financial performance.
If you can’t make it, and can’t vote online before the meeting, please make sure you give your AGM proxy vote to a dairy farmer who will attend the meeting.
In the past, if Queensland farmers were giving someone a proxy we have encouraged them to give these to the eastAUSmilk president. However, Matt did not feel this was appropriate given he is seeking appointment to the ADF Board. The eastAUSmilk board has asked former Board member Joe Bradley to make himself available to collect proxies on behalf of eastAUSmilk members who want their vote to count but can’t participate. I encourage you to contact Joe about your proxy if you might not be able to vote. Joe is contactable on 0400 642 063.
Please do not let this important opportunity to have your say slip by – these decisions are very important. If you have any questions, please call any eastAUSmilk director, Joe Bradley or myself.
Eric Danzi, CEO eastAUSmilk.
Farm Business Resilience Program
eastAUSmilk has been assisting our members in creating ‘Farm Business Resilience plans’ and applying for the subsequent Drought Preparedness grant which offers up to $50 000, or 25%, towards new permanent infrastructure to help improve drought resilience. Some of the recently approved projects include drilling bores, installing tanks, troughs, and irrigation, as well as feed storage such as haysheds, silage pits and commodity sheds.
The Farm Business Resilience Program has been on offer since 2022 and has seen a considerable uptake of farmers applying for the drought preparedness grant. While 25% does not seem to go far towards something like a centre pivot irrigator, which will currently set you back the most part of $200 000, it is of great benefit to anyone already planning to implement an eligible project. eastAUSmilk’s goal within this program is to limit the amount of paperwork that our members need to complete by themselves and assist with the applications as much as required to ensure as many of our members as possible have access to this funding. This will hopefully help complete their desired projects and at the same time provide an outline of the risks and opportunities of their individual businesses.
The program has thus far been very well received, with a good percentage of our members utilizing the grant as an incentive for completing a resilience plan for their farm. eastAUSmilk aims to complete another 12 or more plans before the end of the program, however, which will require even more member engagement. We are on track to achieve this though, and I personally look forward to engaging with our members and helping them become better prepared to face future challenges to their business.
The Drought Preparedness grant is set to end in June 2024, so anyone still planning to apply should do so soon to allow time for projects to be completed by the deadline. Applications must be approved before any project can be commenced and this includes paying for materials or equipment, however, applicants are able to pay a deposit if necessary.
By Letisha Johnson, eastAUSmilk project officer
Dairy farmers and drought
EastAUSmilk is becoming very concerned about the impact of drought on dairy farmers in Queensland and parts of northern New South Wales.
The Bureau of Meteorology predicting below average rainfall through most dairy farming areas in Queensland and in north-eastern New South Wales over the next three months, and we’re getting reports from members that this year’s rainfall in some areas has been less than during the Millenium drought of two decades ago.
While recent rain in parts of New South Wales near Bega has eased conditions somewhat, they’re not out of the woods by any means.
If conditions like that continue, many dairy farms will experience great difficulty keeping herds alive, and the morale of dairying families will be once again crushed by circumstances beyond their control. That’s to say nothing about the likely financial consequences for those farms and their local communities.
Many are yet to fully recover from the devastating impact of dollar-a-litre milk, the last drought, and the last floods. An extended drought, without necessary government support, will be the last straw for some.
While eastAUSmilk backs the move by governments to support farmers to build their drought resilience, this drought has come too soon for that resilience to have built up, and too soon for financial and advisory supports to be removed.
We’re making representations to each of the New South Wales, Queensland, and Commonwealth governments to be ready with appropriate financial supports, as well as advice and other assistance, for drought-stricken farms.
Governments in the two states have historically had different approaches to programs of assistance to farms hit by drought, and the weather patterns are predicted to be quite different between most of New South Wales and Queensland, both governments need to understand the need to support their farmers and communities to outlast this drought.
Mike Smith, eastAUSmilk Government Relations Manager
Bobby Calves and Dairy Beef on the agenda
EastAUSmilk have been closely considering how best to assist farmers in managing the issues and opportunities around bobby calves and their unsaleability, having already raised this issue with the New South Wales, Queensland, and Commonwealth governments.
We recognise that properly addressing the issue will entail a multi-faceted approach. EastAUSmilk is investigating a package of programs which would include training in the use of artificial insemination and sexed semen, incentives for dairy farmers to make the shift (some of the equipment can be quite expensive and sexed semen can be twice the cost of unsexed), and advocacy by government to dairy farmers of its uptake including defining the economic benefits.
Research into the optimal dairy beef breeds, considering geographic location and herd genetics, will help to ensure the program’s longevity and success. Farmers considering adopting sexed semen into their herd management system would have access to relevant data enabling a move to a more valuable and saleable animal. Evaluation of alternative, more consistent markets, and how they could be established, will also be key to the success of the program.
However, before embarking on a comprehensive program such as this, we must be sure we are working with facts. EastAUSmilk is looking to survey our members to collect a range of relevant information including the extent to which they produce bobby calves, use artificial insemination, and use sexed semen. This data will also provide further evidence on the current roadblocks preventing the uptake of dairy beef, and the option of using artificial insemination and sexed semen.
EastAUSmilk is committed to providing leadership and innovative thinking to allow dairy farmers to take the lead in finding and managing sustainable solutions to this issue.
Mike Smith, eastAUSmilk government relations manager
Kay Tommerup, eastAUSmilk board member
Unfathomable – devastated by bushfire again
Imagine how you would feel if you were facing the same fate as you did in 2019-2020 devasted by bushfire.
It is unfathomable to think about but that is what happened to one dairy farmer in the NSW south coast in the Bega Valley region. From Coolagolite Road, Coolagolite (Bega Valley LGA) in the north right through to Cuttagee, Barragga Bay, Murrah, Bunga and as far south to Goalen Head is where the bushfire burned or become far too close to three dairy farms. The bushfire affected area was 6,700 ha in size.
After the fires in 2019-2020 the family were able to rebuild and return to their farm to be caught off guard this time around and have it burned to the ground 3 years later. It is not the fact that the grassed areas and established trees are burned as fire does not discriminate. Livestock, water infrastructure, fences and the list goes on of farm losses that cost millions of dollars to repair and rebuild. Let alone the enormous mental and emotional toll that a disaster such as this can have on a family and community.
The Bega Valley is a dairy farming region, are a close community and it is understood that the fires came close to destroying surrounding farms. One of which was also devastated by fire in February 2020 in the aftermath of the Black Summer fires, however was fortunate to be spared this time.
Farmers, especially dairy farmers work tirelessly to build their property as a sustainable model for years to come and to hopefully one day hand over to their children, to have it destroyed in an instant places enormous pressure on them and their family. If devastation of this magnitude keeps happening to our agricultural communities there will be a shortage of farmers in the future, hence a supply shortage of dairy products which is not something we want to occur.
It is easy to say ‘keep on going’ as farmers always do, but with the forecast of a horror summer for bushfires it is hard to stay so positive. One thing is for certain farmers will always look out for their neighbour!
Lynelle Rogers, eastAUSmilk Executive Officer
Coles lifts milk prices, but Woolworths and Aldi haven’t yet
About 3 weeks ago, Coles quietly lifted the price of Coles milk on its shelves by 10c/L to $4.80 for 3L, $3.30 for 2L and $1.70 for 1L. This caught many in the industry by surprise and is seen a real positive move by Coles. It shows that the dark days of $1/L are a distant memory and it is time for everyone in the industry, including me, to move on from this.
It shows that Coles is adjusting the price on shelf as required to meet the cost of getting milk into their stores. The market is working like all other products which is all the industry ever wanted.
It also highlights that Coles is a market leader in paying farmers a fair price for the milk. Many of my members in southern NSW have made it clear to me that Coles has had a very positive impact on their business in the past 4 years. And the next 3 years are positive given the contracts they have with Coles in a time of considerable uncertainty with milk prices especially in southern Australia.
At this stage, Woolworths and Aldi have not lifted their milk price to match Coles. A logical question is why? Perhaps they are playing games to try and get some brownie points with consumers at the expense of the dairy industry but will lift prices in the coming weeks?
Or perhaps Woolworths and Aldi do not have the same cost pressures since they pay farmers less for their milk? I think in many areas of Australia, especially where Coles has direct supply with dairy farmers, this is very likely to be the case.
Whatever the reason, Woolworths and Aldi are very unlikely to be making more than a very small margin on milk. Matching the Coles price increases would be a welcome move by the industry and would allow price increases to farmers and processors for milk at a time when costs are increasing substantially. It would also allow processors to increase their brands wholesale prices to allow further small price increases to processors and farmers.
So Woolworths and Aldi, please help the dairy industry by matching the Coles price increase.
Eric Danzi, CEO eastAUSmilk.
Biosecurity Levy – Coming to a Dairy Farm Near You?
The Federal Labor Government’s 2023 budget included what they are calling a Biosecurity Protection Levy, to contribute to the cost of biosecurity measures. The government’s proposition is that, because farmers are the beneficiary of biosecurity measures, they should contribute. It will be set at 10% of the 2020-2021 agricultural levy rates.
The government has called for submissions by 6 October 2023 about how the levy is to be introduced, but stressed they are not open to submissions rejecting it, and not open to major modifications.
eastAUSmilk is in the process of developing their views about how they respond to this narrow ‘invitation’. Other agricultural industry bodies are also considering their response, and it is clear some will reject the whole idea and will oppose the new impost.
This is not a levy. It is a fee, charge, excise, or tax and should be accurately labelled as such. This point is not merely semantic. The existing levy system collects funds for industry purposes, is overseen by industry representative bodies, and is generally supported by the agriculture sector. The Biosecurity Protection Levy will, on the other hand, be funnelled into consolidated revenue, will not necessarily be spent on biosecurity initiatives of relevance to industry, and there will be no industry oversight.
The Government’s own levy guidelines set out how a levy is introduced and managed, and this new budget measure is introduced in a way not countenanced by those guidelines.
eastAUSmilk is consulting with Australian Dairy Farmers, and with Queensland Farmers Federation and their affiliated organisations, in developing a response.
Mike Smith, eastAUSmilk Government Relations Officer
Saputo decision delayed
The Australian Competition and Consumer Commission has announced a delay in presenting their findings, on the proposed acquisition of two Saputo milk processing plants by Coles.
They were due to present their final findings on the proposed acquisition on Thursday 14 September, but have delayed their report indefinitely, pending receipt of further information from the parties, i.e. Coles and Saputo.
EastAUSmilk Chief Executive Officer Eric Danzi said that eastAUSmilk had several times during the ACCC review made submissions raising possible consequences of a completely unregulated acquisition. eastAUSmilk had urged the ACCC to ensure, if the acquisition proceeded, that conditions were attached to it which protected dairy farmers and other milk processors from the effects of reduced competition which would arise.
In July this year, ACCC published a Statement of Issues outlining their competition concerns and asked of further submissions.
The two milk processing plants in question are at Laverton North in Victoria and Erskine Park in New South Wales, and the ACCC expressed serious concerns at reduced competition in the central coast area of New South Wales and impacts on other processors. In eastAUSmilk’s view, this impact could be felt from central NSW up into southern Queensland.
While many NSW members of eastAUSmilk have a good working relationship with Coles, some dairy farmers are concerned that if Coles owns the NSW facility it could impact where northern NSW and southern Queensland milk is processed, and hence the viability of production.
The ACCC review is only part of the story, though. Their review is conducted on very narrow grounds – the incremental change to competition in the market, caused by the proposed acquisition.
They are not allowed to:
consider social aspirations shared by all Australians – ongoing access to locally sourced fresh milk, a vibrant dairy industry, regional community resilience, fairness between big business and small, and so on,
address the total effect on competition that the acquiring company will have, nor
treat this as a precedent for agricultural supply chain vertical integration.
The ACCC say they will announce a revised decision date in due course.
Mike Smith, eastAUSmilk Government Relations Officer
Processors want the Dairy code of practice watered down
The code of practice has been in place for 3 years now and has had a significant impact on improving competition in the industry. It has created a fairer and more balanced bargaining between processors and farmers and this is exactly what the code was introduced for.
Farmer advocacy groups including eastAUSmilk and Australian Dairy farmers where key advocates for introducing the code whereas processing representatives tried to block the introduction of the code. A special thanks to Craig Hough from Australian Dairy Farmers who was key to drafting the code. Craig finished his time at Australian Dairy Farmers last week and his knowledge, drive for change and enthusiasm will be sorely missed.
Some processors are now complaining that the code does not give them enough flexibility when competition between processors drives the price to farmers up. These processors and their representatives want the code watered down so processors can reduce prices to farmers like the bad old days pre the code. This will allow processing companies worth billions of dollars to once again dictate to the small family farms that supply them. Their attitude is not surprising since processors were opposed to the code and have never wanted farmers to have any more bargaining power.
Some processors have competed well in the market to attract additional milk supply. The code has allowed this to happen much more readily than it was previously. Are these processors, who want to compete for and attract milk, also complaining that the code needs to be watered down? I would think not.
I would note that processors have identified the boundaries of the code and found out what they can and can’t do. In several areas, this means the intent of the code is not translated into practice. This appears a more significant issue to me than complaints by processors that small family businesses now have too much power over multi-billion dollar companies.
Eric Danzi, CEO eastAUSmilk.
eastAUSmilk AGM
EastAUSmilk’s Annual General Meeting was held in Pittsworth, Queensland on Wednesday 30 August, following last year’s in Lismore, New South Wales. Members from both New South Wales and Queensland attended, as well as staff.
In his report, President Matt Trace highlighted the impact of floods on members, as well as milk pricing issues, and the need to build eastAUSmilk’s profile amongst non-members. Chief Executive Officer Eric Danzi attended via Zoom because he was at an important Dairy NSW Member Event in Merimbula New South Wales. His report stressed the strategic plan developed by the Board, and member services. Auditor Alan Teese, from Gillow and Teese, discussed the financial report with members, and all reports were subsequently accepted.
An ”other business” agenda item allowed members to raise further issues from the floor of the meeting.
Members at the AGM were then welcomed to Peter Garratt’s nearby Southbrook dairy farm, where Peter spoke in detail about his feed and nutrition practices, which enable significantly higher carrying capacity, and hence profitability, than pasture feeding alone.
In conjunction with the Annual General Meeting, eastAUSmilk’s Board also met in person, and considered issues as wide-ranging as the Northern Dairy Plan, artificial insemination, dairy beef exports, and Bermuda grass. They also received an update on government relations matters, particularly including Government funding of dairy programs, and the proposed purchase of two Saputo milk processing facilities by Coles. The Board also considered briefly greater use of technology, to allow on-line attendance at future Annual General Meetings by members who couldn’t be there in person.
Both the Board and the Annual General Meeting spent time discussing the very positive membership growth in New South Wales following the amalgamation of Dairy Connect and QDO, and regional visits by the CEO.
Mike Smith, eastAUSmilk Government Relations Manager
eastAUSmilk presses Federal Minister on Competition
eastAUSmilk has continued to actively pursue priority issues, and this week met with senior advisors to the Commonwealth Minister for Agriculture, Fisheries and Forestry, Murray Watt.
Chief Executive Officer of eastAUSmilk Eric Danzi and Government Relations Manager Mike Smith discussed at length with the Minister’s advisors the proposed purchase by Coles of Saputo milk processing plants in New South Wales and Victoria, with a focus on the issues of concern already identified by the Australian Competition and Consumer Commission.
The ACCC has expressed concern about the impact of this proposed acquisition, and noted it could see fewer processors competing to purchase and process milk in the New South Wales central coast region, and potential impacts on other processors and dairy farmers further away.
Their preliminary report can be downloaded from the ACCC website, and they propose to release their final findings about this proposed acquisition on September 14.
eastAUSmilk stressed to the Minister’s advisors that the outcome, if this sale goes ahead, must see the market for milk throughout New South Wales and Queensland deliver fair and effective competition, and no reduction in the milk sale options open to farmers.
The meeting also discussed in detail the need for an urgent review and updating of the Dairy Industry Code, and the kind of changes eastAUSmilk wants to see. A review of the Code is due this year, and eastAUSmilk has requested that it proceed without delay.
eastAUSmilk has sought a commitment from the Minister’s office, and his department, that they will continue to discuss a wide range of industry issues, including technology uptake by dairy farmers, sustainability and efficiency, and animal welfare.
A follow-up and more detailed discussion is planned, in relation to all of the issues raised, with the Minister’s office.
Mike Smith, eastAUSmilk Government Relations Manager
eastAUSmilk AGM
eastAUSmilk will be holding our annual general meeting on Wednesday 30th of August in Pittsworth at the Pittsworth Motor Inn. The AGM starts at 11.00am with morning tea beforehand and the AGM is due to end by 12.30pm followed by lunch.
A visit to Peter Garratt’s farm at Southbrook is also planned after lunch and is due to commence around 1pm. Peter is one of the leading young farmers in the industry who has transformed his farm over the past 10 years and almost tripled production during this time. Peter is largely a TMR farm and averages over 30L/ cow per day and is a great example to other farmers on what they can do. This farm visit will highlight some of his latest farm improvements including GPS sprayers, concrete silage pits and covered feedpad as well as plans for future development.
This will be followed by a dinner at 7pm with guest speakers Rob Cooper from NSW Department of Primary Industries, who is the chair of the NSW Dairy Action Plan. Rob will speak about the implementation of the NSW dairy action plan including changing farming systems, attracting new entrants and encouraging farmers to expand their business.
Ben Tarrant from Darling Downs Precision will also speak at the dinner. He will discuss the applications of technology including the Weed-IT precision sprayers. The sprayers detect the weeds and only sprays them which saves up to 90% on chemical usage.
The farm visit and dinner are open to all who would like to attend. We look forward to a good turnout with a good number of members having already RSVP’d. We are looking forward to catching up with all attending, if you haven’t yet RSVP’d and would like to attend, please contact us on 07 3236 2955.
Letisha Johnson, eastAUSmilk Project Officer
eastAUSmilk Johne’s Testing
BJD- Bovine Johne's Disease is caused by the bacteria Mycobacterium avium subsp. Paratuberculosis(MAP). It causes diarrhoea, weight loss, reduced milk production and eventually death. It is an incurable disease and although mainly contracted by young stock, it is not often evident for several years, due to the long incubation period.
The dairy industry is working hard to keep BJD out of herds by proactively managing calf rearing conditions and being extra diligent with the importing of stock onto their properties. The Johne’s Disease Dairy Score was developed to help manage associated risks of infection, with active biosecurity plans and biannual herd testing.
Over the past few months, eastAUSmilk has been busy collecting samples from our members farms for their scheduled BJD testing. We have had 118 farms participate in testing, from the Atherton Tablelands QLD to Comboyne NSW.
It has been great to get onto so many farms and chat to our awesome farmers in person. Getting to experience the diversity between different farms, due to location, available services and weather conditions, has given me greater insight into ways to support more farms moving forward. The high standard these farms are operating at is impressive to say the least.
Just a note moving forward, for those needing BJD test results for Qld RNA entries, testing needs to be completed at least 3 months before, to allow the laboratory time to process the results.
Many thanks to all the farms for working in with collection times and days, it helped make the process run smoothly which was much appreciated.
Letisha Johnson, eastAUSmilk Project Officer
Coles and Saputo Sage Continues
Submissions to the Australian Competition and Consumer Commission, on their concerns about the proposed acquisition of Saputo milk processing plants by Coles, closed on 3 August. The ACCC currently propose to make their final findings by 14 September.
In their statement of issues published in July, ACCC raised several areas of concern. They believe it is possible that sale of the Erskine Park (NSW) facility could see significantly less competition in the market for fresh milk, in several regions of NSW, and they are also concerned at the impact on the dairy industry if Coles decides to move processing from further north, or elsewhere, to the Erskine Park facility.
eastAUSmilk has made a submission in response to the concerns raised by the ACCC, and stressed they are not trying to force Saputo to hang onto milk processing plants they don’t want, nor that Coles will harm the dairy industry recklessly. Rather, the eastAUSmilk submission stressed that the competitive advantage which would be enjoyed by Coles if they bought the plants, and the production opportunities they represent, would most likely see Coles make changes to their operations which could drastically impact markets as far north as southern Queensland.
The solutions proposed by eastAUSmilk focused on keeping competition in the NSW market for fresh milk, by encouraging Saputo to go to market with their plants, to see if other milk processors are interested, or alternatively encouraging a joint venture between Coles and another processor or attach conditions to the sale which protect competition. In all cases, eastAUSmilk urged that the Dairy Industry Code be updated to address both this proposed purchase, and any other proposals for vertical integration in the industry.
eastAUSmilk has offered to work with ACCC to develop each of these proposals, because any solution will work better if it has dairy farmer input.
Mike Smith, eastAUSmilk Government Relations Manager
EastAUSmilk Congratulates ACCC for Processor Prosecution
EastAUSmilk CEO Eric Danzi has congratulated the Australian Competition and Consumer Commission for action taken to ensure the integrity of the Dairy Industry Code of Conduct, by prosecuting Lactalis, a large milk processor operating in all states.
The Federal Court found Lactalis had entered into contracts with farmers, which included terms allowing Lactalis to unilaterally terminate agreements for irrelevant behaviour, including when, in Lactalis’ opinion, the farmer had engaged in “public denigration” of processors, key customers or other stakeholders. In other words, contracts were designed to smother dairy farmers engaging in public debate about their industry!
In some cases, famers have no say over the content of contracts, and must sign the contract drafted by the processors, to sell their milk.
The Court also found that Lactalis had breached the Code by failing to publish milk supply agreements on its website.
Lactalis was fined nearly $1 million.
A review of the dairy code is due now, and eastAUSmilk has called on the Federal government to make that review urgent, so loopholes which have become apparent since it commenced can be addressed, and it remains effective and relevant. They also believe it needs to address vertical integration in the dairy supply chain, to protect dairy farmers from potential misuse or market power, as well as minimum pricing in long term contracts, and several other improvements.
EastAUSmilk has met with Ministers or their offices, and departments, in the New South Wales, Queensland, and Commonwealth Governments, to press the need to review the Code now. They say this Federal Court finding, and substantial fine, proves that some milk processors won’t comply with their obligations under the Code, and will try to get away with breaching it if they can. They want a Dairy Industry Code which forces processors to change the culture of bullying farmers.
Mike Smith, eastAUSmilk Government Relations Manager
Australian Competition and Consumer Commission has concerns about Coles
Following submissions from eastAUSmilk and other industry participants, the Australian Competition and Consumer Commission on 20 July published a statement setting out the issues they are concerned about, with Coles’ proposal to buy two milk processing plants from Saputo.
The ACCC noted the proposed acquisition may lead to Saputo exiting markets for the acquisition of raw milk in NSW, thereby substantially lessening competition for the acquisition of raw milk in those markets.
They also noted the proposed acquisition may substantially lessen competition by giving Coles the incentive and ability to harm or frustrate competitor businesses at various points of the dairy supply chain.
The ACCC noted a significant number of industry participants had raised strong concerns about the proposed acquisition, particularly given it will result in a major structural change as the first time a supermarket has its own milk processing facilities.
Their full statement can be downloaded from the ACCC Government website. Issues of concern to the ACCC are discussed in more detail in the ACCC's full statement.
While many NSW members of eastAUSmilk have a good working relationship with Coles, some Queensland dairy farmers are concerned that if Coles owns the NSW facility it could impact where Queensland milk is processed, and hence the viability of some Queensland production.
The ACCC Review is only part of the story, though. Their review is conducted on very narrow grounds – the incremental change to competition in the market, caused by the proposed acquisition. They are not allowed to:
consider social aspirations shared by all Australians – ongoing access to locally sourced fresh milk, a vibrant dairy industry, regional community resilience, fairness between big business and small, and more,
address the total effect on competition that the acquiring company will have, nor
treat this as a precedent for agricultural supply chain vertical integration.
EastAUSmilk is likely to make further submissions to ACCC about the issues they have raised.
Mike Smith, eastAUSmilk Government Relations Manager
EastAUSmilk meets More Decision-Makers
Last week, eastAUSmilk’s team met with officers of the Federal Treasury Department, and advisors to New South Wales Minister for Agriculture, and Regional and Western New South Wales, Tara Moriarty.
eastAUSmilk Chair of the Board Matt Trace and Government Relations Manager Mike Smith talked with Treasury about the Australian Competition and Consumer Commission review of the proposed purchase by Coles of two Saputo milk processing plants. They also pressed the case for review and updating of the Dairy Industry Code. The Treasury officers were very interested in the proposition that some of the processors have begun to work out ways around the provisions of the Code, and agreed to meet eastAUSmilk again, once the ACCC announces the results of their review, on 20 July.
The discussion with Minister Moriarty’s advisors covered the same Coles and Saputo issues, and changes needed to the Dairy Industry Code, as well as industry sustainability measures, animal welfare issues, and foot and mouth disease preparedness. eastAUSmilk and the Minister’s office will get back together soon for further discussions, and some of the topics covered will also be discussed with New South Wales’s Department of Primary Industries, in the near future.
Minister Moriarty was invited to visit a dairy farm, and eastAUSmilk promised to show her the basics of how a dairy farm works. She was also invited to an eastAUSmilk Board meeting.
As with all of the meetings held with Ministerial Offices and Departments over the past several weeks, eastAUSmilk has found discussions to be positive, and constructive, and in all cases there’s a commitment to continue them.
Mike Smith, Government Relations Manager eastAUSmilk