Get with it Coles and just admit you are part of the problem 

When people ask you to brief them on the Australian dairy industry it can become a very complicated story

Farmers in every state except Victoria supply Australian families. Most of the milk produced in Victoria supplies families overseas.

The majority of people who are contacting me share the same values. Like this lovely person who contacted me yesterday

My view is that farmers’ (whatever they’re farming) should be paid a price for their product that allows them to cover the true cost of production, that allows farmers to maintain/replace infrastructure, improve the land, provide for the welfare of their animals, care for themselves and their families and make a bit of profit as well. In other words, a truly sustainable farming system that takes into account economics, environment, people and animals. This can’t happen if people have a belief that food must be cheap. And this can’t happen if retailers keep underpinning that belief with ridiculous price wars.

Thoughts from behind and beyond the fence 

People in the main want to know

1. What impact has the $1/litre  milk price had on dairy farmers
2. When the $1/litre first hit the scene, were processors paying farmers enough (assuming that retailers were paying processors a fair price) or did the retailer change the price paid to the processor which resulted in a change to the price paid to the farmer
3. What do farmers think of the Coles’ dairy farmers fighting fund?
4. Who are the farmers most affected now by the MG price cut? What will be the impact in the medium to longer term?

The answer to question 1 and 3 is beautifully summed up in this article. Coles milk brand gets a sour reception  

“It’s incredibly ironic [the fund],” said Victorian dairy farmer Marian MacDonald. “Now that Coles are killing the goose that laid the golden egg they’re saying we’d better get some grain under their nose to keep the head up.”

Ms MacDonald said she didn’t want to look a gift horse in the mouth and welcomed the prospect of funding for dairy farmers.

“We love that [Coles managing director] John Durkan has had an exorcism,” Ms MacDonald said.

“Tell him we will forgive him for his past sins. We will even shout him a glass of milk, fresh from the cow.”

 

It is time Coles admitted that they are part of the problem and they can be part of the solution and this blatant PR exercise isn’t the solution.

The answer to question 2 is $1/litre milk severely impacted on milk processors supplying the Australian market and in turn this flowed back to farmers no matter what Coles said and the ACCC certainly called them on that one. See previous post on this here

Now to question 4. The next few months will set the scene for this and its going to depend on a lot of things First up the price for next financial year will be announced shortly. There are grave fears it will be some-where between $4.50 and $5 per kg of milk solids produced (this is Victorian lingo and I will find out what that equates to in cents per litre*). This price will cause genuine pain especially when a major processor ( who shall remain nameless) had indicated it would be closer to $6/kg/ms. There are also a number of other things out of farmers control. They cant control the weather and the weather has been very harsh. Water in irrigation areas has become very expensive.  As a result of tough seasonal conditions cattle feed has also become very expensive.  Its a very volatile world our farmers operate in. Kudos to them they are very brave to even consider farming

Beyond the economics farmers are in shock. They are angry and they have lost confidence.

Whilst Murray Goulburn was the initial villain, Fonterra’s response is despicable and I look forward to the ACCC report on their moral responsibility and acknowledging they need to do the right thing by the farmers who look after them .

This comment from their New Zealand CEO beggars belief

“What we are doing is drive (sic) every cent of money which we can out of Australia back to New Zealand shareholders in this extremely low milk price environment,” he said.    Source Fonterra robbing from Australia to help NZ

With a great response from Australian dairy farmer Karrinjeet Singh-Mahil

‘ Fonterra never gave any indication its milk price was not sustainable, and farmers were still waiting on information about a promised loan. There’s some pretty poor decision making in such a large company, both at the top levels of management, but also at board level, because one of the consequences of this entire situation is that Fonterra’s reputation has been irreparably damaged.The backlash could do long-term damage to the company’s key export markets in Asia’.

The solutions. Well I look forward to seeing what’s being put on the table and sharing them with you in my blog

In the first instance you can help by keeping your fingers crossed the Australian dollar drops to somewhere close to 60 cents USD  as this will help ensure Australian farmers milk is competitive in the export market

And and here at home ? You can help our dairy farmers by consuming more dairy products and telling Coles to get with it and admit they are a big part of the problem

 

#dairylove

*FYI My Victorian dairy farmer counterparts tell me this equates to 34 to 38 cents per litre and this NSW 6th generation farmer can assure you this is a disaster in waiting price especially when farmers were budgeting on 46 cents/litre

For farmers some good advice here from consultant John Mulvaney