Describing the Australian dairy industry crisis in a nutshell


Following this Facebook post  I had a non-farmer ask the question

” Outsider looking in question. In a nutshell, what is the “current industry crisis”?

I thought great question and I gave him the link to the Dairy Plan website and threw the question back at him.

This is his answer after a review of the Dairy Plan website?

Well, that was interesting Lynne. I *think* I have a better sense of the issues – a mix of structural and environmental concerns. The background seems to be an industry that has changed reactively without a particularly broad view of how change should be facilitated. Big changes too, such as the move away from co-operative processors that offered more direct farmer participation and influence to hard-nosed and parochial business undertakings where farmers have been hostage to arrangements beyond the farmgate.

I’m curious what you see is needed in terms of culture though. Structural issues are probably better dealt with through more proactive and strategic policy/practice frameworks while many of the environmental concerns have probably been tackled by other industries already and aren’t peculiar to dairy.

In the end though, profitability seems the main concern. When input costs have risen but milk prices have been under downwards pressure that isn’t surprising, so a milk price market at least offers greater transparency and risk visibility for farmers. So long as it’s backed by genuine structural and policy reform.

All of that said, I didn’t miss the references to matters such as domestic demand, possible global markets and our compromised role as an exporter, and social licence. Given recent developments around health and environmental concerns, it seems clear that meat and dairy are on notice domestically. Like I said recently, I fail to see how seeking to grow local demand is able to be reconciled with domestic tensions. Feasibly, dairy genuinely has to contract or become more focused on global markets. At least, that’s how it looks to me. And globally, you might find you need to rely on markets that have yet to fully grapple with the same environmental concerns our domestic market faces. In other words, exports might be a short term hedge and little more. That’ll work for a while I guess (if I am right), but a longer term focus might prevent more of the same in a few decades…

I am confident 100% of Australian dairy farmers would agree that profitability is the main concern for farmers. The question I have for the industry is why dont we have Australia’s version of the Tesco Fair for Farmers model

Tesco Milk – Fair For Farmers

At Tesco we are committed to selling high quality milk, sourced from British dairy farmers who benefit from our long-term support and are guaranteed a fair price for every pint.

Since 2007, we have worked directly with 600 dairy farmers, with herds ranging from 60 to 1,800 cows, who supply us with fresh milk. In return, we pay guaranteed prices and agree long term contracts, through the Tesco Sustainable Dairy Group (TSDG). This year that number will rise to around 800 – the largest group of dairy farmers working directly with a retailer.

All of our milk is 100% British, from cows who receive great care and attention.

Increases in EU milk production following the removal of the European milk quota system and global changes (including decreasing demand from China and a Russian ban on European imports) has caused a worldwide surplus and falling wholesale milk prices.

The TSDG is one of the long term ways Tesco continues to provide support and security to British dairy farmers during periods of economic uncertainty.

Having put the Tesco Fair for Farmers model to Woolworths in 2013 to no avail I look forward to other people’s thoughts ( outside industry perspectives highly welcome)

Cows GHG Meme.PNG

Australian consumers can feel very proud of their dairy farmers 

Author: Lynne Strong

I am a 6th generation farmer who loves surrounding myself with optimistic, courageous people who believe in inclusion, diversity and equality and embrace the power of collaboration. I am the founder of Picture You in Agriculture. Our team design and deliver programs that inspire pride in Australian agriculture and support young people to thrive in business and life

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