It is great news that Murray Goulburn has at last agreed to wipe out the imposed ‘‘debt’’ on its suppliers arising from the clawback a year ago.
We hope Fonterra will follow suit.
This is one of the fundamental changes we have been calling for to save the dairy industry, though there is much more to be done.
The bad news is the unnecessary pain that last year’s clawback has caused in the interim, with hundreds of farmers quitting the industry and many more becoming welfare-dependent.
The clawback led to a fall in the farm gate milk price across the industry, just at a time when global prices were lifting.
A year ago we were told that the fall in price was an absolutely necessary adjustment to the depressed global market. Now that there has been a 40 per cent lift in dairy prices we are being told (most recently by the new chief executive officer of Fonterra Australia) that Australian farmers aren’t seeing the same price increases as NZ farmers because most Australian milk goes into the domestic market.
The UDV appears to have muddied the waters when its president explained that Australian processors can make more money by exporting than if they sell into the domestic market. This is said to explain why supermarkets are replacing Australian product with cheap (possibly dumped) imports.
The consequences of this ugly mess are now seen in the closing of manufacturing plants because of tumbling milk production.
Job losses in the manufacturing sector have previously led to government intervention — remember Alcoa, Ford and the Whyalla steelworks?
Why doesn’t dairy manufacturing justify the same level of concern, especially as it is based on what the government sees as the industries of the future?
We remember that the stated aim of deregulation was to increase Australian milk production to 16billion litres per year, a feat which NZ has managed to exceed during the same time period. However Australia’s distorted market has seen a drop in production to little more than half this volume, with possible ongoing falls.
Who is going to accept responsibility for the policies that have led to this debacle?
Farmer Power has been a lone voice warning that this would happen unless the government intervened.
However the other industry voices have contradicted this by painting an overly optimistic picture, and these are the voices the government has listened to.
Perhaps the fact that the established industry bodies now rely on processors for much of their funding explains this. Processors would be worried that sounding the alarm bells would spook their shareholders.
Now is the time for all participants in the industry to face up to what is actually happening, stop the misinformation and commit to doing something about it. It is surprising to us that no-one has a plan, so we have moved to fill the gap.
Farmer Power will soon be launching the consultation draft of the Australia Dairy Industry Recovery Plan that we have put together, and we will be asking all stakeholders to sign up to its implementation.
After five inquiries into aspects of the dairy industry during the past year, the time for further inquiries is over, and it is definitely time for action.
—Alex Robertson, vice-president, Farmer Power.