No punches pulled at inquiry

DANEKA HILL

DAIRY POLITICS flared up in a big way at the latest Senate hearing into the performance of the dairy industry.

The hearing was held entirely via telecommunication and heard from 52 Victorian farmers and industry workers.

Overwhelmingly farmers expressed disappointment in their advocacy bodies, a mistrust in Dairy Australia, Australian Dairy Farmers and the Australian Dairy Plan, and a desire for change.

“We believe this Senate inquiry has the opportunity to delve deeply into the dairy industry structure and uncover its shortcomings, its failures, and its conflicts of interest,” Farmer Power chief executive Garry Kerr said.

Farmer Power is a grassroots advocacy group voluntarily led by farmers.

Farmer Power believes established advocacy bodies have too many conflictions of interest and allow dairy processors too much influence over decisions.

“It is clear to most that the processors cannot be on an advocacy representing dairy farmers, yet this is just one of the things currently being proposed under the new Australian Dairy Plan,” Mr Kerr said.

The new dairy plan — known as NewCo B — had few friends among the 52 who spoke before the inquiry.

One rare friend was United Dairyfarmers of Victoria president Paul Mumford.

Mr Mumford believed involving processors more was a good thing, and proposed they contribute to the dairy levy which all dairy farmers must pay to the Dairy Australia to support its existence as the industry’s leader.

“If we are trying to create a unified industry, the processors should add value in some form. Currently, they have the use of some of the services of DA,” Mr Mumford said, arguing since processors benefited from DA activities, they should also pay up.

Mr Mumford and UDV manager Ashlee Hamond said their organisation did not support a minimum farm gate milk price because it would hurt milk exports, shrink the Victorian milk pool and there was no way to make the price fair.

“We are all different in how we produce milk,” Mr Mumford said, himself a south Gippsland farmer of 430 milking Jersey cows

“We can’t standardise two dairy farms sideby-side, because of all the nuances within their own business.”

UDV members have voiced concerns about the UDV’s views on the Australian Dairy Plan, leading to weeks of membership consultation across the state.

Three DFV founders gave information at the hearing — Winslow farmer Bernie Free was one of them.

He shunned the UDV for their “quiet voice throughout” the two-day dairy plan workshop.

Mr Free said all state advocacy bodies - except for the Queensland Dairyfarmers Organisation - had been “deafening in their silence”.

Fellow DFV founder Bruce Knowles, a Tyrendarra farmer, said of the industry’s current problems: “it’s political”.

“The unaccountable governance and structures within the Australian dairy industry are letting dairy farmers and their communities down,” Mr Knowles said.

Mistrust in processor involvement and anger towards the advocacy groups which have steered the dairy industry over the past two decades was a recurring theme at the senate hearing.

“[The ADP] is a facade and the grassroots levypaying dairy farmers are just being strung along.”

Two new dairy plans have been developed to rival the ADP’s NewCo B — the Wannon solution (created by the DFV) and the John Dahlsen farmer representative model (created by solicitor John Dahlsen).

United Workers Union food and beverage director Susan Allison spoke on behalf of processor workers at the inquiry hearing.

She said workers supported a minimum farm gate milk price, and the union had made this clear to the ADP only to get radio silence.

“I’m deeply concerned that the views of workers and the grassroots voices of farmers, who are key to the industry, are being ignored,” Ms Allison said.

Branxholme farmer Allan Campbell supported the Wannon solution, which his farm-consultant daughter Sarah Campbell helped develop.

“Somewhere through this process, the concerns of grassroots dairy farmer representation and advocacy has been derailed and represented in a form to propose a dairy industry model involving processors and Dairy Australia,” Mr Campbell said.

He said last financial year he paid $4700 in membership fees to the UDV, and all he got for it was a “spineless response” when the UDV supported the “processor and DA-controlled” NewCo B plan.

The inquiry into the performance of Australia’s dairy industry and the profitability of Australian dairy farmers since deregulation in 2000 has been hearing evidence since December 2019, and is expected to hand down a report in February 2021.

FONTERRA MILK COLLECTION FALLS

Fonterra Australia has recorded a drop of 12 per cent in milk collection, according to the 2019-20 financial results of its New Zealand counterpart.

The drop in milk collection to 107.8 million kg of milk solids was caused by a combination of drought, high on-farm input costs and a highly competitive milk supply market.

Sales volumes for Australian Ingredients, the ingredients channel within Fonterra Australia, also declined by 18 per cent, due to the drop in milk collection.

It wasn’t all bad news, with the ingredients channel’s gross profit increasing from $10million to $31million due to reduced costs as a result of closing the Dennington site, better utilisation of the

Stanhope site and allocating more milk to higher returning cheddar and mozzarella products rather than the lower returning liquid and whole milk powder products.

The Stanhope site was also leading the way in the company’s attempts to reduce water use by 30 per cent.

“This year we reduced water use at our sites, in water constrained regions, by 6.4 per cent, which is a 3.1 per cent reduction against our 2018 baseline and a significant step towards our 30 per cent reduction target by 2030,” the report said.

“Our Stanhope site delivered most of the improvement, installing new treatment infrastructure which has significantly reduced the water it uses.”

Plan sets ambitious targets

THE AUSTRALIAN Dairy Plan has set the ambitious targets of boosting Australia’s annual milk production by almost one billion litres, adding $500 million of farm gate value and creating thousands of jobs by 2025.

Released on September 28, the plan has highlighted increased profitability, confidence and unity during the next five years as the key elements of its strategy.

Australian Dairy Plan chair and former Victorian Premier John Brumby said the “quite conservative” modelling was about paving the way ahead.

“The truth is, in dairy there’s not enough reward for effort,” Mr Brumby said.

“The dairy industry has really turned a corner thanks to seasonal conditions, the cash rate, farm gate prices have picked up, farmers are producing more.

“Farmers are doing much better; this is about trying to lock that in over the next five years.” STATE DAIRY advocacy bodies have welcomed the release of the Australian Dairy Plan, saying it can help pave the way for a strong industry.

But Queensland Dairyfarmers’ Organisation is seeking more information about organisational reform to the industry.

Released late last month, the Australian Dairy Plan outlines a fiveyear pathway for the dairy industry, setting targets to increase milk production, profitability and employment opportunities.

NSW Farmers Dairy Committee chair Colin Thompson said the success of the plan would depend on industry working together to implement and adopt the plan.

“After some years of uncertainty, low farm gate prices and drought for dairy farmers in NSW, it’s pleasing to see initiatives to increase profitability

Mr Brumby acknowledged more needed to be done to grow trust between farmers and processors, an issue Australian Dairy Products Federation president Grant Crothers said was a “key commitment”.

He said the focus needed to be on increasing transparency around farm gate milk prices and the value of milk with the introduction of a new Milk Value Portal.

Implementation of the plan will target greater than 50 per cent of farms achieving profit of at least $1.50 EBIT/ kg MS, have more than three-quarters of farmers and processors confident about the future, and have more than 75 per cent of farmers and processors positive about industry unity by 2025.

Reform of industry structures is one of five key commitments for change identified during an extensive nationwide consultation involving more than 1500 industry participants.

The Australian Dairy Plan was developed in consultation with a number of dairy bodies — Australian Dairy and confidence in the industry,” Mr Thompson said.

“The plan has a strong focus on providing farmers with the services and tools to achieve consistent profitability in an increasingly challenging operating environment.”

The Australian Dairy Plan is the first time industry bodies from across the country have come together to map a way forward.

In a social media post, United Dairyfarmers of Victoria said it was pleased to see a stronger focus on profitability in the final plan.

“The dairy plan is a significant milestone for the industry and we look forward to seeing the plan hit the ground and drive positive outcomes for the Australian dairy industry.”

Queensland Dairyfarmers’ Organisation president Brian Tessmann welcomed the extensive consultation carried out during the plan’s creation, Farmers, Australian Dairy Products Federation, Dairy Australia and Gardiner Foundation.

Farmers heavily criticised industry advocacy bodies in a series of workshops held to discuss the dairy plan last year, and also argued that bodies like Dairy Australia should be doing more to lobby for farmers.

Dairy Australia board director and northern Victorian dairy farmer Jeff Odgers said the plan would help deliver increased business and risk management skills.

“Our target is for all dairy farm businesses to have a documented long-term plan and for at least 75 per cent of dairy farms to be using risk management tools and products within five years,” Mr Odgers said.

The plan sets out the need for further consultation and an industry vote as being essential for successful reform.

Reports will be generated every six months about how the industry is track-

More work needed

ing against the plan’s goals. but said the plan offered “nothing significantly new”.

“What was and continues to frustrate grassroots dairy farmers and organisations such as ours who are intent on change, is the lack of clarity and commitment on timing around the dairy reform process.

“We were informed that the ADP release would not contain details of restructuring. The explanation provided was that the dairy reform process is so important and so complex, that it needs its own separate set of committees and timelines which can still not be disclosed beyond the top line dates provided months ago.

“Without the strong foundation of undisputed leadership and undisputed authority, none of the other commitments can be enacted successfully because the overarching question of whose responsibility remains unknown.”

MILK PRODUCTION UP

National milk production is set to increase this season, as favourable weather, lower input costs and a relatively firm farmgate milk prices support some of the best dairy farming conditions of recent years, according to Dairy Australia’s October Situation and Outlook.

This will be the first annual increase in national milk production in three years—with Tasmania, Gippsland and South Australia leading the charge.

Increased milk supply in most regions is also supporting “cautious optimism” for improved farm profitability.

The report highlights significant changes in consumer purchasing habits resulting from COVID-19.

“Two very different stories are emerging for the current season,” said Dairy Australia senior industry analyst Sofia Omstedt.

“One tells the tale of consistently improving conditions at the farmgate and a positive flow-on impact on milk production. The other reflects depressed global economic growth, disrupted dairy demand and significant shifts in consumer purchasing habits from COVID-19.

“From a farmgate perspective several things are going well, as input costs ease, confidence rebounds, and milk production continues to grow. Whilst the story is far from finished, this year could finally provide the industry a much needed breathing window and farmers the time to build up equity again.

“Dairy demand within Australia has been affected by COVID-19, as consumer habits and purchasing behaviour have changed. With more people staying home than ever before, cooking and baking at home has experienced a renaissance and dairy products used in these recipes are the ones that have grown the fastest since the start of the pandemic.

“It’s likely some of these new habits will become permanent lifestyle changes. If realised, the industry’s ability to capitalise on new growth trends will be key to ensure strong ongoing demand for Australian dairy, as we settle into a new normal.”

While foodservice and route channel sales have declined due to reduced hospitality sector activity and travel, retail dairy sales have been fuelled by increased levels of home cooking and baking.

Supermarket sales of butter have surged 18.2 per cent, cheese by 6.4 per cent and plain Greek yoghurt by 7 per cent in volume in the past 12 months, with larger value packs preferred over single serve items.

By contrast route channel sales of flavoured milks in convenience and petrol stores fell 19 per cent.

In the northern hemisphere, supply growth has picked up as incentives curbing milk production have been phased out.

Milk supply in the US and New Zealand has exceeded expectations according to the report, with global production growth likely to weigh on commodity pricing unless resurgent demand can soak up additional milk.

The Situation and Outlook report also contains a study on the divergence of farmgate milk pricing around milkfat content and highlights the launch of the Dairy Australia Trade Agreement Comparison Guide 2020 with information on current trade agreements for dairy’s top 10 export markets.

For more information visit: dairyaustralia.com.au

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EDITORIAL

Dairy Australia board nominations finalised

Dairy Australia has finalised its board nominations; six candidates will vie for three positions at November’s AGM.

Dairy businessman David Beca, south-west dairy farmer Carlie Barry and Bega Valley dairy farmer Phil Ryan will be on the ballot for a spot on Dairy Australia’s board, which will be voted on at this year’s annual general meeting.

Nominations closed at the end of last month and six candidates will by vying for the three board director vacancies, which are due to the expiry of the terms of the three serving directors�

The available positions are two milk producer directors and one director of agribusiness, innovation and change management�

Half were nominated by the board itself and are looking for re-election, while the other three were supported by at least 100 farmer levy payers� The full list of candidates are:

Tania Luckin, who will stand for the milk producer director vacancy against Carlie

Barry�

Paul Roderick, who will stand for the milk producer director vacancy against Phil Ryan�

Roseanne Healy, who will stand for the agribusiness, innovation and change managementdirector position against David

Beca�

To be successfully elected into the three vacant director roles, each candidate will requiremore than 50 per cent of the votes cast at the AGM to be held online on November27�

All levy payers are encouraged to register as members of Dairy Australia in order to vote�

To register, visit: dairyaustralia.com.au/ members or call 1800004377�

The deadline for registrations is October23�

Industry needs trust and unity

The new Australian Dairy Plan has set out an ambitious plan for the future of the industry.

After 18 months of consultation and planning, the five-year plan has revealed the goal of boosting production by almost a billion litres, adding $500million in farm gate value and growing confidence in the industry.

On paper, it sounds like a positive way forward.

But it’s the implementation that counts.

Collectively led by Dairy Australia, Australian Dairy Farmers, Australian Dairy Products Federation and Gardiner Dairy Foundation, the plan hasn’t been welcomed by all.

And it’s going to be a big task to unite everyone across the country, especially when no dairy farm, let alone dairy region, is the same.

The challenge under the one-size-fits-all plan is to bring together all sectors of the industry—farmers, processors, research and development scientists and marketing people, when occasionally the interests of these parties have been different.

It’s an exercise in trust and unity.

The aims of increasing trust, transparency and boosting confidence are noble ones, but goals that will undoubtedly run into memories of clawbacks and low farm gate prices.

How do you repair years of anger and distrust?

The hope is that centralised advocacy and representation can hit the cultural ‘reset’ button.

Feedback to the dairy plan’s draft plan uncovered a belief that the fragmentation of advocacy had led to poor outcomes in achieving policy changes.

The irony is that many farmers have opted out of membership of advocacy bodies, resulting in fewer resources for those organisations and as a result, delivering less impact on political leaders.

Can that issue be solved by the dairy plan?

Having one body to drive this plan forward will take cool heads, dedication and an ability to compromise and see the big picture.

It will be about the the greatest good for the greatest number.

At the end of the day, the challenge is to convert the aspirations for high performance, efficiency and flexibility into a reality.

Dairy News Australia is published by Shepparton Newspapers Pty Ltd. All editorial copy and photographs are subject to copyright and may not be reproduced without prior written permission of the publisher. Opinions or comments expressed within this publication are not necessarily those of the staff, management or directors of Shepparton Newspapers Pty Ltd.

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Max Hyde 0408558938 max.hyde@dairynewsaustralia.com.au

Editor

Alana Christensen (03)58203237 editor@dairynewsaustralia.com.au

Regional editor

news@dairynewsaustralia.com.au Publisher Shepparton Newspapers Pty Ltd Printed by Newsprinters Pty Ltd

Head Office

7940 Goulburn Valley Highway Shepparton, VIC 3630 Phone (03)58312312 Postal address PO Box 204 Shepparton, Victoria 3632 Australia Dairy News Australia welcomes contributions from stakeholders in the dairy industry, and particularly from organisations wishing to advance the industry. Contributions and photos can be sent to: editor@dairynewsaustralia.com.au Letters to the editor on topical issues are also welcome. Letters should be concise and carry the name and town address of the author, as well as a contact phone number, not for publication.

Fonterra sells China farms

FONTERRA HAS agreed to sell its China farms for a total of NZ$555 million.

Inner Mongolia Natural Dairy Co, a subsidiary of China Youran Dairy Group Limited, has agreed to purchase Fonterra's two farming-hubs in Ying and Yutian for NZ$513 million.

Fonterra has also agreed to sell its 85 per cent interest in its Hangu farm to Beijing Sanyuan Venture Capital Co for $42 million.

Sanyuan has a 15 per cent minority shareholding in the farm and exercised their right of first refusal to purchase Fonterra's interest.

Fonterra chief executive officer Miles Hurrell said in building the farms, Fonterra has demonstrated its commitment to the development of the Chinese dairy industry. "We don't shy away from the fact that establishing farms from scratch in China has been challenging, but our team has successfully developed productive model farms, supplying high quality fresh milk to the local consumer market," he said. "It's now time to pass the baton to Youran and Sanyuan to continue the development of these farms."

Mr Hurrell said the sale of the farms will allow the co-op to prioritise the areas of its business where it has competitive advantages. "For the last 18 months, we have been reviewing every part of the business to ensure our assets and investments meet the needs of the co-op today," he said. "Selling the farms is in line with our decision to focus on our New Zealand farmers' milk."

China currently receives about one quarter of Fonterra's productions.

Completion of the sale, which is subject to anti-trust clearance and other regulatory approvals in China, is expected to occur within this financial year.

The transaction value is subject to customary purchase price adjustments, and exchange rate movements.

Any gains or losses on the sale would be normalised upon completion of the sale.

Fonterra expects to use the cash proceeds from the two transactions to pay down debt, as part of its previously announced overall debt reduction programme.

“For the last 18 months, we have been reviewing every part of the business to ensure our assets and investments meet the needs of the co-op today.”

CHANGES ON BEGA BOARD

New directors have been proposed for Bega Cheese at the annual general meeting coming up on October 27.

A director for more than 30 years, Richard Parbery will be stepping down from the board at the AGM.

Director Terry O’Brien, a former managing director of Simplot Australia, is offering himself for another term on the board.

A former director, Peter Margin, will seek to re-join the board. He formerly served from 2011 to 2019 and currently serves on the boards of Costa Group Holdings and Nufarm, and is chairman of Asahi Holdings.

He was also a non-executive director of Ricegrowers Ltd.

The company earlier reported a before tax profit of $103 million on revenue of $1.5 billion for the last financial year.

A long time director of Bega Cheese, Richard Parbery will be stepping down at this month’s AGM.

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Mixed feelings about royal commission

RODNEY WOODS

DAIRY ADVOCACY groups Farmer Power and Dairy Connect have called for a royal commission into the industry, while the United Dairyfarmers of Victoria and northern Victorian dairy farmers are not so sure.

In a recent Senate inquiry into the dairy industry, Farmer Power chief executive officer Garry Kerr called for the royal commission as a way to resolve the structural issues and lack of accountability he said affected all dairy farmers.

In June, Dairy Connect chief executive Shaughn Morgan said while the industry had been regularly inspected and analysed, there had never been a broad-ranging inquiry with powers appropriate to a critical analysis of the entire supply chain.

“There have been a number of stakeholder and parliamentary committees looking into the Australian dairy industry over many years, with

RODNEY WOODS

NEW ZEALAND dairy business The A2 Milk Company has recorded a net profit after tax of $385.8 million and increased total revenue by 32 per cent during the 2019-20 financial year.

Net profit increased by 34.1 per cent and total revenue now sits at $1.73 billion, a figure that is expected to increase again in 2020-21 to between $1.8 billion and $1.9 billion.

“In September, we have started to observe emerging additional disruption to the corporate daigou/reseller channel, particularly due to the stage four lockdown in Victoria,” a company statement said.

A daigou is someone who buys goods in a country like Australia and sends them to Chinese customers. many of their reports now gathering dust on the shelves of parliamentary libraries and MPs’ offices,” Mr Morgan said.

“A royal commission would overcome the lack of will in all governments in implementing appropriate reform in an industry where market failure has been occurring since deregulation 20 years ago.”

Mr Kerr said a royal commission should look at all aspects of the industry, including dairy groups and the influence supermarkets and processors wield.

“We believe it’s vital that this independent review with the appropriate powers to be able to delve deeply into whether levies paid by dairy farmers are necessary and if the Federal Government and the public are receiving value for their investments,” he said.

“Farmer Power believes that conflicts of interest, lack of accountability and lack of financial transparency are enough to call for a royal commission to ascertain the true impact

“As a result of all these issues, we are now witnessing a contraction in the daigou channel beyond our previous expectations and without the replenishment orders that would typically be anticipated at this point,” the statement said.

“This disruption in the daigou channel is impacting our September sales and it is currently anticipated that this will continue for the remainder of the first half of the 2020-21 financial year.

“Sales in the daigou channel represent a significant proportion of infant formula sales in our Australia and New Zealand business and, assuch, we now expect the Australia and New Zealand business revenue to be materially below plan for the first half.

“However, based on the continuing strong growth in our underlying China infant milk formula brand health metrics and the on dairy farmers of self-serving relationships in the industry.”

UDV president Paul Mumford said if a royal commission was to be held, new information would have to be revealed.

“There have been 10 inquiries in the last 10 years for many reasons and there are further inquiries, which will shed light, such as the ACCC’s inquiry into fresh food supply (the perishable agricultural goods inquiry),” Mr Mumford said.

“We have ample evidence of what we need to fix from historical inquiries.

“The question is, if we have a royal commission what additional information will it highlight that we don’t already know and at what cost?”

Cohuna dairy farmer John Keely and Murrabit dairy farmer Andrew Leahy both agreed a royal commission would be a waste of taxpayers’ money.

“We’ve currently got the dairy plan (Australian Dairy Plan) being developed,” Mr Keely said. performance of the rest of our business, we believe this to be a single channel logistics issue, as we are continuing to see strong underlying consumer demand for our brand in China.

“We are of the view that this short-term impact to the daigou channel will prove to be temporary, assuming stabilisation of COVID-19 related issues in Australia.”

Despite the impacts to the daigou channel, The A2 Milk Company reported performance in all other areas of the business was strong, including the liquid milk businesses in Australia and the United States.

“Importantly, our local China business is performing strongly, notably in mother and baby stores, which we anticipate will continue,” the statement said.

Despite COVID-19 resulting in disruptions and changing consumer behaviour, the company

Farmer Power chief executive officer Garry Kerr has joined the calls for a royal commission into the dairy industry.

“That’s going to give us direction to help us go forward.”

Mr Leahy also questioned what a royal commission would achieve, saying a lot of the information needed to improve the industry was

A2 Milk Company lifts profits

already available

The A2 Milk Company is expecting its revenue to increase again in 2020-21 after it grew by 32 per cent in 2019-20.

estimates it had a modest positive impact on the revenue and earnings before interest, taxes, depreciation and amortisation results for 2019-20.

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Producers more confident

GOOD WINTER rain and expectations of a good season are driving confidence in dairy farmers across the country.

Strong farm gate milk prices, combined with a major turnaround in seasonal conditions in many regions, was supporting confidence among producers.

In Victoria, sentiment in the key dairy areas remained upbeat, with 60 per cent expecting little change in agricultural economic conditions, while one-in-five were forecasting an improvement.

By region, sentiment had dipped in every part of the state except Gippsland, where dairy prices and excellent winter rain have combined to bolster optimism in an area that has experienced both drought and bushfires in recent times.

Rabobank southern Victoria regional manager Deborah Maskell-Davies said the season was well set up.

“Good milk prices and a great hay and silage season last year are positives for dairy farmers in west and south Gippsland, however after a wet winter, there is some concern about managing a wetter-than-expected spring over coming months,” she said.

Farmers in south-west Victoria reported the most pessimistic outlook for the season ahead.

Dairy farmers were positive about their income prospects with 32 per cent anticipating a stronger financial result in the 2020-21 financial year.

Ms Maskell-Davies said there was considerable infrastructure building under way to boost drought resilience and preparedness, with new dairy barn construction a noticeable trend.

Expansionary interests were most prevalent in the dairy sector, with 26 per cent of dairy farmers intending to increase investment in their business.

Of these, more than half had earmarked investment for additional property purchases.

“The Victorian rural property market is incredibly strong and many farmers are expressing interest in expanding their operations, particularly in terms of drought-proofing enterprises with property in reliable rainfall regions,” Ms Maskell-Davies said.

It was a similar story in NSW, with sentiment slightly down on last quarter but remaining strong due to robust prices and an expectation among 39 per cent of dairy farmers surveyed that economic conditions would improve over the coming year (compared with 59 per cent in the previous quarter) and 53 per cent expecting little change in conditions.

Investment was at front of mind for many of those producers, with 48 per cent looking to increase investment in their farm businesses over the coming year.

Winter rain, low input costs and a positive outlook ahead is leading to higher confidence in the dairy industry.

Dairy farmers in Tasmania are the most optimistic in the face of external pressures, with 44 per cent of those surveyed looking to an improved year ahead.

Rabobank’s Tasmanian manager Stuart Whatling said farmers across the state were generally very optimistic about the spring season ahead thanks to good winter rain, especially in June and August.

He said many farmers were reporting conditions “as green as they have seen” for at least the past four or five years, with even producers along the east coast region reporting unseasonably warm and wet conditions throughout winter.

Meanwhile dairy sentiment was shown to be soaring, with the sector posting strong upswing in confidence this survey.

In total, 44 per cent of Tasmanian dairy farmers were expecting an improvement in business conditions over the coming year and a further 44 per cent expecting little change to current conditions.

Fresh push to cross border

CALLS FOR a new not-for-profit New South Wales-Queensland fresh milk association have been ignited by advocacy group Dairy Connect.

The organisation has floated the concept which would represent the entire value-chain including producers, processors, distributors, vendors and consumers.

The concept had its genesis when the Dairy Industry Conference briefed the NSW Government about the industry’s desire in NSW to create a new state peak dairy representative body in 2011.

Dairy Connect farmers’ group president Graham Forbes - a producer from Barrington NSW - said there were special synergies between the fresh milk industries in New South Wales and Queensland.

“A single not-for-profit value chain organisation representing fresh milk production in the two states would ensure consistency in advocacy with government, stakeholders and other interest groups,” he said.

“There remains a dairy production dichotomy between northern states and those in the south.

“This particularly relates to Queensland and New South Wales which share much in common, including markets and farming systems and which largely produce fresh milk compared with more commodity-focused production in the south.

“The Australian Dairy Plan, which is out for further consultation nationally now, provides a unique opportunity for NSW and Queensland to look at forming a structure which reflects the best interests of the industry as a whole.”

While the dairy plan had a number of points in its favour, there were clear differences between fresh milk production and dairy product manufacturing across state borders according to Dairy Connect chief executive officer Shaughn Morgan.

“A New South Wales-Queensland fresh milk value-chain association would mean that pressing challenges could be addressed more effectively by those who have ‘skin in the game’,” he said.

“It is time that those dairy stakeholders who wish to be involved with an organisation specifically addressing the concerns of fresh milk producers act to establish a special platform and act urgently.

“Stakeholder organisations should reflect all parts of the industry as well as including research, development and extension to ensure consistency for dairy producers who need support in relation to fresh milk issues.”

Mr Morgan said there would be obstacles along the path, but nothing that could not be overcome.

“For instance, matters relating to the farmer levy can be discussed and a way forward developed to ensure RD&E that is specific to producers of fresh milk can be addressed,” he said.

“Dairy Connect is a unique value-chain organisation that has risen to be the premier advocacy group for the dairy industry on the eastern seaboard during the past four years.

“We recognise the importance of ensuring continuity and common practice between all players, ranging from the dairy producer, the processor through to the function of delivering fresh milk to retailers with consumers completing the chain.”

Discussions are expected to continue with state dairy organisations such as the NSW Farmers Association dairy committee and the Queensland Dairy Organisation.

FONTERRA BUYS DAIRY COUNTRY

Fonterra Australia has set its sights on boosting its cheese production, purchasing Melbourne-based cheese business Dairy Country for $19.23million.

Fonterra Australia managing director René Dedoncker said Fonterra had a long and successful history with Dairy Country.

“This acquisition is a logical choice and further supports our strategy to be customer and consumer led, while ensuring we keep pace with the fast-growing cheese category in Australia.

“Dairy Country has two well-equipped secondary processing sites with capability across grating, shredding and block, as well as an experienced workforce.

“For some time we have been looking to bring more of our secondary cheese processing in-house to gain greater endto-end control over a range of different cheese products and further strengthen our integrated supply chain.”

The acquisition, from food and beverage company Retail Food Group, includes Dairy Country’s processing and packing facilities at Campbellfield and Tullamarine in Victoria, along with related services, intellectual property and the trademark for the Dairy Country brand.

“Having this kind of capability inhouse will enable efficiencies and allow us to make the most of opportunities for value creation and product innovation,” Mr Dedoncker said.

Fonterra currently holds a 23 per cent market share in the $2.6billion Australian retail cheese category with key brands including Perfect Italiano, Mainland and Bega.

The majority of Dairy Country’s permanent employees will transfer over to Fonterra and will continue to work at the Campbellfield and Tullamarine facilities.

RFG executive chairman Peter George said Fonterra was a natural buyer for the business.

The sale is expected to be finalised by October 2020.

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