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16-Aug-2012

Dairy farmers man the barricades

DAIRY farmers are talking openly of barricading milk processing plants and picketing supermarkets in NSW and Queensland, and breaking low-paying contracts to send their surplus milk to other users.  
A meeting of the peak body Australian Dairy Farmers (ADF) this week is looking at how it may participate in or co-ordinate angry farmer protests.  
 
The groundswell of fury about unsustainable farmgate payments, shrinking milk contract supply quotas and cut-throat retail prices boiled over in Brisbane last weekend when dairy farmers at the Royal Queensland Show (Ekka) rallied with their cows.  
 
Queensland Dairyfarmers Organisation estimates typical dairy farm incomes have been cut about $50,000 this year as a direct result of the supply line earnings squeeze triggered by supermarkets slashing generic milk to $1 a litre or less 18 months ago.  
 
With branded milk sales losing market share to the discount house brands and milk processor earnings gutted, big milk companies Lion and Parmalat now generally have too much milk available from their suppliers' herds and have pruned quotas and producers' payments.  
Newly elected NSW Farmers dairy committee chairman Paul Timbs said there was a "better than even chance" that producers would vent their anger by blocking milk deliveries to Sydney milk factories.  
 
Lion has closed three NSW factories in recent years to help streamline costs but still has two Sydney plants at Penrith and Wetherill Park, while Parmalat operates the old Dairy Farmers site at Lidcombe.  
 
"We need to keep working hard on trying to resolve the price issue, but there's a groundswell of feeling out there and a lot of talk about taking direct action," said Mr Timbs from Jaspers Brush on the South Coast.  
 
"I don't think plans are on paper yet, but if something's going to happen we could certainly be supporting it."  
 
Typical of the sentiment expressed by NSW Farmers' members was talk of picketing supermarkets with placards and leaflets to show shoppers how the "Down Down" price war was crippling milk producers.  
 
Farmers also wanted their representative bodies in Sydney, Melbourne and Canberra to fund media advertising to show consumers why farmers were being forced to quit, leaving milk vulnerable to future price spikes.  
 
ADF executive member and NSW farmer Adrian Drury said shocked farmers were pointing to their three years of sliding payments, smaller milk contracts and big costs such as electricity - they were now desperate for change.  
 
"But if there's going to be protest action it has to be done properly on a strategic scale that will work," he said.  
 
"Dairy farmers in Britain have shown us that they were able to get results because they were well organised."  
 
Mr Drury was unsure if ADF would back widespread protest action or blockades, but options were being considered at meetings in Melbourne today and yesterday.  
 
Meanwhile, farmers burnt by low farmgate payments down to 13 cents/L for milk exceeding their tier one quota and tighter volume allocations are also independently seeking buyers for their unwanted production.  
 
Some have already started diverting tier two surplus to other dairy plants, despite being supposedly tied to contract commitments to send all their milk to their primary processor.  
 
"They simply can't afford to be the economic shock absorber for the milk industry any more - the only option is to change their situation or develop an exit strategy," said PPB Advisory's senior agribusiness division manager, Ben Craw.  
 
The specialist financial planning and insolvency management firm had worked with farm enterprises to help split their ownership structure so milk production was owned by a different partners and could be sold separately to different buyers.  
 
Other farmers with contracts due to be renewed in early 2013 were also re-thinking their strategies along similar lines.  
 
"They see the processors have moved the goal posts on volumes and price so they're looking to move, too," Mr Craw said.  
 
The drive to sell tier two milk separately is in line with similar plans being developed by the Dairy Farmers Milk Co-operative (DFMC), which supplies Lion with milk from 600 farms in eastern Australia.  
 
DFMC is in the throes of launching a subsidiary, the Australian Dairy Farmers Supply Co-op, to sell surplus production to any buyer if the milk can't be absorbed at a better price by Lion.  
 
 
FarmOnline  
 
Source: http://www.farmonline.com.au

 

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