Dairy sector looks to pricing mechanism

09 Jan, 2019 04:00 AM
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SADA president John Hunt says there are movements to improve pricing coming this year.
SADA president John Hunt says there are movements to improve pricing coming this year.

THE past 12 months have seen some progress on major issues affecting the dairy industry, albeit not as smoothly as the sector would have liked, according to SA Dairyfarmers’ Association president John Hunt.

He said there had been good progress with the Murray-Darling Basin Plan as different regions along the river had the chance to put forward their views.

“We do have differing opinions from other states and will push that view around how irrigation efficiency can help, not only the river but our farmers’ profitability,” he said.

Mr Hunt said it was great to see ministers from all states start to work together.

But he said farmers also had to contend with drought and the cost of fodder “almost doubling”.

“Farmers are having to reassess their farming practices to make sure their systems are profitable,” he said.

Mr Hunt said this was not helped by a “knee-jerk reaction” by major supermarkets to impose a 10-cent levy on their private label milk.

“Although the motivation was good, there was not enough thought went into how it might pan out so it helped all farmers,” he said.

“It confused consumers as steered them towards $1 a litre milk.

“The retailers put their hand up as the good guys but, in our view, if they did not discount our product in the first place, we may not be feeling the same pain.”

Last year also marked a shift from a preference for a voluntary code of conduct towards a mandatory code between processors and producers.

In 2017, Mr Hunt said a voluntary code would have the advantage that everyone involved was there willingly.

“The code of conduct was taken out of industry’s hands by (federal) Agriculture Minister David Littleproud as he had enough of the procrastination from our peak body,” he said. “The code, being mandatory, is there to make sure both farmers and processors follow a set of rules that makes contracts and behaviour fair and equitable for both parties. There will be a process to follow if complaints are made and independent mediation.”

Mr Hunt said it also meant opening prices would be released by the end of June, helping make budgeting more accurate.

“There is still a lot of work to go into the code, though it is a good start,” he said.

Looking ahead, Mr Hunt said the genetic modification or gene editing debate would be topical during 2019.

“It is now on the table, which will allow open and free debate as to the pros and cons of GM,” he said. “SADA has put in a substantial submission on benefits to farmers about GM, including markets.”

SADA has also been active in developing a pricing mechanism policy paper.

He said it would explore why processors do not pass on rising costs to retailers, despite that provision in their contracts.

SADA also plans to roll out its Dairy Industry Blueprint early next month.

Mr Hunt said the 12-month project had taken on board views from all farmers and processors, with some interesting results coming out of the consultation.

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