Contract concerns outlined at forum

As part of the Australian Competition & Consumer Commission inquiry into the dairy industry, agricultural commissioner Mick Keogh has been travelling across the nation, speaking with dairyfarmers about their concerns. This was the final week, with stops in Hahndorf and Tas.

“I’d characterise the situation as one where trust has been damaged quite severely,” Mr Keogh said.

“Without trust, the part of the transaction that kept the industry operating efficiently is not there.”

Mr Keogh said the chance to hear local stories was an important part of the inquiry process.

“These forums have been helping us understand the complexities and subtleties of how the market operates,” he said. “Producers are telling us their experiences in how to negotiate their contracts, which makes it clearer than a written submission.”

Mr Keogh said he noticed key differences across the regions.

“In the north and west (of Australia), it’s a flatter market and can be more expensive with fodder costs,” he said.

“In Vic, there is a much stronger emphasis on the export market with more seasonal supply.”

Mr Keogh said an SA farmer concern was the limited ability to change processors.

“Even though processors announce a forward price, it is part of a complex formula and can be difficult for farmers to know how much they are getting paid,” he said.

“Farmers often sign a three-year contract price, but the price is only offered for one year.”

With the farmer forums finished, Mr Keogh said the second half of the year would focus on the other half of the industry – processors and retailers.

“The Treasurer has conferred strong disclosure power on the inquiry,” he said. “This is a comprehensive look at the industry – which parts make profit, the impact of $1 a litre milk – factors that have been speculated on for years.”

SA Dairyfarmers Association president John Hunt said the forum had good representation of the state’s industry.

“It was a good chance for farmers to vent their frustrations on what they thought was impeding their business,” he said.

“We’ve got to share risk and at the moment, all the risk is taken on the chin by dairyfarmers.”