THE Coalition has promised funding to research and develop contemporary trading options for the dairy sector, if re-elected, saying it would provide farmers with more choice, flexibility and price transparency.
Agriculture Minister David Littleproud said the Liberal Nationals government would invest $560,000 to have Australian Dairy Farmers contract an independent research group to develop, consult and market test a new trading and marketing platform, reporting back in February 2020.
"This initiative, in addition to the Liberal Nationals government's implementation of a Mandatory Code of Conduct, responds directly to the Australian Competition & Consumer Commission report into the dairy industry which found that that dairy farmers are battling a range of market failures due to a strong imbalance in bargaining power," he said.
"We want to not only strengthen dairyfarmers hand in negotiations with processors, we also want to provide farmers more choice in the way they interact with the milk market to give farmers more market power.
"Dairyfarmers need more flexibility in how they sell milk - a new platform will give them more options, opportunities and flexibility.
"Dairyfarmers currently have limited selling arrangements, basically a supply contract.
"A new platform could allow dairyfarmers to market their future supply, and give them options to get better prices and reduce business risk."
Mr Littleproud said the project would look at the potential for a farmer to sell milk to multiple processors, or contract a portion of their future milk supply as a hedge - with an option to pull out and sell elsewhere if the farmer receives an offer to pay more for their milk.
"Trading future supply is available to other agricultural commodities but the dairy industry has not modernised in the same way," he said.
"Perishability is often flagged as the barrier but if more contemporary trading models can deal with this and provide more certainty and more choice for dairy farmers to market their milk, I am all for it."