Push for simple milk payment structures

Dairy-NSWDAIRY FARMERS sick of trying to make sense of complex payment structures imposed by milk processors are being invited to support a new plan spearheaded by Victoria’s peak farmer group.

The United Dairyfarmers of Victoria are pushing for simple milk payment structures, saying the current system is hurting the Australian dairy industry.

UDV President Adam Jenkins urged farmers to turn out and support simplified structures as the farmer group hits the road to promote the scheme drawn up in conjunction with industry consultants and led by John Mulvany.

“UDV has been calling for a simplified milk price structure for years, and it’s time for farmers to support the change,” Mr Jenkins said.

“The reality is milk production has fallen and processors are trying to keep their facilities operating at an efficient level by holding existing milk while also attracting new milk.

“The pressure on processors to find replacement milk as farmers swap factories leads to even more confidential deals. What we are left with is an unjustifiable spread in prices being paid between farmers supplying the same processor.”

“These distorted pricing signals are building unnecessary risk into farm businesses, as outlined in the ACCC report.”

The UDV believes the new structure will address farming system inefficiencies and confusion around complicated milk payment calculations.

“We need a payment system that allows us to maximise our comparative advantage. One that encourages farmers to produce milk efficiently and at a time that suits their natural resources, whilst also acknowledging the requirements of the processors,” Mr Jenkins said.

Processors are under pressure to adapt their pricing structures after the Australian Competition and Consumer Commission released their report into the dairy industry in which they recommended reregulation as a feasible path for the sector.

Mr Jenkins said the industry needed to unite in support of a simplified milk payment system to help improve confidence between farmers and processors.

“We are penalising new entrants with an unfair payment system, limiting their growth and causing them to drop out of our industry when times are tough”

With fewer young farmers entering and staying in dairy, we need to decide how to rebuild the industry or if we should just sit by and watch it dwindle,” Mr Jenkins said.

-VFF

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