Mike Norton answers Miles Mottershead's questions.

18 May, 2005 08:45 PM

Q. How is the agency going to get rid of any excess milk?

A. We received the same question from the ACCC. The agency will build up a good relationship with suppliers, and find out how much milk they will be supplying and then the agency will source the markets for it. Therefore there is no such thing as excess milk, and this is the key and beauty of the system.

Q. How is the agency going to divide up the white milk market, and how is it going to be allocated?

A. The Agriculture Department is doing work for us on this very issue. Dizshrapnel is a consulting company currently scoping out some answers. We will hopefully have the answers by the end of this week. Options will then be taken to farmers to consider and decide which will be the best way.

Q. Will the agency buy all the milk off the farm, even if they can't sell it all?

A. The supplier will tell the agency how much milk they produce, and the quantity will then be matched with the outlet, as in question one.

Q. What happens to Challenge and the DRUs once the agency is up and running?

A. I spent a couple of hours with Challenge discussing this very topic. DRUs will be apart of what the supplier owns, so all they have to do is work out the price.

Q. Realistically, will the agency improve prices?

A. WA has the lowest milk prices in Australia at the moment, and they have for the last five years. We donít have to do all that much to improve the prices. But we believe that we can save about 1-2 cents by running the transport system ourselves, and having it run by one company. We also believe that we need to target higher-value products. We should all be working together to value add and promote our dairy products and industry and to establish a WA brand name.


TOO many un-answered questions are preventing a Witchcliffe dairy farmer from backing the proposed negotiation agency.

Miles Mottershead, who milks 650 Holsteins, has stood up to present the other side of the story, amid claims the agency is what the dairy industry needs.

Mr Mottershead is concerned the agency has not explained what they are to do with excess milk, if processors do not want it.

"The crux of it is, they haven't got a plan in place to get rid of the milk and that's the number one thing - are they going to buy the milk regardless of whether they can get rid of it, or are they going to leave it on the farm?" he asked.

"If the agency has all of the milk, the companies will take what they want, and then the agency will have to meet a market with the rest."

While the Dairy Industry Working Group says it would buy a processing plant if it cannot sell their milk, Mr Mottershead said that the industry needed fewer processors, not more.

In the UK, a negotiation agency (Milk Mark) was set up, but fell in a hole, because it couldn't dispose of all their milk, he said.

Mr Mottershead, a National Foods and Challenge supplier, is also concerned about what will happen to Challenge once the negotiation agency is up and running.

"If it all goes ahead, what happens to Challenge and the DRUs (Delivery Right Units)?" he said.

Mr Mottershead said he was not against the idea of an agency, but many questions need to be answered, and he believed that its purpose was already served by Challenge.

"People don't believe in Challenge, but if everyone had joined up to Challenge at the start, its purpose would have been achieved," he said.

"Challenge has spent the past five years getting set up and running and things are now starting to go forward.

"The agency will basically cut Challenge out."

Mr Mottershead believed that, realistically, 28-30 cents a litre was possible to achieve, and that the industry was not far off that now.

In a calendar year Mr Mottershead's dairy produces 4.5mL, and he predicts this year he will be receiving on average 28c/L.

He believes that the industry has been through its lull, and that the industry is now coming to a period when the prices will improve.

"It's been very tough, but what it has done is made us a lot more efficient producers," Mr Mottershead said.

Mr Mottershead said at the end of the day, it came down to commercial reality.

"They may be able to get 4-5c/litre more out of the major companies, but they may also get less off them too," he said.



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