Farmers seek sustainable dairy future

27 Feb, 2017 02:00 AM
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WAFARMERS has called for the establishment of a task force to develop a long-term plan assessing the sustainability and profitability of WA's shrinking dairy industry.

It has been meeting with representatives of major parties, including Pauline Hanson's One Nation on Wednesday last week, seeking support for its March 11 State election policy wish list.

Last week WAFarmers added a dairy task force to the list.

President Tony York said a "round table of the whole industry, including processors" was needed to map out where investment could be best targeted to overcome pricing, inflexible contract and seasonal production spike problems which hit the industry last year.

"WAFarmers requests that the Department of Food and Agriculture WA (DAFWA) and the Minister for Agriculture and Food commit to working alongside other relevant departments and key industry stakeholders to agree to a long-term solution to enhance the profitability and sustainability of the WA dairy industry," Mr York said.

"We would certainly hope that the processors (Brownes Dairy, Harvey Fresh and Lion Dairy & Drinks) would be involved," he said.

"The key aim must be to achieve the sustained long-term growth of the industry, particularly to retain the younger people currently working in the industry, as well as those studying to enter the dairy industry at a later date."

Mr York said WA's dairy industry lacked critical secondary manufacturing capacity, with more than 90 per cent of the milk produced here being sold as fresh milk rather than being turned into products like butter or cheese, which could be processed when there was abundant milk and stockpiled until needed.

"The objective of the dairy task force must include proactive measures for investment into the establishment of a secondary value-added industry that can utilise high-end milk production, especially during peak seasonal output windows, to balance seasonal milk supply," he said.

"Western Australia must develop its capacity to manufacture products such as cheese, cream, butter, evaporated milks, and so on.

"WAFarmers will continue to advocate for investment in this space to foster growth, incentives and further export opportunities to balance seasonal milk supply."

Mr York said WAFarmers was involved in discussions last year regarding the future of the WA dairy industry and its producers, following a tumultuous year where four Brownes suppliers and two Harvey Fresh suppliers left the industry, with another Brownes supplier to go next month.

Last October WAFarmers funded milk being transported to the Eastern States from three out-of-contract Brownes suppliers as a transitional move aimed at delaying unwanted milk being tipped out.

It was funded from the sale of its own WAFarmersFirst product.

WAFarmers dairy council president Michael Partridge and chief executive officer Stephen Brown were involved in meetings with Agriculture and Food Minister Mark Lewis, dairy farmers, Harvey Fresh, DAFWA and Federal government and Department of Agriculture and Water Resources representatives.

"Throughout 2016, WAFarmers took every possible opportunity to support the dairy farmers affected by contract cuts, and offer potential solutions in collaborative and co-operative talks with the State and Federal governments, industry and other stakeholders," Mr York said.

"Given this deep involvement, having the establishment of a dairy task force as part of our wish list on the WAFarmers State election policy platform was a no-brainer.

"We look forward to being involved in these discussions and to doing our part to safeguard the future of the entire WA dairy industry."

Mr York said WAFarmers would be "knocking on doors" immediately after the election, reminding the new government and minister of its wish list and for the task force to be set up.

Most of the cheese and butter sold in WA supermarkets is from interstate.

According to Dairy Australia's 2016 Australian Dairy Industry In Focus publication, 344,256 tonnes of cheese was produced in Australia in 2015-16 of which WA contributed 2305 tonnes.

A further 89,300 tonnes of cheese – an estimated 28 per cent of the market and growing year-on-year by 8.4pc – was imported into Australia, mainly from New Zealand.

In 2015-16 Australia produced 99,015 tonnes of butter and butter blends plus 19,610 tonnes of anhydrous milkfat commonly known as butteroil, but Dairy Australia did not provide a breakdown of each State's production.

It did say 23,400 tonnes of butter and butteroil – almost 17 per cent by volume of the Australian market – was imported, with more than 90pc coming from New Zealand.

Of the three major WA milk processors only Harvey Fresh produces local cheese, marketed under its own brand and the Capel Valley brand.

It also produces a specialty line of Capel brand butter.

There are a number of local boutique cheese manufacturers who generally buy milk from the major processors because supply contracts between farmer and processor prohibit farmers selling fresh milk to a third party.

Early in his tenure as Brownes managing director Tony Girgis closed the company's Brunswick cheese factory in 2015 and shut down cheese processing.

He said while bulk block cheese production covered costs, the cheese division overall made a loss once bulk blocks were cut up and wrapped for retail sale.

Discussions between Brownes, State government and Department of Agriculture and Water Resources last year about approvals, funding and an export licence deemed necessary to reopen the mothballed plant to soak up some of the excess spring milk production were unfruitful.

The Australian Competition and Consumer Commission is conducting an inquiry into the Australian dairy industry, looking particularly at transparency of farmgate pricing, flexibility of contracts and unconscionable conduct.

It will hold a public forum Thursday, March 16, 12-2pm at the Mercure Sanctuary Golf Resort, Bunbury.

WAFarmers' dairy council has urged as many dairy farmers as possible to attend to put their case.

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FarmWeekly
Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly

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