Processors slam Labor’s milk floor price plan

Processors slam Labor’s milk floor price plan


Dairy
DRY ARGUMENT: As water prices have soared in northern Victoria this season, the cost of production has increased.

DRY ARGUMENT: As water prices have soared in northern Victoria this season, the cost of production has increased.

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There's not much support for Labor's milk price plan from the big end of town.

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Leading Australian dairy processors have rejected a commitment from the federal opposition to set a minimum floor price for farmgate milk sales, labeling the policy as “vague” and “problematic”.

Labor agriculture spokesman Joel Fitzgibbon announced last week that Labor would task the Australian Competition and Consumer Commission with testing the efficacy of a milk floor price and to make recommendations on the best design options.

Some of the biggest names in dairy processing were taking part in a panel discussion at the Australian Dairy Conference the day after the policy was announced.

Bega Cheese CEO Paul van Heerwaarden said he’d spoken to Mr Fitzgibbon since the announcement and was concerned about how much thought had gone into the policy development.

Mr van Heerwaarden said Mr Fitzgibbon was keen to set a price based on the cost of production which he noted varied according to different milk systems, locations and seasonal conditions.

“If I talk to farmers up in northern Victoria, the cost of production at the start of the season when water cost 100 bucks and now its costing 550, the cost structure is changing within the year,” he said.

“How do you practically set this?

“We always, as an industry, will do things that are going to be better for improving returns, particularly for farmers, but if they (the government) get in the way and they cause a poor decision to be made, it’s going to be problematic.”

“I just don’t see how practically that can work.”

PROCESSOR PANEL: René Dedoncker, Fonterra; Paul van Heerwaarden, Bega; Greg McNamara, Norco; and Lino Saputo Jr, Saputo, on the panel at the Australian Dairy Conference.

PROCESSOR PANEL: René Dedoncker, Fonterra; Paul van Heerwaarden, Bega; Greg McNamara, Norco; and Lino Saputo Jr, Saputo, on the panel at the Australian Dairy Conference.

Norco chair Greg McNamara said industry needed to be more united in their approach to federal and state parliamentarians.

“How do we stop people racing off to government, and five different organisations turning up at parliament house and having a different view about what the industry does,” he asked.

“Presenting a paper to Joel Fitzgibbon around setting a floor price. Has the industry discussed it? We haven’t even had the conversation.

“How do we have those conversations internally and nut it out, so we all get a fair say in it but we actually present a proposition that actually makes value.”

Saputo chairman and chief executive officer Lino Saputo Jr said governments needed to “stay out of the way” when it came to markets.

He also said the terms of the proposal were vague, making it hard to pass judgement on the idea.

“We will have to see what’s in the details of that to have a better definition of whether it makes sense or not,” he said.

“I can tell you that speaking to some dairy farmers, I don’t think that is going to solve the problem. That’s not really where the problem lies.”

Fonterra Australia managing director René Dedoncker is also concerned that Mr Fitzgibbon doesn’t understand the issue noting “he’s asking questions that are quite narrow”.

“And a floor price for farmers is interesting but only in the context of what does it mean for the whole value chain and he was buying into that…,” he said.

The story Processors slam Labor’s milk floor price plan first appeared on Farm Online.

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