DAIRY farmer representatives and the three major milk processors in Western Australia have signed a memorandum of understanding (MoU) on creating a sustainable plan for the local dairy industry.
WAFarmers' dairy council president Ian Noakes and former president Mike Partridge signed on behalf of the States' dairy farmers.
The MoU has been signed by Brownes Dairy, Bega Cheese, which produces Masters Milk and processes and packages milk bought by Coles, and Lactalis Australia, which produces Harvey Fresh milk and from January will process and package milk for Woolworths.
As well, Western Dairy and the Department of Primary Industries and Regional Development - the other members of the WA Dairy Industry Working Group - have also signed.
The agreement commits the participants to working together to prepare a draft five-year plan for consideration by dairy farmers at the end of the year.
Zoom meetings this week of working group subcommittees and a meeting of the whole group next week have been scheduled to develop aspects of the plan.
"We are formulating this plan, at the moment we've set some ground rules and now we want to put some meat on the bones," said Mr Noakes after last week's WAFarmers' Dairy Conference 2021 at Busselton.
"Everybody has agreed we have an agenda to develop a plan that farmers should be comfortable with - it's a long-term vision for growth," he said.
"One of the issues that we face is we've lost nearly a generation who have said 'no, I don't want to do it (dairy farming)'.
"We need to look at that, find out why and make changes to remedy that."
Mr Noakes said ultimately, once farmers and processors had established what they wanted from the plan, major supermarket retailers in Coles and Woolworths could be invited to join the working group.
Although Coles is technically a processor under the dairy code of conduct because it buys milk direct from farmers, Mr Noakes said it was considered a retailer for the purposes of the working group.
Recent investigations indicated smaller "market" type grocery, fruit and vegetable chains were now increasingly taking over from major supermarkets as the main drivers of lower retail milk prices, he said.
Rather than just for the next five years, Mr Noakes said he would like to see the proposed industry plan become a rolling five-year plan, reviewed and updated every year.
He told the dairy conference the working group has "already made some progress in coming up with a long-term plan for the industry".
"I think that (signing the MoU) is a pretty significant step for the future of our industry," Mr Noakes said.
"Since the (Coles $1-a-litre milk advertising) 'down down' campaign from 2011, it made life (for dairy farmers) a lot tougher and more difficult for money to be extracted from consumers and to make its way back into farmers' and also processors' pockets," he said.
"From the last price survey we've seen, WA has the lowest retail price of milk in Australia (WA average is $1.44 per litre, 7 cents a litre lower than the next lowest average price).
"Why is this so?
"Farmers have the most invested in this industry with the value of our farms and our cattle, processors have maybe half or less of our investment and supermarkets have very little invested, but they have the power because they control prices."
Mr Noakes said that as a dairy farmer who was making changes to his enterprise to improve efficiency, to control production costs, to comply with tighter effluent management requirements and to minimise its contribution to climate change factors, he wanted "a sustainability dividend".
"If we are going to make all these onfarm changes, then we deserve to be rewarded for that," he said.
"At the moment the changes we are making are just keeping us in the game, but that needs to change.
"To me, the biggest issue we face is a lack of confidence - a lack of a solid plan for the future of the industry and a lack of confidence in farming, because always in the back of your mind is the question 'will I get recontracted?'
"That's what happened in 2016 (when a dairy farmer was forced out of the industry prematurely and permanently and others temporarily because their supply contract options were not taken up and they were not offered alternative contracts) and it's not been forgotten."
- At WAFarmers' dairy council annual general meeting, held after Dairy Conference 2021, Mr Noakes was re-elected unopposed as president. There were no nominations for vice president, so the dairy council will continue without one for a second year.
