Milk a microgrid

Copy of Chris Farm 9

There’s something interesting going on in the Latrobe Valley right now that I thought you ought to know about.

Local residents are being asked to sign up to a local energy feasibility study which, if it gets the go-ahead, will enable people with solar panels or wind turbines to sell any excess energy to others in their neighbourhood on their own terms – determining their own profits.

For dairy farmers, with lots of land and rooftops, it could provide another profitable income stream – not only saving energy costs but turning farms into profit-generating powerplants of the future.

To tell you more about it, here’s Belinda Kinkead, from the LO3 Energy team who are setting it up.

The Latrobe Valley project is such an exciting project for us because it is an opportunity for our technology to provide a significant and much-needed benefit to an entire industry.

We are working with Dairy Australia on this project and understand that reduced revenues are already making it hard to balance the books. We hear you.

Increasing running costs and greater weather unpredictability is only making it worse – and we were surprised to learn that, as a result, one in five dairy farmers are now preparing to quit.

But don’t quit just yet – because this could provide a way for you to turn things around.

It’s all about electricity.

You know better than me that dairy farming spends a lot of money on electricity. It’s used to run milking machines, pump water for irrigating fields, keeping milk chilled, heating water for cleaning equipment and providing light in the early morning hours.

And it’s expensive.

One case study showed a farm with 500 cows, 400 of which were milked twice daily, used 320 MWh of energy per year (875kWh per day). At an average cost of 25cents per kWh, that’s approximately $80,000 per annum[1].

But as farmers, you have extensive land and large areas of rooftops – perfect for solar panels or micro wind turbines.

Installing solar clearly has its benefits – it can reduce the amount of energy you have to buy from the grid, and any excess can be sold back to the grid.

Therein lies the problem. Right now, the only place to sell it is back to the grid, and it’s a closed market. There’s no price negotiation which means the return is usually in the retailers favour.

But, what if you could sell your unused energy to people in the local area – at a price they’re willing to pay? You reap the full benefit of the sale price of your energy.

For example (unless you were lucky enough to be an early solar uptaker) you would probably receive a feed in tariff of 10 – 15c/kWh[2] from your retailer. When you buy electricity from your retailer you would likely pay more than 35c/kWh at peak times, and more than 20c/kWh off-peak. That’s a significant gap.

There’s the prospect of a win-win where you can sell your excess generation to a neighbour for more than the feed in tariff, and they can buy electricity from you for less than the retail price. There are also other benefits associated with keeping your energy spend within your community – supporting local businesses and local jobs.

That’s the idea behind the Latrobe Valley Microgrid, a local energy market place.

It sounds complicated, but actually, it’s simple, and it’s proven – we’ve been running one in Brooklyn, New York for two years and the locals love it.

You might like to know that we have also partnered with SMF, and through the local councils, offer a financing option (Environmental Upgrade Agreement) that could ease your cashflow concerns for solar installations.

Everywhere in the world, technology and the sharing economy is changing business models – from Airbnb to Uber.

Adapting for the future is essential – and this really does make sense.

So if you’re looking to add additional revenue streams into your farm, take a look at what could be the solution. It’s all laid out on www.LatrobeValley.Energy

You can help make it a reality by taking part in the project. Join our feasibility study now. It doesn’t cost anything, we just need your consent to use your energy usage data on an anonymous basis to model the cost/benefits for the project. The more data we get, the more precise the results. Get online and register www.LatrobeValley.Energy.

[1] http://www.aginnovators.org/initiatives/energy/case-studies/energy-efficiency-supports-viability-family-run-dairy-near-wagga-wagga

[2] VIC minimum tariff for 2018/19 is currently 9.9c/kWh (https://www.energy.vic.gov.au/renewable-energy/victorian-feed-in-tariff)

WorkCover for dairy farmers: reality vs myth

Dairy farmers get injured. A lot. But how many of us think about workers compensation until there’s a serious incident?

I invited the author of “WorkCover that Works”, Mark Stipic, to bust some of the myths for dairy farmers. I highly recommend the book, which is packed with practical information yet easy to read, even after a long day in the paddock!

Thanks very much, Mark!

red myth circle

Recently, I had a conversation with Milk Maid Marian thanks to an introduction by our mutual colleague Kevin Jones from SafetyAtWorkBlog.

We discussed WorkCover in the context of the dairy industry. The more we talked, Marian discovered there could be many dairy farmers out there sharing some misconceptions about how WorkCover works.

Dairy farming is what I’d call a pretty high-risk industry. In Victoria the WorkCover Industry Rate for ‘Dairy Cattle Farming’ is 4.546% in 2018/19. This means many dairy farmers are paying more than 4.5% on top of their labour costs in WorkCover insurance alone. The average premium rate across all employers in the state is 1.272% so by comparison, you guys pay quite a lot.

Here are 5 common myths (and 5 harsh realities) about WorkCover in Victoria.

Myth 1: WorkCover is just another type of commercial insurance

The reality: WorkCover is more like taxation than insurance

First let’s compare WorkCover insurance to car insurance. When insuring your motor vehicle, you can browse the market, negotiate rates and compare the benefits of different policies. You can usually change insurers as often as you like. Once you have a reasonable claims history, you can request a lower rate or threaten to switch providers.

However, when it comes to WorkCover, each year the Victorian Government releases industry rates that are used to determine how much you’ll pay. Legislation determines your level of coverage. You cannot negotiate a better deal, not even through an insurance broker. Restrictions are in place that affect how often you can move your policy to another provider.

The WorkCover scheme is heavily regulated and WorkSafe Victoria has the authority to audit your business at any time. They even share information with the Australian Taxation Office and State Revenue Office to target employers who aren’t paying their fair share of WorkCover premiums. That’s all very different to other forms of insurance.

Myth 2: There are 5 WorkCover insurers in Victoria

The reality: There is only one insurer – WorkSafe

WorkSafe Victoria is the trading name of the Victorian WorkCover Authority. This is the state government agency responsible for OHS matters, employers’ WorkCover premiums, and claims for compensation by injured workers.

WorkSafe has appointed five agents to administer premium- and claims-related matters on their behalf. These are Allianz, CGU, Employers Mutual Limited (EML), Gallagher Bassett (GB) and Xchanging. These companies are often referred to as ‘the insurer’. But don’t be mistaken, they are not insurers. They are agents of WorkSafe.

When you pay your annual WorkCover premium, the money goes to the WorkSafe scheme, not to your WorkSafe agent. Even though the notices will display a logo from one of the five companies listed above, the agent is merely the administrator of the premium collection process. So be aware that, for WorkCover purposes, you are not dealing with an insurer per se, but with the third-party administrators of a state government agency.

Myth 3: I don’t need WorkCover insurance because I’m the only person working in my business

The reality: You don’t get to decide whether or not to take out a WorkCover insurance policy – either you’re required to have it, or you’re not eligible for cover

As I stated above, WorkCover is much like taxation. And you don’t get to decide whether or not to pay taxes – if you meet certain criteria, you must pay. Well, the same goes for WorkCover.

With regard WorkCover insurance, if WorkSafe finds out that you were uninsured for a period of time, they may audit you and sting you with back-payments and penalties.

So, if you’re the only person working in your business, how do you work out if you should have a policy or not?

Generally, if you are a sole trader or a partner in the business and have no other employees then you cannot take out a WorkCover insurance policy. This means you don’t have to pay, but it also means you aren’t covered in the event of an injury.

However, if you have a Pty Ltd company, you could be an employee of the company (even if you are the only employee and the business owner). In this case it is likely that your company should have a WorkCover policy. Regular payments made to you would need to be declared to WorkSafe and used in your premium calculation.

The best thing to do is contact one of the five WorkSafe agents and explain your business structure, including how you pay yourself. They will guide you through the policy registration process if appropriate or confirm you are ineligible for coverage.

Myth 4: WorkCover insurance will protect my business from the costs of an injury claim

The reality: Some employers will experience premium increases that significantly outweigh the actual amounts paid on the claim

If your business pays over $200,000 rateable remuneration (which is basically WorkSafe’s term for ‘labour costs’) then the costs paid on your WorkCover claims will be used in calculating your premium. If you have higher claims costs than the average for your industry, you can expect to payer higher than the average rate applied to your sector.

Having worked with hundreds of employers in many different industries I have observed that the system doesn’t treat every business fairly. Generally, small businesses in low risk industries (eg. A local real estate agency) will be well protected from the costs of a claim. For example, if an injured worker received $10,000 in WorkCover payments, the employer’s premium might go up a total of $1000 over the life of the claim.

But medium-to-large employers, especially those in higher risk industries, often experience premium increases that outweigh the actual costs paid on a claim. $10,000 paid to an injured worker could result in $40,000 additional premium over the life of the claim.

It’s difficult for me to explain the nuances of this risk in this relatively brief blog post. In the dairy industry I’ve found the tipping point is that if you pay more than $400,000 labour costs, you face a risk that a single WorkCover claim could lead to significant additional premiums to be paid. And that can decimate your bottom-line profits. You would be well advised to grab a copy of my book and pay close attention to the section on ‘sizing factor’ where I further unpack this topic.

Myth 5: I don’t need WorkCover for contractors

The reality: Some contractors are considered ‘deemed workers’ by WorkSafe. They attract additional premiums for your business, plus they could be eligible to lodge a claim against you

Generally, payments to employees are used to calculate how much WorkCover premium you’ll pay and payments to contractors don’t need to be declared.

While a person might be a genuine contractor for all intents and purposes regarding taxation and benefits, if they earn 80% or more of their income from a single source, they may be considered by WorkSafe to be a deemed worker. And payments to deemed workers are included in rateable remuneration (meaning they count towards your WorkCover premium).

There are many contractors out there who only provide contracting services to just one business. It is likely that the hiring business would be required to declare payments to this contractor as a deemed worker. If you engage contractors, you should brush up on WorkSafe’s guideline around contractors and workers.

Furthermore, WorkSafe has specific guidance around when a sharefarmer would be considered a worker or contractor. I understand this is a common working relationship in the dairy industry and you can read WorkSafe’s position on the topic here.

My advice to you

The dairy industry is an incredibly important part of the Australian economy and it’s my privilege to have been invited to share some helpful advice. Here are my top tips for dairy farmers:

  1. If you’ve made an error on your WorkCover policy – or perhaps you forgot to set one up when you went into business – sort it out sooner rather than later. The longer you leave it the bigger the problem could become. Plus, WorkSafe is generally more lenient when you self-disclose an error as opposed to when they discover it following an audit.
  2. Get to understand your WorkCover risk now and start taking steps to prevent injuries. Often it is cheaper, less time-consuming and more rewarding to proactively invest in injury-prevention strategies now than to deal with the fallout of a single claim.
  3. Don’t be afraid to seek independent advice. Most employers rely solely on their WorkSafe agent regarding claims strategies. But remember, they are an agent of WorkSafe. They must also provide advice to your injured worker and they may be working towards targets that don’t benefit the goals of your business.

About the author

Mark Stipic is #TheWorkCoverGuy and managing director of Mark Stipic Consulting. He is the author of WorkCover that Works, the only book of its kind written specifically to help employers reduce their injuries, claims and WorkCover premiums.

When you’re ready, here are two ways Mark can help you and your business take control of your WorkCover situation:

  1. Get a copy of his book WorkCover that Works. It will show you how to reduce your injuries, claims and WorkCover premiums.
  2. Request a free, no obligation 30-minute strategy call. Mark will help you address your most pressing challenges and connect you with potential solutions if appropriate.

Waging war on weeds: the latest research

laser weed control
Blasting a weed with a laser, leaving it smoking with a high voltage zap or watching it wither under a giant magnifying glass may well be my cathartic farm job of the future.

Waging war on weeds – whether with chemicals or tillage – is set to get a whole lot smarter, more cost-effective and kinder for the environment, thanks to new work at the University of Sydney.

I was delighted when researcher Michael Walsh agreed to give Milk Maid Marian a sneak peek at the direction of his team’s research.

MMM: Farmers traditionally use chemicals or tillage to control weeds. Why should we consider new forms of weed control?

MW: Like many other decisions on farm, cost is the driving factor behind the need to consider other forms of weed control. Herbicides and tillage are both relatively cheap to apply but there are production risks to the use of these treatments.

There is a risk of herbicide resistance that occurs every time a herbicide is applied and once resistance evolves it remains in a weed population forever and therefore the herbicide is no longer useful.

For tillage it is the risk associated with soil disturbance and the lack of selectivity. In a pasture tillage for weed control will result in the loss of grazing for that paddock.

MMM: What are the alternatives being researched at the University of Sydney?
MW: We have been evaluating targeted tillage and more recently laser weeding, but we are also keen to investigate electrical weeding and solar weeding.

Electrical weeding is simply just using electricity to “shock” weeds. A weed is touched with a positive terminal and the earth acts as the ground so the charge passes through the weed burning cells as it goes. In the UK there are commercially available hand held electrical weeders.

Solar weed control

Solar weeding is using the sun to burn weeds. It’s the magnifying glass approach where a lens (grooved plastic sheet) is used to concentrate sunlight on to a weed to burn it. These types of lenses (Fresnel lens) are used in lighthouses to focus light into a strong beam.

MMM: What are the benefits?
MW: Initially the main benefit will be the reduced reliance on herbicides.

There will be substantial savings in weed control costs associated with controlling individual weeds rather than applying a blanket weed control treatment to the whole field. These savings will depend on weed density and it is hope that with good weed identification systems we will be better able to reduce weeds to very low numbers in crop and pasture paddocks.

MMM: Other forms of automated weed control have struggled to identify weeds in pasture. How can this be overcome?
MW: The development of new camera and sensing technologies for cars and phones has created the opportunity for weed recognition and identification. This will allow us to use tillage and other physical weed control tactics to selectively target weeds in crop and pasture situations.

MMM: What needs to happen to make this technology a reality on Australian dairy farms?
MW: I guess the first thing to do is to start working on systems that are able to identify weeds in pastures. Basically it is just a matter of training a sensing system (e.g. a robot) to recognise what is a weed and what is pasture plant. This is typically achieved by building up a library of weed images as they occur in pastures over the growing season.

Thank you very much, Michael, for this glimpse of what farmers can look forward to in the war on weeds! I do hope the dairy community is quick to support such an exciting development for farmers and the planet and can begin building that library of weeds.

ACCC explains mandatory codes

mandatorycode

Since the ACCC recommended a mandatory code for the interactions between dairy farmers and processors, there’s been a lot of talk about what this might mean. To help sort the fact from the fiction, I asked the ACCC’s deputy chair, Mick Keogh, about the fundamentals.

Milk Maid Marian is really grateful to Mick for his explanation.


MickKeogh2

Mick Keogh, deputy chair, ACCC

 

MMM: How does a mandatory code differ from a prescribed voluntary code?

MK: There are three types of industry codes – (1) a voluntary code (such as the current Dairy Code), (2) a prescribed voluntary code (such as the Food and Grocery Code), and (3) a mandatory code (such as the Horticulture code).

A voluntary code is one developed by industry which participants voluntarily agree to by becoming signatories, but which has no penalties attached to breaches, and participants can choose to opt out of at any time without disadvantage.

A prescribed voluntary code is one which participants voluntarily agree to by becoming signatories, and which can have penalties or sanctions associated with breaches by participants.

A mandatory Code is one which all the relevant industry participants are bound to abide by, and which may have penalties or sanctions if a participant breaches the code.

The key difference between a prescribed mandatory code and a prescribed voluntary code is that a prescribed voluntary code only applies to industry participants who voluntarily choose to become a signatory to the code. Signatories can choose to withdraw and cease to be bound by a voluntary code at any time (although they will still be liable for breaches that occurred while they were signatories). In contrast, a mandatory code is legally binding on all industry participants specified within the code.

Prescribed voluntary codes and mandatory codes are both developed by Government in consultation with industry participants and the public, and administered by the ACCC. The ACCC can take enforcement action against parties that a prescribed voluntary code or mandatory applies to. Remedies include injunctions, damages, non‑punitive orders and other compensatory orders. Penalties and infringement notices may apply, but are more likely in a mandatory code than a prescribed voluntary code.

Any person who suffers loss or damage due to a contravention of a prescribed voluntary code or mandatory code can also bring a court action for damages.

MMM: What are the pros and cons of each?

MK: In the context of the dairy industry, the ACCC found that a mandatory code is likely to be stronger than a voluntary code in both the coverage of its enforceability and the potential for its substantive obligations to address issues which lead to market failures. We found that dairy processors are unlikely to volunteer to be covered by a prescribed voluntary code that is strong enough to address the market failures we identified in the dairy industry.

MMM: What is the normal process involved in drafting a mandatory code?

MK: If the Government agrees to pursue the creation of a prescribed mandatory code, the process will involve several stages, including stakeholder consultation with businesses, consumers and relevant government agencies, including the ACCC.

Following consultation with the industry, the responsible department will prepare a draft Regulatory Impact Statement, which evaluates the relevant issues and problems in question, objectives of a potential code and options for addressing the identified issues. This statement would be released for public consultation before it is finalised.

Afterwards the Department with policy carriage will draft the text of the proposed code and may  seek public feedback on it.

When it is finalised, the Governor General will make a regulation prescribing the code. The code regulation will then be registered and tabled in each House of Parliament, where it can be disallowed within 15 sitting days in each House.

Treasury processes to prescribe an industry code are set out at: https://treasury.gov.au/publication/policy-guidelines-on-prescribing-industry-codes/process-and-consultation-after-a-decision-to-prescribe-an-industry-code/

MMM: How long does it typically take to put a mandatory code in place?

MK: The time it takes to put a prescribed code in place (from announcement to implementation) will depend on a range of factors.

The time can range from about a month (as was the case for the Wheat Port Code and the Sugar Code) to several years (including a transition period, for example for the Horticulture Code).

MMM: What is involved if stakeholders agree that a mandatory code needs to be revised?

MK: A prescribed mandatory code may be subject to review after it has been implemented. For example, the Sugar Code must be reviewed within 18 months of its commencement, and the Wheat Port Code must have its first review within three years of its commencement.

The review involves a public consultation process to seek feedback from a wide range of stakeholders. A review can be conducted by the Government Department with policy responsibility for the particular code or alternatively by an independent body or industry experts. The review may consider options for repealing the code or amending it.

 

 


 

ACCC delivers a ladder for dairy farmers

All I could think as I scrolled through the interim ACCC dairy report was “Wow!”. Any fears farmers had that the ACCC would fail to understand the intricacies of our industry have been well and truly put to bed. This report proves the regulator gets it.

“…the problems we have identified in this inquiry emanate from the inherent bargaining power imbalances in the industry, particularly between processors and farmers.”
– p. 22, ACCC Dairy Inquiry Interim Report

While there are more than 200 pages of very interesting information, the really important section deals with the regulator’s eight recommendations:

1. Processors and farmers should enter into written contracts for milk supply that are signed by the farmer.

2. All processors should simplify their contracts where possible, including by minimising the number of documents and clearly indicating which documents contain terms and conditions of milk supply.

3. Milk supply contracts should not include terms which unreasonably restrict farmers from switching between processors.

4. The industry should establish a process whereby an independent body can administer mediation and act as a binding arbitrator or expert in relation to contractual disputes between farmers and processors.

5. Farmers should ensure they have properly considered the legal and financial implications of contracts with processors.

6. Processors should publish information identifying how their pricing offers apply to individual farm production characteristics to enable better farm income forecasts.

7. The Voluntary Dairy Code should be strengthened
Notwithstanding Recommendation 8, the Voluntary Code will continue to operate for at least the short-to-medium term. The following amendments should be made:
(a) processors to include a comprehensive dispute resolution process in their milk supply agreements, including where this relates to compliance with the Voluntary Code itself
(b) processors to provide timely price and other contract information before requiring farmers to make a decision about renewing a contract.
(c) with regard to section 6 of the Voluntary Code, removal of the incumbent processor’s first right of refusal regarding a farmer’s supply of milk to an alternative processor.

8. A mandatory code of conduct within the Competition and Consumer Act 2010 should be considered for the dairy industry.

It’ll take time to digest the report properly and I’m betting that some of the details will be hotly debated over the next few weeks. That’s a good thing.

This ACCC inquiry is not a whitewash. The system is broken and such a strong report offers us a way to climb out of the deep hole we’re in towards the light.

Biosecurity dairy debacle: what farmers need to know

Forget mad cows, this time last week, the milk maid was practically frothing at the mouth. The MLA had told me there were new rules but – not to worry – just go ahead and break them.

Every time farmers sell cattle, we need to accompany them with National Vendor Declaration (NVD) forms. From October, those forms will include new sections on biosecurity and animal welfare.

We’re going to be selling cows again soon so I figured it was a good idea to get everything in order. I checked the NVD website auspiced by Meat and Livestock Australia (MLA) and did the education segments but still couldn’t work out what else I needed to do. So I rang the MLA’s helpline.

What a mistake that was. To cut a long story short, I was referred to the Animal Health Australia biosecurity plan template. Jeepers. Among the dozens of requirements appears to be the tracking of all movements across the property and decontamination of vehicles as they move from one “zone” to another.

Despite bearing the Australian Dairy Farmers logo, it’s totally impractical for most dairy farms. Implementing it in the two weeks before it came into force? Absolutely impossible.

When I asked what the implications were of failing to take the recommended actions, I was told that I didn’t need to prove I’d done any of it – after all, the chances I’d be audited were pretty remote, David, the MLA man added. Just tick the box declaring I had.  Righto. All fixed. Not.

When I rang last week, Dairy Australia said it was still working on a solution for dairy farmers. Now, thankfully, Dairy Australia’s manager of sustainability including food safety and integrity, Helen Dornom, has pulled off a minor miracle with this:

“Dairy farmers have been deemed to be LPA equivalent based on the dairy QA programs currently in place and underpinned by dairy licences and a legislated requirement for on-farm food safety programs.”

“As well, the dairy industry is developing a biosecurity app to provide dairy farmers with an easy to use program that will deliver a personalised biosecurity plan for each dairy farm. The LPA module provides a template for biosecurity plans, as does Animal Health Australia. 

“The LPA template is based on the AHA template – and designed to help all livestock producers provide evidence of implementing the biosecurity requirements. The dairy app will be more customised to individual dairy farms.

“The industry is also developing a monitoring program for Animal Health and Welfare practices and has provided all dairy farmers with a copy of the Animal Welfare Standards and Guidelines for dairy farmers – distributed through dairy companies at the end of 2014.”

“The key message for dairy farmers is that they are exempt from the need to undertake the LPA modules (although they can do them if they want to) – and short-term, do not need to take any action as they are deemed to be LPA accredited. Dairy farmers will also be exempt from LPA audits once the dairy farmer’s PIC is linked to his/her current dairy licence number.”

So, in other words, don’t call MLA when the time comes to send your cows to market. Don’t worry about the big pack of info on its way to your mailbox right now. Don’t bother going to any of those biosecurity sessions around the country. It’s all been rather like a scene from ABC’s Utopia.

Of course, if you have beef cattle on your property, too, then that’s another matter. Panic.

UPDATE 22/09/17: A series of emergency meetings has yielded this clarification for dairy farmers by the MLA: https://www.mla.com.au/meat-safety-and-traceability/red-meat-integrity-system/red-meat-integrity-systems-newsletter/what-the-changes-mean-for-dairy-farmers/

 

RUOK day and the SSM test for people like me

SSM

I tweeted yesterday that I had voted “yes” for same sex marriage because who others love is none of my business.

I am sure of that but I made the mistake of thinking the same sex marriage survey was all about LGTBI people. A call from another Gippsland dairy farmer set me straight. It’s about us.

Like gay and lesbian couples, dairy farmers are a minority group. When $1 milk arrived in 2011, I started this blog, frustrated that few Australians seemed to understand why it mattered; why we deserved a fair go.

But there is a difference. The bullying, abuse and vicious attacks LGBTI people often endure is foreign to me. On the contrary, ordinary Australians with no connection to farming whatsoever put their hands in their pockets to buy branded milk during the dairy crisis. Because they understood that everyone deserves a fair go.

The impact of the dairy crisis lingers but, today on RUOK Day, yes, I am okay. And, for that, I owe something to the support of everyday Australians who showed they cared.

The SSM survey cannot test the validity of anyone’s love. It is a test for ordinary Australians like me who expect a fair go. Will we rise to the challenge and return same the respect and tolerance for others that we demand for ourselves?

 

Farmers finally get our chance

accc

A once in a lifetime opportunity to sort out the whole damn dairy mess we’ve all taken for granted for so long is coming to town. The ACCC wants to meet you, dear dairy farmer. Not the men in suits – you. If you can’t get to one of the forums or find the time to write an email, that’s okay because they’ll even take calls from the tractor cab on 03 9290 1997. Just do it.

Why? After last year’s debacle, we shouted from the rooftops that the system stank. For once, people listened. Average Aussies dug deeper at the supermarket to help us. And, now, the regulator is asking us exactly what the problem is and what needs to change. We can’t fall silent now. Would anyone ever take us seriously again?

We deserve a system where:

  • the risk in the supply chain is shared fairly by processors and farmers;
  • the farmer is free to sell his or her milk based purely on its virtues on an open market;
  • processors act independently of their competitors;
  • there is trust and transparency in all dealings; and
  • farms big and small are treated fairly.

This stuff is pretty basic in other industries and it’s far bigger than the behaviour of MG and Fonterra (the regulator is looking into that separately). It’s about the way the entire dairy sector ticks and how we are paid for our milk.

It may just be the closest we will get to spelling out and solving the problems that ruined lives. Don’t let others decide our futures. This time, the ACCC means business  but it needs your input.

The ACCC dairy forums will be held at:

  • Monday 6 February 2017 – Toowoomba, Qld
  • Tuesday 7 February 2017, 12pm–2pm – Club West, Taree, NSW
  • Tuesday 14 February 2017– Traralgon, Vic
  • Monday 27 February 2017 – Warrnambool, Vic
  • Tuesday 28 February 2017 – Shepparton, Vic
  • Thursday 16 March 2017 – Bunbury, WA
  • Monday 20 March 2017 – Hahndorf, SA
  • Wednesday 22 March 2017 – Burnie, Tas

Go if you can, email dairyinquiry@accc.gov.au or call 03 9290 1997 and ask for Amy Bellhouse. All the details are at the ACCC dairy inquiry website.

Could this have been the wake-up call Aussie dairy needed?

bulllores

When the two biggest processors of Australia’s milk, Murray Goulburn and Fonterra, squandered the goodwill of farmers earlier this year, there was a sense they could do as they wished. They made the rules and broke them, too.

One executive told me there was no risk of supply loss following the drastic price cuts, saying, “After all, where would they (farmer suppliers) go?”.

How things have changed. Both the big processors have watched milk supply evaporate and, with the dawning realisation that something had to be done to avoid the death spiral outlined here and detailed by MG’s own advisors, Grant Samuel, both have responded.

After suspending the MSSP while reducing the forecast close by about the same amount a week earlier, MG made amends with a step-up the day before its AGM.

In his AGM address, MG chairman Phil Tracy acknowledged farmers’ pain and offered an apology of sorts.

“While as a Board, we did what we could with the information that we had at the time, we know that the outcomes of that period have been devastating for suppliers and for that we are deeply sorry.” – Phil Tracy, MG Chairman

Like MG, Fonterra Australia has announced it is reviewing the way farmers are paid for milk in order to avoid a repeat of the May debacle. Farmers whose milk production peaked in May and June were initially singled out for a thumping, causing many to sell off cows, only for Fonterra to back-track days later and spread the pain of its price cut more evenly among suppliers.

Despite poaching 200 million litres of milk from MG, Fonterra Australia’s supply remained fragile, due to the tricky season, the low milk price and the damage done in May to autumn-calving regions. Hours after MG announced its step-up, Fonterra came out with its own, much larger (and incredibly welcome), price increase.

The size of the step-up challenged the oft-held belief that Fonterra only pays the price it needs to in order to prevent supply loss to MG. With profitability restored, perhaps Fonterra has indeed extended its co-operative spirit to this side of the Tasman. On the other hand, Fonterra’s announcement provided a hint that perhaps it was essential to fill under-utilised stainless steel:

“The last six months have been challenging for all of you, and we know that spring is critical to optimise production.” – Matt Watt, Fonterra Australia

No matter what the motivation, it’s enormously heartening to see the two biggest processors act and act so positively. Maybe this is the wake-up call Australian dairy had to have. It might even help to rekindle the traditional sense of partnership between farmer and factory that had been on the wane for so long.

What’s certain is that farmers – and their supply of milk – can no longer be taken for granted. Loyalties have been stretched or broken and farmers who have now experienced how easy and rewarding it can be to shift their supply may well be tempted to do so again.

In return, expect processors to lock in a broader range of “desirable” supply with more special deals and contracts. Be careful what you sign. I’m tipping the unfair contract law that came into force quietly this weekend will be more important for dairy farmers than legislators could have imagined.

Why I welcomed Four Corners to our dairy

I’m looking forward to watching Four Corners tonight with all the enthusiasm of a patient awaiting the lancing of a boil. Will it be fun? No. Will it be good for me? I guess so.

It’s almost four months since Murray Goulburn called a trading halt, followed by the infamous “clawbacks” of both MG and Fonterra that rocked the dairy community.

In a state of confusion and panic, farmers called out for help. Ordinary Australians did what they could, ditching cheap unbranded milk in a show of solidarity with farmers that continues to hearten.

Four months on, panic has given way to a sense of aimlessness and loss. Helou and Tracy’s vision had offered a shining path towards security and prosperity but now Gary the Great has vanished and nobody has filled the role of white knight. Leadership is lacking at the time we need it most.

We farmers have a fleeting once-in-a-lifetime chance to fix things. Politicians want to know how they can help but we don’t seem to be able to articulate a coherent answer other than to cry for something, anything, to dull the pain.

Meanwhile, there’s a puerile optimism amongst some elites, reckoning that every casualty improves the prospects of the survivors. It’s a sentiment that disgusts me and simply doesn’t stack up.

Floods of milk generated by the powerhouses of Europe, NZ and the USA sink or float the export market – not the farm next door. We’ve already lost thousands of Aussie dairy farmers since deregulation. More of the same won’t solve our problems.

The first step towards a cure is to work out exactly what ails us and, at the moment, all we’re doing is bandaiding a festering sore. If there’s anybody who can sniff out and lance a boil, it’s Four Corners.

That’s why we welcomed Deb Whitmont and her team to our farm. Sure, I’ll be cringing on the couch but Four Corners’ Milked Dry might just reveal the bitter pill we need to swallow.