Dairy crisis in dates disgraces ADF and minister

Here’s a potted history of the dairy crisis. It’s worth remembering:

April 2016                   MG stuns the dairy community with the clawback

May 2016                    Fonterra follows suit, crashing its price

May 2016                    Milk price index announced

August 2016                Ag minister Barnaby Joyce says he will put an end to $1 milk

September 2016          Senate inquiry into dairy industry announced

October 2016             Treasurer Scott Morrison instructed the ACCC to hold an inquiry into the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry.

August 2017                Senate committee report released

November 2017          Consultant chosen to deliver milk price index

November 2017          ACCC Interim report

December 2017           Milk price index consultant sacked

March 2018                 UDV opposes mandatory code

April 2018                   ACCC final report

May 2018                    Milk price index due “mid year”

May 2018                     ADF: “we cannot make a snap decision” on mandatory code

June 2018                     Minister Littleproud: no timeframe for decision on mandatory code “will investigate thoroughly”

So, after all this, where are we today, just two weeks from a new set of pricing for our milk?:

  • No action on ACCC recommendations
  • No milk price index
  • No opening price from either of the big two processors
  • $1 milk AND $6 cheese, with promise of even lower retail milk prices

No wonder farmers are angry. The can has already been well and truly kicked down the road. The independent umpire has spoken.

After two years of investigation and analysis, what justification do the ADF and Minister Littleproud have for waiting any longer to do their jobs and take decisive action to protect dairy farmers?

The casualties of the milk war still to be counted and breaking news says they will grow

Media coverage of the senate inquiry’s report on the milk war by Coles suggests there have been only victors but this only tells half the story, for every war must have casualties. Instead, my reading of the report is that the government feels there is not much it can do about the fallout.

Gobbledegook like this:

…the ability for processors to ‘walk away’ from negotiations with collective bargaining groups (as highlighted during the committee’s 2010 inquiry), market realities such as the number of drinking milk processors in some areas and the fact that the processors must deal with the two major supermarket chains that dominate the grocery sector, can mitigate the benefits of collective bargaining arrangements.

and this:

Much of this information, however, concentrated on concerns about shifts in sales away from the processors’ branded milk products to the discounted supermarket private label milk. As a matter of overall principle, these types of free market outcomes should not be a matter for government. Many private label grocery products have grown in share in recent years…It should not be a matter for public policy to protect brands that consumers no longer value. It also does appear that the steadily increasing sales of private label milk—which have more than doubled their share of sales in supermarkets over the past decade—is a trend that is unlikely to be reversed.

…actually means that dairy farmers are standing right in the path of the cross-fire as Coles and Woolies spray litres (or should I say “rounds”?) of discounted homebrand milk at each other.

On top of all this, there are news reports that private labels will soon occupy far more supermarket shelf space. It won’t be just dairy farmers in the firing line. All of Australia’s food manufacturers and producers should see this milk war as simply an opening salvo.

How ironic then, that the most articulate description of the milk war’s impact comes from Woolworths:

…this price move has effectively re-based the price of white of milk across Australia overnight, and for an unknown period into the future, which also potentially devalues the whole milk category in the eyes of the consumer. In effect, the consumer baseline for price is now at 1990s levels, but with 2011 input costs for all parts of the supply chain.