25 May, 2016

Dairy Crisis

I have followed the Murray Goulburn/ Fonterra milk issue closely. How extraordinary that the processors would actually pay farmers a price more than they were recovering, with a price volatile commodity and have the ability to recover from the farmers. The processors have effectively left the full price risk with the farmers.

I acknowledge  the significance of the dominant exports. However, I do believe that there is an opportunity for the much criticised Australian supermarkets and the milk processors, to win some really valuable goodwill by offering a brand with a 25c per litre (50c per 2 litre bottle) loading, widely publicised. The loading would be directly payable on some clever formula basis, to dairy farmers. Some years ago a similar thing was done following a flood in the cotton industry with the bulk payments made to a farmer representative industry body who distributed in full to those most impacted, on an agreed formula.

The scheme would be entirely voluntary, with no Government involvement. It is no fault of most farmers, other than the Co-op Directors, that they have been caught in this squeeze. As I assess it, they currently have the sympathy of Australian consumers. But they need to act quickly whilst the issue is topical.

Branded milk products are selling strongly, clearly demonstrating the sympathy factor. The purchase of branded milk helps, but it seems to me that more could be done. 
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