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Dairy industry reform recommended

IN its report published late January on options for reform of dairy industry structures, the Joint Transition Team (JTT) of the Australian Dairy Plan has recommended the creation of a single, new whole of industry national dairy organisation.

The proposed national body (referred to as ‘NewCo B’ in the JTT’s report) would see the current range of national and regional dairy organisations brought together as a one stop shop for all industry services including policy, advocacy, R&D and marketing for dairy businesses across the entire supply chain.

It would operate through one national brand and a network of regional offices providing tailored local services.

The proposed new organisation would be member-owned and overseen by a skills-based Board.

Farmers would contribute a single levy payment for all services (the current Dairy Service Levy) and processing companies would also provide funding.

Eligible expenditure on research and development would continue to attract matched funding from the Commonwealth Government.

JTT chair and local dairy farmer, Shirley Harlock said the JTT’s analysis confirmed a widespread view that current industry institutional arrangements were no longer fit for purpose.

“Our report recommends the creation of a dynamic new national organisation to provide leadership and services for the Australian dairy industry,” she said.

“Although we present three different strategic options in our report, we believe a fully integrated services model is best placed to achieve the transformational change sought by dairy businesses - out of the patchwork of different national, state and local industry representative organisations which currently exist.”

Mrs Harlock said the operating environment for the dairy industry had changed dramatically over the past two decades.

“It is time to move on from the industry institutions that helped us succeed in the past and create a new unified, world-class model that can really perform and meet the needs of modern dairy businesses from across the value chain.

“I encourage everyone in the industry to read the report carefully and to lend your support for implementation of a new, modern organisation that would enable our great dairy industry to prosper nationally and internationally into the future.”

The JTT was formed as part of the Australian Dairy Plan, in response to overwhelming feedback from across the dairy industry about the need for transformational change to industry structures and advocacy arrangements.

Independent chair of the Australian Dairy Plan (ADP) committee, John Brumby said the JTT’s work had created a strong platform to now take the industry forward through reform of industry dairy structures.

“The ADP committee commends and thanks the JTT for working diligently and at pace since its creation in September last year,” he said.

“We believe its recommendation of a fully integrated services model addresses the industry’s clear desire for transformational change, by bringing all core services together for the first time.

“The proposed merging of national and regional dairy organisations into one whole of industry body would create a single line of sight and accountability.

“The proposed inclusion of strategic policy development as well as additional resources for advocacy within the new organisation would strengthen the ability of dairy businesses to directly shape the industry’s future.”

Mr Brumby said the ADP committee supports the JTT recommendation for a new, single, whole of industry national body (NewCo B), and recognises further consultation is needed to shape and refine a preferred model, particularly in relation to governance matters.

“The JTT has recommended a path forward and the ADP committee acknowledges that translation of this into a concrete and achievable plan is a complex and challenging task affecting many individuals, organisations and stakeholder interests,” Mr Brumby said.

He said with the JTT report now released, there would now be a further period for industry and stakeholder feedback in regards to the report and recommended model.

“Our goal over the coming period is to listen carefully to industry feedback to shape and further refine the recommended model, as required,” he said.

“When this task is complete, we will ensure all dairy businesses have a vote, ideally sometime in the middle of this year.”

What are farmers saying?

RESPONSES are mixed, but for the most part farmers are not happy with the proposal.

A lot of the discontent with the plan is the inclusion of milk processors at the table of the new structure.

Many farmers are concerned that farmers interests cannot be effectively advocated for by a body with so many conflicts. 

Farmers are concerned that in a post co-op environment, processors and farmers do not have the same interests.

Farmers want a good, sustainable milk price, whereas processors want to minimise their costs; and milk is a significant cost to their business.

How can one body advocate for both a good milk price for farmers and a low input cost for processors?

Some have been hypothesising that it could work if processors were to contribute towards R&D, but not the advocacy aspect.

But then how does the one proposed body facilitate both R&D effectively on behalf of both processors and farmers, but then only advocate for farmers (sometimes against the interests of processors)?

One example of where conflict will arise is at the 12-month review of the Mandatory Code of Conduct that came into play in January.

The code sets out requirements that processors and farmers must both adhere to, with the original aim being to strengthen the position of the farmers in bargaining with the larger processors.

When submissions are being taken to improve this code, in which farmers interests are at clear odds with that processors, how will a body that owes a duty to both farmers and processors not be conflicted and be able to adequately advocate on behalf of farmers?

Many farmers are concerned this will simply be change for the sake of change, with no positive outcomes.

Some on social media are even likening this restructure to shuffling chairs on the deck of the Titanic and have been quite outspoken in their discontent with this proposal.  Feedback on options for reform of industry structure contained in the JTT report can be provided via dairy industry member organisations or directly by email to contact@dairyplan.com.au.

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