Dairy Farmers Fight Back 

Election 2016: Victorian dairy farmers in safe Liberal seat say they will take their anger to the ballot box

AMBy Danny TranUpdated Wed Jun 15 13:28:08 EST 2016

http://mobile.abc.net.au/news/2016-06-15/dairy-farmers-to-use-their-vote-in-protest/7511852

In the dairy farming district of Simpson, near Colac, the bruises of this year's savage dairy cuts still have not yet faded, and farmers say they plan to take out their frustrations with the major parties at the ballot box.

Key points:

• Many dairy farmers say they will be voting independent
• Farmers left with debt and prospect of collapse
• Calls for a Royal Commission into dairy industry

It has been months since dairy giants Murray Goulburn and Fonterra announced that they would drastically reduce the milk price, which resulted in farmers being saddled with huge debts and the prospect of collapse.

Audio 3:36 Listen to Danny Tran's story

AM

In the dairy farming districts of Deans Marsh and Simpson in Victoria, the impact on farmers has continued to be felt.  Farmers from those areas are asking for a Royal Commission into the dairy industry, which they say has long deceived them.   Australia's largest processor, Murray Goulburn, said it was no longer feasible to pay the current price because of the exchange rate and lower than expected milk powder sales in China.  Alex Robertson, who represents the advocacy group Farmer Power, said the feeling among dairy farmers was that if the Coalition and Labor were not going to listen to them, "we're not going to vote for them."  Mr Robertson was left $300,000 in debt when the price of milk was reduced by Murray Goulburn and Fonterra, and he said he blamed the industry. "We were misled not just by factories, we were misled by our industry reps," he said.  "We need a full inquiry into what's going on in the industry and why farmers are being short changed all the time.   "I would prefer a Royal Commission than an inquiry."

Dollar milk is killing the industry: dairy farmer

Photo Robert Methven, dairy farmer angry about the cut to milk prices and demanding a royal commission

ABC News: Danny Tran

Robert Methven's dairy farm produces 12,000 litres a day. He said the reduction in prices had left him "feeling sick."  "You're producing it [milk], put it into the vat and it's really not going to pay all the bills."

Dairy industry in crisis

What started all this?

On April 27, Australia's largest dairy processor Murray Goulburn (MG) slashed the price it pays suppliers for milk. Within a week, the world's biggest dairy exporter, Fonterra, followed suit.

Why were prices slashed?

The processors said the cut was due to:

• Lower than expected adult milk powder sales in China
• Unfavourable changes in the exchange rate
• Russia's ban on western dairy imports
• A downward revision on the value of current milk supplies

How much less will farmers earn?

MG have cut their price from $5.60 per kilogram of milk solids to between $4.75 and $5.00.  Fonterra has changed its price from $5.60 to $5.The cuts were retrospective, as processors claimed farmers had been overpaid, so some farmers will receive as little as $1.90 per kilogram.

What does this mean for farmers?

For some dairy farmers the price cut meant the loss of two years' profit in one day. Some farmers have been forced to close their businesses due to debts of more than $100,000.  And unfortunately the prices offered in the new financial year are expected to be even lower.

Loans from processors

Both processors have offered farmers support packages, better described as loans.  By borrowing money, MG and Fonterra can offer a higher milk price.  But farmers will have to pay back this money, plus interest, in a few years time.

How has the government responded?

Barnaby Joyce announced a support package for farmers, which includes income support and access to low-interest loans that were previously available for drought-hit farmers.  A commodity milk price index will also be set up and the Rural Financial Counselling Service will get additional funding.

And Labor's response?

Agriculture spokesman Joel Fitzgibbon has confirmed Labor will support the package.  Due to current caretaker conventions Labor must approve the package before it can take effect.  Labor has also called for MG's non-farmer shareholders to sacrifice their dividends so more cash can be returned to farmers.

So what do supermarkets have to do with it?

Many consumers are boycotting discounted supermarket milk to help struggling famers.  Farmers have blamed supermarkets for devaluing their industry by offering cut-price milk.  But, discounted milk did not directly cause the processors' price cuts. The companies are exposed to the weak global dairy price because more of their milk is processed and exported.  Coles has since announced a new milk brand that would return 20 cents a litre to a fund to help dairy farmers.

What now?

The ACCC is looking at whether the processors behaved unconscionably towards their suppliers.  MG is also being investigated by ASIC and is facing a class action for alleged misleading claims. The company's managing director and chief financial officer resigned following the announcement of cuts.  While most people were starting high school, Mr Methven was at work on the farm, and after 19 years with Murray Goulburn, he severed ties with the company and moved to Warrnambool Cheese and Butter.  “It's crucifying this industry because that's a dollar milk, and you think 'the one beside it is maybe two dollars or a dollar fifty, I'll go for the dollar because you know, that bloke's making more money than this bloke'," he said.

"But that's not true. That dollar milk is killing the industry and killing the farmer."

Mr Methven said he wanted more government intervention and that there needed to be a floor price for milk. While Simpson had always voted Liberal, everything was now on the table in this election, said Mr Methven.  Mr Methven said when he spoke with his friends, most of them had talked about voting independent.  "Because we've got nothing out of either government, they've told us porkies and give us loans — but we don't want a loan, we want a decent price," he said. "They put window dressing up and say we're looking after the farmer, but they're not. They're just vote catching."

Posted Wed Jun 15 10:59:49 EST 2016