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MARCH
APRIL
The Australian 2019
airyfarmer
CONSUMERS
New campaign
to li trust
PASTURES
Fergaon
delivers results
LEADERSHIP
Finding the
courageous path
DROUGHT
Data helps farmers
make decisions
INTERNATIONAL DAIRY WEEK REPORT
YOUNG PEOPLE SHINE
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The official voice of the Australian dairy farmer
– free to all dairyfarmers
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The Australian
airyfarmer
Vol 34, No.2 MARCHAPRIL 2019 CONTENTS
NEWS
$1 milk under fire from processors 13
Milk pricing systems set for shake up 15
Labor proposes milk floor price scheme 21
Dra mandatory code released 34
Costs and season restrain confidence 37
Polical fight erupts over basin plan 38
Temporary bluetongue zone hits trade 40
The importance of your mental health 41
Red focus ahead of conference 90
Women on Farms Gathering 91
TRUSTED DAIRY INDUSTRY
One-stop shop for would-be manufacturers 22
Greater access unlocked to key market 23
New campaign to li trust 24
Australia’s finest products honoured 26
Search on for 2019 Legendairy capital 28
Dairy leads way toward sustainability 30
Burra Foods commits to long-term sustainability 31 56
GROWING BETTER PASTURES FARM PROFITABILITY
Fergaon proves it worth in trial 45 A lile mould means big problems 94
Finding pasture management’s holy grail 52 Managing ryegrass grazing in autumn 95
Plate meters and satellites for Greenacres 54 Maximising autumn with nitrogen 96
Careful management helps farm grow 56 Forage index puts science in sowing 97
Chicory thrives on SA farm 60
Maximising pasture when season is short 62 COLUMNS
Plantain potenal to reduce emissions 65
At my desk 5
Forage Value Index 66
Milk Maers 6
INTERNATIONAL DAIRY WEEK REPORT Dairy Australia Roundup 11
NHIA News Roundup 18
Illawarra takes grand prize again 71 Update from the Gardiner Foundaon 32
Holstein sale reflects tough season 73 Dairy market report 43
Crawford family takes two grands 74 What’s on 91
Qld-bred Guernsey wins for NSW owners 78 Snippets and Titbits 92
Illawarra champ goes to a trio of mates 80 DataGene 93
Tandara takes double in Brown Swiss 82 Regional Development Program contacts 98
Gippsland Ayrshire breeders dominate 84
Top BPI cow named Jersey champion 86
Champion heifers tops Jersey sale 87
Youth Show champion beauful 88
OUR COVER
Ellie Hourigan with the
2019 Internaonal Dairy
Week All Breeds Youth
Show grand champion
heifer Darryn Vale Tequila
San. Read the full report
on page 88.
13 Picture: Carlene Dowie
The Australian Dairyfarmer March-April 2019 3
AT MY DESK
How a plan can
make a difference The Australian Dairyfarmer is published on
the 15th of every second month, in July,
T HERE’S a been a lot of talk lately
in the industry about leadership,
unity and finding solutions to our
problems.
Some have queried the value in de-
We visited other sporting facilities,
we sat down and nutted out what each
group wanted. We engaged a local
consultant to identify how our vision
aligned with various local and state
September, November, January, March
and May, for the Australian Dairy Farmers,
Level 2, Swan House, 22 William Street,
Melbourne, Victoria, 3000.
veloping another plan or have criti- government priorities and to prepare
cised leaders for being out of touch, the document. We had an architect de- EDITORIAL
while others have called for a unified velop a rough concept design of what Editor: CARLENE DOWIE
front, questioning those who have we wanted. PO Box 59, Carisbrook, Vic, 3464
rushed to government with sugges- From this, we developed a plan. Email: carlene.dowie@fairfaxmedia.com.au
tions for fixing problems. The 30-page document (with a Phone/fax: (03) 5464 1542
I want to share a story with you handy double-page summary for the Mobile: 0475 962 221
about how taking the time to develop a time-poor politician) identified clearly
plan, listening to everyone’s points of what we wanted, what it would achieve ADVERTISING
view and thinking about a solution be- and how it fitted with government pri- Advertising manager: PETER ROACH
yond a handout can make a difference. orities. GPO Box 257, Melbourne, Vic, 3001
I’m on the board of our local foot- But more importantly, it changed
Email: peter.roach@fairfaxmedia.com.au
ball/netball club. the way we talked.
Telephone: (03) 8667 1147
The changerooms at our ground, like We still showed politicians and bu-
hundreds of others around the coun- reaucrats around the facility and let Fax: (03) 8667 1141
try, are in dire need of an upgrade. The their dire state speak for themselves, Mobile: 0447 551 316
away rooms are not-so-affectionately before presenting them with a solu-
referred to as the chook sheds. The tion that went way beyond upgrading PRODUCTION
home rooms aren’t much better. a changeroom. Fairfax Media Australian Community
We’ve been banging on about the The outcome: firstly the local coun- Media production hub
need to replace them for years. cil identified the project as its number
We whinged to anyone who’d listen. one priority for the state election. And Circulation: The Australian Dairyfarmer is
We showed politicians and bureau- then by luck of being in a marginal seat, supplied free to all registered dairyfarmers
crats around the place, who’d nod we were promised significant funding in Australia.
sympathetically, before heading off to by both sides. For a change of address, contact
the next community group asked for The council has now engaged an ar-
ADF Reception
their help. chitect to come up with the final plans
We were all becoming increasingly for the $2 million we’ve been promised. Telephone: (03) 8621 4200
frustrated with the local council, who It started with being willing to work Fax: (03) 8621 4280
we saw as being uninterested in help- through our differences and develop a Email: recepon@
ing, and disgruntled at the seeming plan. Maybe there’s something in that australiandairyfarmers.com.au
uncaring state politicians and bureau- for all of us. D
crats. Copyright: All material in The
Then two years ago we took another Australian Dairyfarmer is copyright.
tack. Reproduction in whole or in part is not
We were challenged by one bureau- permitted without the written permission
crat to come up with a plan — a plan
of the publisher.
that took a much broader view of what
we wanted and how it could be used in
our community. Editorial contributions: Editorial
So we took a step back. We worked contributions are welcome, but no
as a group to develop a new vision for responsibility can be taken for their loss.
the recreation reserve, which pitched Copy is preferred by email. Deadline is
it not just as the sporting hub of our Editor two months before publication.
small town, but a facility that would be
the home of women’s football in our Printed by: Rural Press Printing.
region, a facility that could be used by Published by: Fairfax Agricultural Media
local health services wanting to reach
(Agricultural Publishers Pty Ltd)
farmers in our area, a facility that @DowieDairyEd
would have the latest teleconferencing ABN 55 000 560 430.
technology to allow all the clubs in our
region to tap into high-level coaching ISSN: 0814-4494
and training advice and a facility that CAB Audit Figure: 9392 (March 2018)
could be used as a base for local emer- www.facebook.com/
gency groups facing natural disasters. AustralianDairyfarmer
The Australian Dairyfarmer March-April 2019 5
MILK MATTERS
provided by Australian Dairy Farmers Ltd
Win in discount milk war
✔ Woolworths agrees to li price of payment cycles. The distribution of
Key points
$1 a litre milk the additional funds will have contin-
✔ Move a game changer for dairy ued oversight and be independently
✔ Coles and Aldi refuse to budge audited. Woolworths will continue
to consult and engage with dairy in-
dustry bodies on longer term reform
A USTRALIAN Dairy Farmers
(ADF) has secured a major
victory in the fight against
discount dairy products with super-
market giant Woolworths commit-
and payment mechanisms.
Coles has so far refused to follow
Woolworths with a similar initiative,
instead proposing an industry-wide
10-cent levy on all milk products,
ting to remove $1 per litre fresh milk while Aldi rejected calls to raise the
from sale. price of its discount milk line, which
Australian Dairy Farmers chief execuve
The move will see the supermar- retails for 99 cents.
officer, David Inall, with dairy farmers
ket sell two-litre and three-litre vari- Mr Inall said the retailers could
Erika Chesworth, Dubbo, NSW,
eties of Woolworths-branded fresh not continue selling cheap milk
(NSW Farmers), and Graham Forbes,
milk for $2.20 and $3.30 respectively. while simultaneously raising the
Gloucester, NSW, (Dairy Connect), and
Every cent of the increase will end price of other products to help
Woolworths managing director, Brad
up with Australian dairy farmers. drought-stricken farmers.
Branducci, with boles of two-litre
ADF and Woolworths have en- “Coles has just raised the price of
private label milk, which lied in price to
gaged in constructive discussions in bread due to high grain prices, and
$2.20 in Woolworths’ stores in February.
recent months around the damage both Woolworths and Coles have
wrought on the dairy industry by $1 raised the price of roast chicken
milk and other discount dairy prod- the country. This is affecting milk so there is no reason why they
ucts. production and farm viability, which shouldn’t also acknowledge the
Australian Dairy Farmers chief is devastating for farmers and the hard work and tight margins of their
executive David Inall said the move regional communities in which they dairy suppliers,” he said.
was a “game changer” for the dairy live. “We would love to work with Coles
industry, which had been long frus- “It’s clear something needs to and Aldi on devising a mechanism
trated by discount dairy products. change, and we want to play a con- that would get fair returns back to
“It is reassuring that Woolworths structive role in making this happen. farmers because this issue is gaining
has committed to deliver the full momentum and it won’t go away for
10-cent increase back to those farm- them.”
ers who supplied the milk into that ‘Removing $1 milk is Coles previously stated that rath-
product category,” Mr Inall said. not just intended to er than raise the price of its cheap
“Removing $1 milk is not just in- milk line, the supermarket would
tended to restore farmers’ financial restore farmers’ financial instead “continue to look at ways to
confidence, but it will also boost support Australian farmers, includ-
confidence in regional communities
confidence, but it will ing by collecting customer dona-
and small businesses that rely on also boost confidence in tions at our supermarket registers”.
the industry. Mr Inall said any call by the retail-
“Consumers can buy fresh milk regional communies...’ er for public donations was a slap to
from Woolworths knowing they are their suppliers.
supporting the Australian farmers “We’re acutely aware of the budg- “Any suggestion that Coles can
who supplied it.” etary pressures facing many of our rattle the collection tin to help strug-
Woolworths attributed the move customers and have not taken this gling farmers is an insult,” he said.
to wanting to protect the long-term decision lightly. We believe it’s the “Farmers don’t want a handout.
sustainability of the Australian dairy right thing to do and a key step in They run businesses and like all
industry and regional communities. shoring up fresh milk production businesses owners, they want a fair
Woolworths chief executive Brad in Australia. We’ll continue to work price for their product.
Banducci said: “In our consulta- very hard to offer great value to our “The dairy industry has suffered
tion with industry bodies, includ- customers across their total shop.” from the debilitating effects of dollar
ing Australian Dairy Farmers and its Under the model, the extra 10 milk for eight years, since Australia
state members, we’ve heard the out- cents customers pay on each litre is Day 2011, and the retailers have an
look will continue to be extremely distributed in full to dairy farmers opportunity to come to the table
tough for dairy farmers right across by processors in line with the usual and help us implement change.” D
6 The Australian Dairyfarmer March-April 2019
MILK MATTERS
How to deal with on-farm acvism
✔ Prepare and plan the farm for
possible acvism
✔ If approached, keep calm and
communicate to those affected
Key points
✔ Secure the property
✔ Prepare for the media and get
support
I N January 2019, The Aussie Farms
Repository posted an interactive
map of thousands of commercial
farms and abattoirs across Australia
based on information the organisa-
tion and its affiliates have gathered
over eight years.
The map includes 748 farms iden-
tified as ‘dairy farms’ and includes
some or all of business name, ad-
dress, status of operation and GPS
coordinates.
Aussie Farms describes itself as an
“animal rights charity, dedicated to The clickable map encourages members of the public to upload informaon, photos
ending commercialised animal abuse or video about any site highlighted on it.
and exploitation in Australian animal
agriculture facilities by increasing in- intruder (car description and plate 3. Secure the property
dustry transparency and educating numbers, description of individuals, • Secure all on-farm facilities possible
the public”. where they were, if anything was tak- — lock sheds and gates, limit access
There was significant media atten- en or damaged). throughout the property as much as
tion following the launch of the map, • Consult the dedicated National possible.
leading to a heightened risk of activist Farmers Federation web page for ad- • If aspects of operations are open
activity targeting farm properties. vice on what steps to take to limit the to public, for example retail or hos-
Australian Dairy Farmers (ADF) publication of the farm’s location — pitality operations, consider the
is offering practical advice for dairy . decide whether there is a need to
get for on-farm activism motivated by • Think twice about having veterinar- close. If so, think about the need to
concerns for animal rights or welfare. ians performing treatments in areas communicate this on social media
highly visible to the public. or through other channels to those
Responding to on- If a farm owner becomes aware of who may be affected by the unex-
farm acvism or suspects unauthorised access to pected closure.
1. Prepare farm: 4. Prepare for media
It’s not possible to entirely protect 2. Communicate • The activity may attract local me-
the farm from being the target for ac- • Keep calm and approach the activ- dia attention or discussions online
tivists. Perhaps the best protection ists, asking them to leave the property. through social media. If comments
from activism is trying to limit the • If they are not willing to leave, make are posted directly to the business or
visibility of farm operation that may clear the intention to contact the local family page, resist the urge to respond
attract the attention of activists from police, and follow through if required. in the heat of the moment.
public roads, such as calving sheds, • If possible, ask the group to identify • If comments are abusive, contain
calving pads, hospital paddocks, ani- the organisation with which they are expletives, or directed to the owner
mals awaiting knackery collection and affiliated. or the family or staff, hide and delete
anywhere animals may be receiving • Ensure to communicate with staff the post, and consider blocking the
veterinary care. and any farm visitors to let them poster from accounts.
• Limit unannounced visitors to the know about the situation and give 5. Get support
farm through clear Biosecurity signs clear instructions as to what work can Get in touch with state dairy farmer
at all entrances, requiring visitors to safely continue, or otherwise where organisation (SDFO) or Regional De-
request approval before entry. they should gather. velopment Program (RDP) to report
• Write down protocols for everyone, • Try to manage the response to the activity and get advice. They can
including staff, if they encounter an avoid accusations of inappropriate assist navigate any media or social
intruder. This could include: local po- aggression or criminal threat, includ- media attention that may arise, con-
lice numbers, if and how they should ing confronting the activists carrying nect resources available to support
be approached, and what information anything that could be perceived as a and get in contact with parent organi-
they should record if they suspect an weapon. sations directly. D
The Australian Dairyfarmer March-April 2019 7
MILK MATTERS
Firm trade stand vital
✔ Australia negoang free trade
agreement with EU
✔ EU wants to restrict product
Key points
names and labelling
✔ Technical barriers should not be
included in trade deals
By Terry Richardson
ADF president
A USTRALIA needs to stand up
to the European Union and en-
sure our local dairy industry
doesn’t suffer under a new free trade
agreement.
The federal government is clearly
enthusiastic about the prospect of
securing a $100 billion trade deal.
Prime Minister Scott Morrison
went so far as to pledge to “acceler-
ate” negotiations for greater Austral-
ian export access into Europe at last
year’s G20 leaders’ summit.
But as part of the negotiations, that
started in mid-2018, the EU is push-
ing for Australia to accept and imple- Australian dairy producers would be forced to change the names of a range of
ment strict labelling rules that could products, if the EU gets its way in trade negoaons.
spell disaster for our dairy industry.
Called geographical indications sector, worth $4.3 billion at the farm linked to a specific place, but we do
(GIs), the stated purpose of these gate alone, and is still the country’s have concerns with restricting com-
rules is to “protect distinctive EU third largest agricultural industry. mon food names — for example,
food and drink products from imita- We produce more than 22,000 the use of Camembert as a common
tions in Australia”, but in practice tonnes of cheese varieties that are name, in comparison to Camembert
imposing such restrictions poses a of risk each year, with a value of pro- de Normandie, which is clearly linked
grave threat to existing locally pro- duction equalling more than $180 to Normandy in France.
duced dairy products. million per annum and export sales A further 45,000 tonnes of local
Such a move could see a ban on averaging more than $55 million. cheese production, averaging $300
locally produced Feta, Parmesan, million in domestic and export sales
Haloumi and eventually Greek Yo- per year, could face future restric-
ghurt. ‘The EU is pushing for tions on production and sale if strict
Dairy producers will be forced to GI evocation rules are applied under
change the names of these products, Australia to accept and the FTA.
and consumers will be confused and implement strict labelling It is vital that the free trade agree-
frustrated at no longer being able ment has benefits for both sides, con-
to find some of their favourite dairy rules that could spell sidering the ease of access European
products on supermarket shelves. dairy manufacturers have to the Aus-
Not only that, but European ne-
disaster for our dairy tralian market.
gotiators are also arguing to extend industry.’ These trade negotiations should
the scope of GIs beyond the name of allow both Australia and the EU to
products to include colours, flags, capitalise on an improved commer-
symbols, script or anything that And alarmingly, the EU wants to re- cial relationship.
might evoke the source of a product. serve the right to add names to the But we need to ensure this deal
A quick look in any supermarket GI list in the future. frees up the trade relationship rather
cheese section will show you that Greece is currently applying to than creates technical barriers such
many Australian dairy manufacturers have the term ‘Greek Yoghurt’ pro- as GIs.
have built their brands on their cul- tected as a GI. The future of the Australian dairy
tural heritage and now face the possi- This is just a taste of things to industry depends on the federal
bility of having that taken from them. come if Australia allows GIs to be in- government’s courage to stay firm
This is a nightmare scenario we cluded in a trade deal with the EU. in trade negotiations and push back
cannot let play out. The dairy industry does not op- against the EU’s demand to enforce
Australia has a prominent dairy pose the concept of GIs that are GI restrictions. D
8 The Australian Dairyfarmer March-April 2019
MILK MATTERS
Ramping up disease surveillance
✔ New project to help farms li
biosecurity
✔ Uses Foot-and-Mouth Disease as
Key points
a model
✔ Aims to create local educaon
programs
G ROUPS of producers from
across Australia are jumping on
the biosecurity bandwagon and
ramping up their on-farm disease sur-
veillance through a program called the
Foot-and-Mouth Disease (FMD) Ready
Project.
The project aims to strengthen pre-
paredness for an emergency animal
disease outbreak and facilitate an ear-
lier return to trade for Australia follow-
ing control of such a disease. While the
project is using FMD as a model, it is
much broader than that and improved
surveillance can help producers with a
host of health and welfare issues.
Through the project, animal health
stakeholders including produc-
ers, agents and private and govern-
ment veterinarians will form local
pilot groups to improve surveillance
through strong partnerships. Each A new project aims to strengthen preparedness for an emergency animal disease
group has access to funding and tech- outbreak in Australian livestock industries, including dairy.
nical resources to create a local plat-
form that designs and trials education developed by the Queensland govern-
programs and innovative solutions to ment in partnership with private vets
animal health surveillance and disease
‘There are also pilot to improve producers’ awareness and
management problems, which will as- groups running in practical skills in the detection of signs
sist their industry in on-farm surveil- and symptoms of both endemic and
lance. the dairy and pork exotic diseases of concern.
This might include designing and industries.’ There are also pilot groups running
running training workshops for pro- in the dairy and pork industries.
ducers on what symptoms to look for This project is supported by Meat
to identify disease/conditions of con- A sheep pilot group is based in West- & Livestock Australia (MLA), through
cern, who to contact if anything sus- ern Australia and is exploring options funding from the Australian Govern-
pect is seen and what happens then. for better feedback systems to produc- ment Department of Agriculture and
For goats, this might include for ex- ers from abattoirs as well as gathering Water Resources as part of its Rural
ample Caprine arthritis and encepha- information about how the National Research & Development for Profit
litis (CAE), Johne’s disease (JD) and Significant Disease Investigation Pro- program, and by producer levies from
Q fever as well as conditions like foo- gram might fit into producers’ manage- Australian FMD-susceptible livestock
trot, coccidiosis, pulpy kidney, scabby ment of their animals. They are also (cattle, sheep, goats and pigs) indus-
mouth and tetanus. working to improve general awareness tries and Charles Sturt University
The goat pilot group is based in by producers and the community as (CSU), leveraging significant in-kind
South Australia and met to brainstorm a whole about emergency animal dis- support from the research partners.
ideas in December. The group was ex- eases, what to look for and what to do The research partners for this
cited about the possibilities and what if something suspicious is found. project are the CSIRO, CSU through
could be achieved over the course The beef pilot group is based in the Graham Centre for Agricultural In-
of the project for the greater good of Queensland and is working on devel- novation, the Bureau of Meteorology
not just the SA industry, but Australia oping a framework for enhanced sur- (BOM) and the Australian Department
wide. This will hopefully be an oppor- veillance and biosecurity practices on of Agriculture and Water Resources,
tunity to create stronger connections their farms. The group includes beef supported by Animal Health Australia
across the SA goat industry and to producers, local vets and state govern- (AHA). D
work together to address issues, start- ment representatives and will also trial Read more about the program at
ing with surveillance. a new training program, which is being .
The Australian Dairyfarmer March-April 2019 9
Making the best of a difficult situaon
‘It’s important that you don’t tackle problems alone,
as this could isolate you from the many other farmers
who are feeling just as you are.’
you don’t tackle problems alone, as the local successes and the world-
By David Naon this could isolate you from the many leading initiatives happening here in
Managing director other farmers who are feeling just as Australia.
Dairy Australia you are. Global milk prices have also been
Activities through RDPs such as rebounding for the past two months,
✔ Farmers should reach out for discussion groups and field days are which is welcome news and is a posi-
support, especially from Regional a good way to connect to others in a tive signal for future milk prices. We
Key points
Development Programs similar situation. have recently released the February
✔ Hold onto something posive It is also important to hold onto update of the Situation and Outlook
✔ Improvements in herd genecs something positive, as the tides will report, which provides a comprehen-
change, and it will be important for sive update of market conditions.
T HE current season continues to
build on the cost pressures of
dairy farming, requiring hard
work and clear thinking to make the
best of a difficult situation.
your business to be well positioned
to take advantage of better farming
conditions.
A common topic of conversation is
the quality of heifers coming through,
You can read more about the report
on page 45.
Dairy Australia recently held the
20th Australian Grand Dairy Awards.
The judges reflected on the increas-
The trend of declining milk produc- as well as some herds carrying more ing quality of dairy products and the
tion continues, and we have revised heifers than usual and using this as a breadth of talent across a wide range
down the forecast of milk production springboard for the future. This is the of dairy, including Australia’s best
for the year. The effects of this year, reward of many years of effort to im- cheeses, ice creams, yoghurts, milks
particularly through reduced herd prove genetics and fertility and will be and butters. This is another strength
numbers and farms exiting dairy, so important to the future success of of the industry that we often don’t
means that the decline in milk produc- the industry. fully recognise. For the record, Tas-
tion will continue into next season. It is timely that the Herd 19 confer- mania’s Lion Dairy and Drinks was
I encourage you to reach out to the ence is being held this month in Bend- named Grand Champion Cheese for
support that is around you and con- igo, Vic, starting on March 19, and will their King Island Dairy Roaring For-
tact the Regional Development Pro- bring international experts in herd ties Blue Cheese.
gram (RDP) that is closest to you and improvement to Australia. We need to You can find out who the rest of the
tap into the many resources available be closely connected into the global Champions were in our story on page
in your region. Maybe you just need trends in herd improvement, as well 26. Congratulations to all the champi-
someone to listen. It’s important that as celebrate and better understand ons. D
The Australian Dairyfarmer March-April 2019 11Effluent Pumps, Stirrers, Separators
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$1 milk under fire from processors
✔ Supermarket discount pricing
analysed
Key points
✔ Norco says ACCC got it wrong
Saputo says $1 milk agreement a
disgrace
By Carlene Dowie
S UPERMARKET discounted milk
was in the firing line at the Aus-
tralian Dairy Conference in Can-
berra in February. And it wasn’t farm-
ers firing the bullets.
Chiefs from leading processors — all
of which supply private-label products René Dedoncker, Fonterra; Paul van Heerwaarden, Bega; Greg McNamara, Norco; and
to supermarkets — said $1 milk and $6 Lino Saputo Jr, Saputo, on the panel at the Australian Dairy Conference.
cheese fundamentally undermined the
value of dairy. label milk, as the farmgate prices are litres of milk going into a kilogram of
Saputo chairman Lino Saputo Jr, passed through to the supermarkets.” cheese, and a block of cheese selling
who supplies Coles with its $1 a litre But Mr McNamara said that was for 6 bucks, that’s 60 cents a litre,” Mr
milk in Victoria and NSW, said proces- wrong. “Fundamentally the pricing van Heerwaarden said.
sors needed to demand the real value mechanism and how we discuss with Mr McNamara, whose company sup-
for dairy products when negotiating retailers and set pricing, their outcome plies Coles with $1/l milk in south-east
with retailers. was, in my view, flawed,” he said. Queensland, said the discounted prod-
“I go back to the days when MG (Mur- Mr Saputo, when asked about the uct was now also having a big impact
ray Goulburn) was running the busi- current contracts providing an oppor- on sales to cafes and small businesses.
ness and they signed a contract with a tunity for more money to come back to More operators of franchise cafes
large retailer for $1 milk,” he said. “It’s processors for farmers, said he would were buying discounted milk in bulk
hard to say this, but it doesn’t make “love to see that”. directly from the supermarkets, rath-
any f*** sense.” er than at a higher price through the
He applauded the move by Wool- route trade.
worths in February to lift its price to ‘I think it just devalues All agreed that the processors need-
$1.10/l but said it still was not enough. everything we as farmers ed to lead the discussion with retailers
“$1.10 still doesn’t make sense when about the value of milk.
you can buy water at $3 a litre, when do.’ “I think the single biggest issue the
you can buy soda pop at $4 a litre or industry faces from my perspective
those Powerades or Gatorades at $5 a Bega Cheese chief executive Paul when we talk about what some retail-
litre,” he said. “It doesn’t make sense van Heerwaarden said supermarket ers have done in a levy and asking peo-
with all the work that’s going behind to private label products had changed ple to put donations in tins, I think it
produce milk, to process that milk to farmgate prices. There was no longer just devalues everything we as farmers
then sell it for $1 a litre.” a domestic-market farmgate price and do,” Mr McNamara said.
The processors said supermarket lower export-commodity-market farm- “We do not want a generation of wel-
pricing influenced the farmgate price gate price. fare recipients. We want a generation
for milk. Mr van Heerwaarden said more than of farmers that are business-savvy, that
Norco chairman Greg McNamara half of the key dairy products — milk, spend the money in the right spots and
said the Australian Competition and cheese and butter — sold in Australian we’ve just got to help retailers actually
Consumer Commission got its findings supermarkets was private label. come to that conclusion.”
wrong in its 2018 dairy inquiry. “And without speaking too much out Mr Saputo said the company would
The ACCC’s Dairy Inquiry Final Re- of school, the baseline dairy products honour its existing contracts with re-
port said it found no evidence that that go into them, whether it’s butter tailers.
supermarket pricing, including $1/l or milk or indeed cheese are commod- “But as those contracts expire, we
milk, had a direct impact on farmgate ity prices,” he said. “There’s not the like to sit at the table with those retail-
prices. “Importantly, we found that returns in there that there used to be.” ers and renegotiate the terms and con-
contracts for the supply of private la- Mr van Heerwaarden said the super- tracts that make it mutually beneficial
bel milk allow processors to pass the market label products were driven by as opposed to one-sided,” he said.
farmgate price paid to farmers through commodity prices. “And a lot of those “I think in some cases some of the
to the wholesale prices they charge to products are being imported today — contracts are one-sided.”
retailers,” the ACCC report said. whether it’s from New Zealand or else- Mr van Heerwaarden said there was
“This means that processors do not where,” he said. a big need for processors to properly
have an incentive to reduce farmgate Milk in cheap cheese and butter was have conversations with the retailers.
prices as a result of the lower whole- valued even lower than the discounted “This is the value chain we should be
sale prices they receive for private fresh milk. “And if we think about 10 creating,” he said. D
The Australian Dairyfarmer March-April 2019 13NEWS
Milk pricing systems set for shake up
✔ Big southern processors looking
at milk pricing systems
✔ Bega and Saputo favouring
Key points
simpler systems
✔ Fonterra looking to offer porolio
of choices
By Carlene Dowie
M ILK pricing systems look set
for a shake up as southern Aus-
tralia processors grapple with
falling supply.
The heads of Australia’s three larg- Lino Saputo Jr: there will Paul van Heerwaarden: René Dedoncker: Fonterra
est processors — Saputo, Fonterra and be no special deals for Milk pricing systems need operates in a network of
Bega Cheese — in a wide-ranging dis- corporate farms. to beer suit the whole different communies.
cussion at the Australian Dairy Confer- supply chain.
ence in Canberra in February identified
pricing systems as one of the issues that Australia because we are not going to that may not be best for the farm,” he
needed to be sorted. be doing those things. We tell our sup- said.
But there appears to be a split about pliers on an ongoing basis we have one Mr van Heerwaarden said he looked
how that will be approached — with class of farm whether you are producing at their company’s recent investment in
Saputo and Bega indicating simplified a hundred million litres or you are pro- the Koroit, Vic, factory as an example
contracts as the solution and Fonterra ducing a billion litres of milk, we have of how Bega could take a different ap-
talking about offering a range of price one class of farmers.” proach to help farmers. “We can handle
“portfolios” to farmers. Mr Saputo said from July the former a lot of seasonal milk, we’ve got a lot of
The introduction of a mandatory Murray Goulburn and Warrnambool capacity, and so, for example, there we
code is also driving the change, with Cheese and Butter programs would are not looking to incentivise farms to
the draft code proposing a requirement merge with 5-6 simpler programs of- produce milk in February/March when
for all processors to release a standard fered. “Everyone tries to outdo every- it’s very expensive,” he said.
form agreement and minimum prices at one else by offering these very compli- “So investing in assets that are going
the same time. cated bonuses and structures,” he said. to fit the farm profile in those regions is
Saputo chairman and chief executive “We need to simplify that.” how we’ve got to think about our invest-
officer Lino Saputo Jr told the Australian Bega Cheese chief executive officer ments and they are 10 to 20 years out.”
Dairyfarmer, Saputo would be offering Paul van Heerwaarden also identified Milk pricing systems needed to better
farmers the choice of five or six pro- simpler pricing systems as a way to lift suit the whole supply chain.
grams next year and there would be no farmer returns. “As an industry, historically we have
special deals for select suppliers. “One of the things we are looking at been one of the lowest cost most com-
“I will say this categorically there will is what will we do with our milk-pricing petitive dairy industries in the world,
be no special deals beyond those pro- systems, which over the last 20 years but we are not there today,” he said.
grams,” he said. have become quite complex and, dare Farms had become more dependent
“So any of those large corporate I say, have provided an incentive for on inputs that now represented 40 per
farms that want to have a sideline deal, farmers to produce milk perhaps at a cent of costs compared with 15-20pc 20
they should not do it with Saputo Dairy time of the year or in certain practices years.
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The Australian Dairyfarmer March-April 2019 15NEWS
“We need more control back on farm, “What if they were separate business- that they shouldn’t be overly focused
where they can make decisions that are es, how would they price their milk?” on opening price, rather they should be
better for their farms,” Mr van Heer- All three chief executives acknowl- more concerned with closing price.
waarden said. “Do we move to pasture- edged milk supply was an issue. “We made a guarantee we would be
based systems in regions that are suit- Mr Dedoncker said Fonterra was paying a leading price for dairy at the
able for pasture-based systems and take looking to activate contingency plans to close of the year. Now, of course, it was
cost structures down and importantly meet its contracts. very easy for some of our competitors
take risk down?” The rebuilt Stanhope, Vic, factory was to have a higher opening price than
He acknowledged that approach now producing three times as much what we had.
would mean more seasonal milk for cheese as it had before it was destroyed “And some of the suppliers criticised
processors. “But I think that’s our re- by fire in 2014 but Fonterra was strug- us — there was a great opportunity for
sponsibility to work out how we turn gling with milk supply to it. Saputo to collect more milk had they
that into value and that’s the key,” he The worst-case scenario could be had a higher opening price. And I re-
said. moving milk from the west to the north. minded them that’s not responsible on
Fonterra Australia managing director “We don’t regret the investment, it is our part.”
Ren‚ Dedoncker flagged a different ap- state of the art and we take a 10-year Mr Saputo said the opening price was
proach. view,” he said. the number on which farmers could
In February, Fonterra offered north- build their budgets for the year. “We are
ern Victorian farmers who were willing not going to be taking a step down; we
to commit to a minimum volume of milk ‘The introducon of a are not going to be doing a clawback,”
a higher price. The company said the he said.
special price for farmers who produced mandatory code is also Mr Saputo said he was optimistic that
a flatter milk curve was in response to driving the change...’ once the company convinced suppliers
seasonal conditions and heightened it was “honourable and ethical” it would
competition in the market and was no collect more milk “But it takes a fair bit
different to the premium offered for “Yes we are under pressure, there is of time to build the confidence,” he said.
fresh milk and ones it planned to pay for no doubt about that, and we have to Mr Saputo said the company had tak-
organic and A2 milk. take a long-term view.” en the same approach after it took over
Mr Dedoncker hinted at the con- Mr Saputo acknowledged that the Warrnambool Cheese and Butter in 2014
ference that the company was look- company had not grown supply above and had grown milk intake by 25pc in
ing at offering more of these types of 1.6 billion litres since taking over Mur- the following four years.
premiums.“Farmers are all different: dif ray Goulburn last year. Mr van Heerwaarden said companies
ferent age profile, different risk profile, The company has set itself a target to need to look at investments in light of
different propensity to be able to farm get up to 2.1 billion litres of milk in three what worked best to drive growth and
flat or through a curve,” he said. years. “We are confident that we are go- profitability.
“Is it feasible we are in a world now ing to get there in terms of processed Growth was critical for the industry
where we say there is a portfolio and milk,” he said. to be successful.
you get to choose, you get a choice? We “Out of the gate, we haven’t grown “And in the last 20 years in this coun-
are testing that.” our milk base from the 1.6, only because try we haven’t had growth, we’ve been
Mr Dedoncker also hinted that Fonter- we are sort of changing how milk prices in decline or we’ve stagnated,” he said.
ra could consider different pricing for are communicated.” “I know that when I’ve worked in in-
suppliers to different factories. Mr Saputo said it was rebuilding trust dustries that are in a growth mode, life
“Fonterra has a network of different with suppliers that the opening price is a whole lot easier.”
communities where we are,” he said. was the guaranteed minimum price they Mr van Heerwaarden said growth
“What if I don’t call it one Fonterra? would receive for the year. “(Last year) would not be brought about by proces-
What if we had the Western State Butter we came out with an opening price that sors investing in more stainless steel.
Company, Stanhope Cheese Northern we believed was reflective of the dairy ”Unless we have more milk, we don’t
Dairy Company and Tasmania Inc or the markets and we came out first,” he said. have growth and that’s where it has got
Darnum Nutritional Company? “And we did it to inform our suppliers to start,” he said. D
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Semen sales hit record levels
✔ Genomics helps drive semen sales
Key points
ance here. Mr Gillan said there was
✔ Sexed semen sales also increase
also a wider range of bulls available at
✔ Holstein remains dominant breed
different pricing points.
“All of a sudden there is three lay-
By Carlene Dowie ers of pricing reflected, whereas years
ago there was one layer of pricing and
D AIRY semen sales hit record
levels in 2017-18, according to
the recently released Semen
Market Survey 2018 report from the
National Herd Improvement Associa-
then it fell away really quickly on ge-
netic merit,” he said.
“Companies are able to make a
wider range of product available that
is still high genetic merit but is still re-
tion of Australia. ally good value.”
This was driven by farmers having Farmers were starting to under-
a better understanding of the value of stand the value of good genetics in
genetics, NHIA chairman Graeme Gil- their herds.
lan said. “Inbuilding good genetics actually
The rapid and massive improve- Graeme Gillan: Inbuilding good genecs helps improve efficiencies,” he said.
ment in genetics now occurring as a helps improve efficiencies. “It’s a free kick.”
result of the use of genomics was also Genomics had also allowed the de-
behind the trend. velopment of more accurate ABVs for
The total number of doses of semen ‘There was also a wider lower heritable traits, such as daugh-
sold in Australia leapt to 2,196,456, up range of bulls available at ter fertility and some of the survival
8 per cent on the previous year and traits.
up 30 per cent in the past decade. different pricing points.’ “Genomics has been a boon be-
Mr Gillan said although the increase cause it allows us to measure that
would have also reflected people increased steadily and was now fast more accurately than what we could
needing to buy semen after clear- approaching sales of daughter-proven have done historically,” he said,
ing out their tanks following the milk semen.
price crash in 2016, the fundamental The rapid advancement in genetic
Sexed semen
change in the market due to genomics merit meant, for example, there were The survey also revealed increased
was the main factor. now 140-150 Holstein bulls above 300 sales of sexed semen.
“All of a sudden the range of bulls Balanced Performance Index in the Mr Gillan said he expected this to
and value that people pay for bulls is Good Bulls Guide compared with just continue as the reliability of sexed se-
really improving quite dramatically six two years ago. men continued to improve and people
year on year,” he said. Genomics had also allowed over- developed breeding programs that
Although Australia had not been seas bulls to be tested on the Austral- better accommodated it.
an aggressive adopter of the use of ian reference base, providing a more Larger herds, in particular, were
genomically proven semen, use had accurate indicator of their perform- becoming more aggressive with their
reproduction programs, with the in-
Dairy semen sales by category Doses of sexed dairy semen sold
creasing use of synchronisation and
technology such as electronic heat
detection.
The trend to sexed semen would
also be driven by increasing societal
concerns about bobby calves.
Farmers would focus the use of
sexed semen in the top end of the
18 The Australian Dairyfarmer March-April 2019NHIA NEWS ROUNDUP
Table 1: Dairy Sales by Breed by year
2010 2011 2012 2013 2014 2015 2016 2017 2018
Holstein 1,334,892 1,530,057 1,525,776 1,470,581 1,498,275 1,597,106 1,516,992 1,609,595 1,733,733
Jersey 250,873 278,307 277,744 235,391 294,569 327,186 270,795 281,648 301,945
IIlawarra 11,578 57,584 30,738 12,738 11,915 12,281 14,540 11,216 16,845
Brown Swiss 12,897 15,292 17,581 18,552 17,965 15,351 12,545 11,832 11,481
ARB* 54,809 51,897 55,487 61,083 56,842 55,180 48,210 58,512 67,151
Montbeliarde 4322 8556 8106 7563 6852 2563 2736 1972 1770
Ayrshire 8841 11,734 8692 8530 7378 9,193 13,671 8427 7251
Guernsey 4164 5431 5759 3058 4878 4374 6043 3707 5012
Kiwi Friesian 10,826 14,794 14,105 20,560 29,246 34,577 48,475 41,375 43,278
Other 2605 12,053 1977 3068 3578 3485 6091 4721 7990
Total sales 1,695,807 1,985,705 1,945,965 1,841,124 1,931,498 2,061,296 1,940,098 2,033,005 2,196,456
*Australian Red Breed
herd — whether they identified those bobby calf,” Mr Gillan said. This was ability of daughter fertility, health
animals by genomic testing or herd also driving a trend of increased beef traits and survival traits, and genom-
testing or their own methods. semen sales. ics has been one of the key drivers to
If the export heifer market was help that.
strong, people would be also more
Breed “Jerseys continue in a consistent
likely to use sexed semen in the mid- Holstein semen continue to dominate position. The Aussie Reds, to their
dle portion of the herd. sales, accounting for 79 per cent. credit, they have grown even though
Beef semen increasingly would be Jersey semen accounted for 14pc of they are quite a small what I call reg-
used over the bottom end of the herd. sales, Australian Red Breed semen istered group but are actually quite a
“If you’ve got an Angus-cross Hol- 3pc and Kiwi Friesian 2pc. large commercial group.”
stein or whatever, you can probably “Holstein continues to maintain its These three breeds were all able to
sell it to someone for $200 at a week’s position and grow its use,” Mr Gillan leverage off developments in other
age versus a $40 straight Holstein said. “That reflects much better avail- countries. D
Semen exports connue to grow
Dairy semen exported from Australia
D AIRY semen exports from Australia
connue to grow, according to the
recently released Semen Market Survey
“They don’t go in there and just sell
bulls. They go in and sell grass-fed low-
cost management system and say by the
2018 report from the Naonal Herd Im- way here’s the genecs that work the
provement Associaon of Australia. best. And here’s the breeding values that
NHIA chairman Graeme Gillan said this idenfy these genecs for you.”
was a reflecon of hard work by Genecs Mr Gillan said it was not about promot-
Australia and Total Livestock Genecs in ing a bull, it was a more holisc approach.
idenfying and working to establish mar- industry we need to collaboravely work “Even though we are late into the
kets. “For us to be growing semen exports together to present — not only our ge- market, I think Australia can be well po-
is a real credit because ... the breeding necs but our systems and how they can sioned because we have a diverse envi-
values of currency around the world are translate into other countries. ronment, we have people who operate
sll the United States,” he said. “We have yet to really do anything with in different systems whether its low-cost
“Developing these relaonships inter- heat tolerance into countries like Indone- pasture through to high-cost part-pasture
naonally is really a long-term business sia, Vietnam, and places like that where part-intense management, and we have
arrangement that needs companies to they have to work their way through these animals that perform extremely
invest in before they get returns.” managing cale in hot and humid envi- well and they can go into these different
However, the internaonal market did ronments. environments,” he said.
allow Australian companies to get more “We probably haven’t done enough on The Australian genecs industry could
value out of bulls standing in Australia, our feed efficiency side of things to pro- also leverage off the country’s health sta-
parcularly if those animals were not at mote that.” tus.
full producon capacity. Part of this involved not just selling The export market would help grow
Mr Gillan said there was an opportu- bulls, but selling how the breeding values the Australian genecs industry.
nity for Australia to beer promote the were developed and the system in which NHIA played a role in the export side
value of its dairy genecs. they operated. by facilitang the discussion between
“We undersell the genec merit of our New Zealand had been successful in the government, quaranne people and
animals and their ability to perform in di- doing that. “They sell a whole system the industry. It was vital export proto-
verse environments,” he said. when they go into a country in South cols were based around science and not
“I think that’s one of the things as an America,” Mr Gillan said. around trade protecon, Mr Gillan said.
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Labor proposes milk floor price scheme
✔ Labor proposes minimum discussion at the Australian Dairy Fonterra Australia managing direc-
farmgate milk price Conference the day after the policy tor René Dedoncker is also concerned
Key points
✔ Proposal short on detail was announced. that Mr Fitzgibbon doesn’t under-
✔ Mixed reacon from dairy Bega Cheese CEO Paul van Heer- stand the issue noting “he’s asking
industry waarden said he’d spoken to Mr Fit- questions that are quite narrow”.
zgibbon since the announcement “And a floor price for farmers is
By Mike Foley and was concerned about how much interesting but only in the context of
thought had gone into the policy de- what does it mean for the whole value
A SHORTEN Labor Government
will task the Australian Com-
petition and Consumer Com-
mission with testing the efficacy of a
minimum farmgate milk price and to
velopment.
Mr van Heerwaarden said Mr Fitz-
gibbon was keen to set a price based
on the cost of production which he
noted varied according to different
chain and he was buying into that?,”
he said
Mr Dedoncker said he had been
surprised to learn of Labor’s plan.
“Regulation is a serious challenge and
make recommendations on the best milk systems, locations and seasonal could change the face of the industry
design options. conditions. and not necessarily for the good,” Mr
Labor believes government inter- “If I talk to farmers up in northern Dedoncker said. “My initial reaction
vention is needed to save the dairy Victoria, the cost of production at the was ‘it’s too hard, regulation is always
sector and dairy farmers and as such start of the season when water cost bad’.”
brought a motion to debate its policy 100 bucks and now its costing 550, ADF chief executive David Inall said
for a dairy floor price to parliament in the cost structure is changing within the organisation was committed to
February. It was defeated. the year,” he said. “How do you practi- working constructively through this
It was doomed to fail on the num- cally set this?” proposal “because farmers are telling
bers, but pursued by Labor in an at- us that something must change to se-
tempt to create negative headlines for cure the future of the Australian dairy
the Nationals. ‘This is a naonal industry,” he said.
Labor agriculture spokesman Joel emergency. It’s not an “We appreciate the recognition
Fitzgibbon said the dairy industry from the federal Opposition and other
was “broken” because farmers and opon to do nothing.’ stakeholders, but there are no imme-
processors could not make sustaina- diate or simple solutions to address
ble returns, while supermarkets were Norco chair Greg McNamara said all problems afflicting farmers.”
generating marginal returns. “This is a industry needed to be more united in President of the United Dairyfarm-
national emergency,” he said. “It’s not its approach to federal and state par- ers of Victoria (UDV) Paul Mumford
an option to do nothing.” liamentarians. welcomed the ALP’s acknowledge-
Mr Fitzgibbon expects the policy “How do we stop people racing off ment that changes were needed in the
would be implemented by an inde- to government, and five different or- embattled sector, but said his organi-
pendent authority and implemented ganisations turning up at parliament sation would have to look over any
regionally, calculating a floor price house and having a different view proposals carefully before giving it
above the production cost of milk in about what the industry does,” he their stamp of approval.
each district. asked. “We are pleased they see the need
He said any Labor scheme would “Presenting a paper to Joel Fitzgib- for change and that farmers are doing
avoid the pitfalls of past experience bon around setting a floor price. Has it tough at present, but equally, those
with the wool price, which collapsed the industry discussed it? We haven’t with long memories will cast their
dramatically in the 1990s, and was even had the conversation. minds back to the old wool floor price
based on a guaranteed purchase of a “How do we have those conversa- scheme, which did not go so well,” Mr
set amount of production. tions internally and nut it out, so we Mumford, who farms in Gippsland,
“We will direct the ACCC to assess, all get a fair say in it but we actually Victoria, said. “What we definitely
test and design a scheme. We’ll be present a proposition that actually don’t want is the wool floor price
making it clear, we don’t want to hear makes value.” scheme 2.0.”
why it’s difficult, we want to hear how Saputo chairman and chief execu- He said the UDV welcomed any-
we best make it work,” Mr Fitzgibbon tive officer Lino Saputo Jr said govern- thing that boosted farmgate prices
said. ments needed to “stay out of the way” from current unsustainable levels, but
Agriculture Minister David Little- when it came to markets. said there were a number of regional
proud dismissed Labor’s floor price He also said the terms of the pro- nuances to work through..
move as a stunt that had already been posal were vague, making it hard to Dairy Connect chief executive
dismissed earlier in the year by the pass judgement on the idea. “We will Shaughn Morgan welcomed the fed-
ACCC, in its review of milk prices. “It’s have to see what’s in the details of that eral focus on the industry, but said
a cruel hoax to try and politicise the to have a better definition of whether he would hold judgement until more
issue,” Mr Littleproud said. it makes sense or not,” he said. detail emerged. “The devil is always in
The proposal was met with mixed “I can tell you that speaking to some the detail. We will welcome the atten-
reaction from the dairy industry. dairy farmers, I don’t think that is go- tion on this issue, which acknowledg-
Some of the biggest names in dairy ing to solve the problem. That’s not es the market failure of the Australian
processing were taking part in a panel really where the problem lies.” dairy industry,” he said. D
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