Talk to each other, farmers, processors urged.

Australian Dairy Farmers (ADF) acting president David Basham and United Dairyfarmers of Victoria (UDV) are holding a series of community meetings, to look at long term resolution of the current crisis. Both have called for new ways of managing price volatility, by simplifying milk supply contracts and improving transparency in the pricing system.

“I think we do need to have a real look about what can be put in place to manage risk for farmers, they need different options put on the table for different suppliers,” Mr Basham said.

Any pricing must also take into account domestic premiums, which were gradually being eroded by the way contracts were negotiated with the supermarkets. “Even for farmers, its hard to understand – some talk about cents per litre, some about kilograms of milk solids; there is a huge range,” Mr Basham said.

 “The dairy industry was very much based on handshake type agreements; the world has got more complicated, but we have tried, in a lot of cases, to maintain those handshake agreements. There are so many conditions around those handshakes, they are no longer applicable. I think it’s very much in the interests of both the farmers and the companies to sit down and have a conversation about the needs of both – farmers need processors and processors need farmers.”

Opening milk prices have now been set for this financial year, with at $4.75kg/ms, Murray Goulburn at $4.31, Burra Foods, $4.50, Warrnambool Cheese and Butter on $4.80 and Bega at $5.

But UDV president Adam Jenkins said some farmers would be getting an on-farm opening price, as low as $3.90. “As farmers, and as an industry, we need to better informed around what commodities are doing, as they have such an impact on the farm gate price,” Mr Jenkins said.

Processors must be prepared to “call a spade a spade, if it doesn’t look great. Thirteen weeks ago it was $5.60kg/ms - that was a long way off and it’s been such a big hole, in such a short period of time, to work through.” Mr Jenkins reiterated dairy farmers needed to adjust to a low cost production system. But he said the risk being borne by farmers was unacceptable and too frequent.

Mcarthur dairy farmer Craig Dettling agreed there needed to be greater transparency from suppliers, particularly Murray Goulburn (MG), about areas such as stock inventories. The restructuring of the business had meant the company was concerned about legal action, and had “put up a bit of a shield. They need to negotiate around that and find the right balance. There needs to be clearer information about MG’s position, where to from here, how can we carry on and how can suppliers have confidence it won’t happen again? You have to ask yourself, why MG was so bullish, last year?”

Fleyas Holsteins Jessa Fleming, Portland, said producers wanted answers, as to why so much inventory was being held by MG.  “Why can’t the board come out and say, we stuffed up?,” Ms Fleming said. “We can’t change what happened with the great Murray Goulburn crash, but we can look at it - and change it - for the future.

“We want to know what’s going on, we just want answers and to know what we are working for.” Ms Fleming said suppliers needed to be comfortable their questions would be answered. “There needs to be a system set up, where suppliers can SMS questions to a number, or questions can be written down, and handed in,” she said.

Timboon producer Nick Renyard said there would be no quick answers to the current crisis. “It’s going to take people a while to get through this - in the short term, there is support in place for people to make good decisions and to find out ‘where to” for them,” Mr Renyard said. The UDV had three committees, one for each of Victoria’s dairy regions, which would gather feedback on where the gaps were.

 “There are still people out there who are not aware of the support that is available, we need to reach those people,” Mr Renyard said. “They’ve just got to devote a bit of time to accessing it.  It’s going to be a complex process – people are looking for easy answers, and there just aren’t any.”