Federal Agriculture Minister Barnaby Joyce said it was important Murray Goulburn (MG) explained to their suppliers what steps it would take to support farmers and restore confidence to the dairy sector.
Mr Joyce, and Prime Minister Malcolm Turnbull, met with the MG board, in Canberra on Tuesday.
He said the pair would be meeting with Fonterra’s Australian management in the next week.
“The Coalition government strongly supports Australia’s hard working dairy farmers,” Mr Joyce said.
He said today’s meeting was the first of a series of formal talks on what was required to build a more profitable dairy industry, in Australia.
“The Government’s interests are in supporting Murray Goulburn suppliers,” he said.
“There can only be strong and profitable dairy processors if we have strong and profitable dairy farmers.”
Mr Joyce said Australia’s dairy farmers deserved fair returns at the farm gate, as well as transparency in milk price arrangements and supply contracts.
United Dairyfarmers of Victoria president Adam Jenkins said producers were awaiting the outcome of Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investment Commission (ASIC) investigations.
“From the dairy industry point of view, everyone wants to unite and move forward,” Mr Jenkins said.
An important part of solving the dairy crisis was understanding why it arose, in the first place.
“We still need to recognise and rectify issues which landed us in this situation,” he said.
MG, Australia’s biggest milk processor, dropped the price it paid farmers by $1 kg/ms.
The co-operative also required farmers to pay back the difference, affecting about 2,500 producers.
Mr Joyce said the government recognised creating a more sustainable dairy industry could only happen if there was genuine participation, by industry and stakeholders.
“While there are current global oversupply issues impacting our markets and forcing down world dairy prices, the long term future of the dairy industry looks strong.”
Meanwhile, the Australian Greens called on the government to act, to prevent retrospective price decreases in the dairy industry, while the ACCC investigated.
“Dairy farmers are hurting now and swift action is required from the government and ACCC,” said Senator Richard Di Natale, Australian Greens Leader.
Australian Greens spokesperson on Agriculture Senator Rachel Siewert said the proposal would see the incurred liabilities transferred onto the balance sheets of processors, such as MG.
And South Australian senator Nick has called for an urgent review of unfair contract laws to prevent the ‘claw back’.
“Current unfair contract laws don’t appear to give protection to those dairy farmers who made decision in good faith, based on forecasts and statements by Murray Goulburn management, only to find they are in deep debt because of the ‘claw back provisions’.
He said he, and Mayo MP Rebekah Sharkie, would draft changes to the Competition and Consumer Act to give more protection to farmers hit by claw back clauses.
Senator Xenophon has also pledged his support for Murray Goulburn farmers, who as members of the co-operative, had the right to call for an extraordinary general meeting (EGM).
“An EGM would force the entire board and management to answer questions such as why, with so many farmers doing it tough, profits in the tens of millions are being retained and dividends paid to investors, Senator Xenophon said.
