Victorian dairy farmers have welcomed the Senate probe of processors and supermarkets, although one said it “raised more questions than it answered.”
Senators from the Economics Reference Committee into the dairy industry questioned senior staff from the two big supermarkets and processors Murray Goulburn (MG) and Fonterra.
United Dairyfarmers of Victoria (UDV) president Adam Jenkins said while responses to the Senators’ questions didn’t shed any light onto the impact of dollar milk, the hearing was still a worthwhile exercise.
“It raised a lot more questions than were answered - and that is a good outcome, in some respects,” Mr Jenkins said.
“It highlighted the need for the Australian Competition and Consumer Commission (ACCC) inquiry into the industry, from farm gate to consumer.
He said greater clarity on margins was required, “it’s very much smoke and mirrors.”
“Clearly dollar a litre milk sends the wrong message to the whole dairy cabinet, particularly when farm inputs are rising.”
He questioned whether the retailer, or processor, wore the rising costs.
“I can only assume, at the end of the day, it will be the farmer.
“The risk needs to be shared through the supply chain; until we get transparency, through the supply chain, we are not going to know who holds all the risk.”
He said information provided by the processors and supermarkets Coles and Woolworths would be of value to the UDV, in presenting its case to the ACCC.
In April, Murray Goulburn (MG) cut its supplier payments from $5.60 kg/ms to $5.47kg/ms, down from an original forecast of $6.05kg/ms.
Fonterra quickly cut its payments as well.
Farmers who spoke to submissions they made to the inquiry, Karrinjeet Singh-Mahil, Crossley, and Craig Dettling, Macarthur, said questioning by the Senators was positive.
Both said the hearing switched attention away from MG to other processors, particularly Fonterra.
“Everyone has been so hysterical about MG and there wasn’t a reason for all that hysteria,” Ms Singh-Mahil said.
Fonterra suppliers had also learned MG’s MSSP was a debt borne by the company, not farmers.
“If you leave you don’t have to take it with you - that makes sense, it is not a supplier debt, it is a company debt,” she said.
“Therefore the Fonterra argument that the MSSP was a debt incurred by the suppliers is false.”
Ms Singh-Mahil, who supplies Fonterra, said many farmers were still very upset the company followed MG’s lead, in stepping down the farm gate milk price.
“I would hope Fonterra would fix it and pay us the 40 cents (kg/ms) they have underpaid us.
“That would be correct thing to do, and more importantly that would be right thing to do.
“They made a commercial, tactical decision to do that, and we are the ones that wear the consequences of it.”
Mr Dettling, a MG supplier, said the public hearing “shone the spotlight on Fonterra, which has been missing.”
“There has been a lack of balance and – talking to some of the senators - they had no idea.
“They thought it was an MG problem,” Mr Dettling said.
“Hopefully it gave it a wider focus, because it’s not just an MG problem as other companies have done worse.”
