It is time for all dairy farmers to join the call for a simplified milk payment structure. Special deals, unnecessary incentives and meaningless price reporting have contributed to increasing complexity in our milk price structures.
And with the milk pool shrinking, price complexity is getting worse. Processors are trying to save their existing milk supply while reaching out to potential new suppliers to keep their production plants running at efficient levels.
The result is a mess of hidden deals struck between farmers and processors. Processors cannot justify the spread in prices being paid, and farmers have little idea how their payment is calculated or if it’s fair.
The complex system is forcing farmers to operate inefficiently by chasing incentives and converting to off-season milk production, which can have long-term impacts on business viability and herd fertility. The United Dairyfarmers of Victoria are calling for a simple pricing formula, a realistic spring differential, independent months with no linkage, reduced productivity bonus, reporting of median price, and reporting of a price range.
Ultimately, the milk price structure should be simple, fair, and of equal benefit to farmers and processors. A sustainable industry is in the best interest of the whole sector – including processors. We’re at a cross-road; we can’t continue to spiral into inefficiency, inequity and confusion.
By making the price structure simple and fair, we are ensuring that the dairy supply chain remains sustainable into the future. Changing the system will not be an easy task. It will require support from all players in the dairy supply chain. That’s why we’re out talking to farmers as well as processors. It is time for all dairy farmers to advocate for a transparent and simplified milk payment structure.
