Milk price clarification call

Milk pricing has come under further fire

TRANSPARENT PRICE: Australian Dairy Farmers Corporation chair Scott Seiben says the company seeks to offer a competitive price that is very transparent and easy to understand.

TRANSPARENT PRICE: Australian Dairy Farmers Corporation chair Scott Seiben says the company seeks to offer a competitive price that is very transparent and easy to understand.


Milk supplier ADFC joins pricing criticism.


The chair of independent milk supplier, the Australian Dairy Farmers Corporation, has added to the criticism of milk processors' special deals and average weighted prices.

ADFC chair Scott Sieben also took aim at the price differentials between northern and southern Victoria.

"The [Dairy Code of Conduct] hasn't really helped the dairy industry be transparent, because companies quote a headline price that we know isn't right," Mr Sieben said.

"All they are doing is trying to confuse the farmer."

He said 99 per cent of the time, special deals were not all they promised.

Burra Foods chief executive Stewart Carson has said too many processors released average weighted milk prices that were unrealistic.

Mr Sieben also criticised separate payments for northern and southern Victoria.

"Why would I say to a Gippsland farmer I'm going to give you less than a northern farmer, because you are in a different region?," he said.

"We are a supply co-operative; whatever money we make through the co-operative, we pay back to the farmer."

Mr Seiben found support from dairy farmers, including former Murray Goulburn director and Bullaharre dairy farmer Craig Dwyer, who is an ADFC supplier.

"I completely agree with his comments around the north-south pricing differential," Mr Dwyer said.

"Farm wherever you like, you get the associated risks that come with that locale."

Northern prices were introduced to help offset elevated irrigation costs.

"Now it's just being used as leverage to keep a still declining northern milk supply pool appeased," he said.

He called for milk swaps to be banned or made more transparent.

The Australian Competition and Consumer Commission had looked at milk swaps.

But Mr Dwyer said it had unfortunately concluded there was "nothing to see here".

On social media, Australian Milk Price Initiative organiser Scott Briggs agreed.

"The idea of putting one milk price out per season with no ability to hedge forward hurt the entire industry," Mr Briggs said.

"We are the only ones who do it like this and we are the ones who have shrunk the most."

Stony Creek dairy farmer Doug Hanks said complicated pricing from the big four processors had become the norm.

"Every year, they change the price structure to pull the wool over farmers' eyes and the weighted average is the biggest load of crap going around at the moment," Mr Hanks said.

"I guarantee the average farmer milking 200 cows won't get close to their weighted average announced price."

He said processors were offering so many different deals and incentives, it was impossible to accurately compare prices.

"With production and finance incentives, special, city and fresh milk deals there are so many variances being paid," Mr Hanks said.

"The other thing that annoys me is the milk swaps between the big four - why would Saputo go hard in the west if Bega has the majority of milk and Saputo has the majority in the east?"

Mr Sieben said ADFC had a six and six model, which paid $7 a kilogram milk solids for July to December and $7.50/kg MS from January to June (opening milk price).

"The only thing that comes out are the Dairy Australia and Dairy Foods Safety Victoria levies, so it's a very simple model," he said

"There are no pick-up charges, stop charges or volume charges.

"The price is the price - whether you are big or small, everybody gets treated equally."

ADFC, founded in 2012, was currently picking up 275 million litres of milk from 160 farms in Gippsland, northern and south-west Victoria

Bega, Fonterra, Lactalis and Saputo Dairy Australia have been contacted for comment but have not yet responded.


From the front page

Sponsored by