DAIRY Farmers chairman Ian Zandstra calls the milk co-op’s latest deal with processor Nat-ional Foods a “positive development”, but Tuncester dairy farmer Paul Weir is a little more blunt.
“Hopeless. It’s deadset hopeless,” Mr Weir said.
Mr Weir’s anger is understandable. He said the deal with National Foods, which last year lost its contract to supply milk to Woolworths in North Queensland, slashed the volume of milk farmers were selling to the processor by about 60 million litres.
Under the deal announced yesterday by Mr Zandstra, the co-op would sell about 900 million litres of milk to National Foods from dairy farms on the Northern Rivers and elsewhere in NSW, Queensland, Victoria and South Australia. The deal applies only to volume, with the per-litre price paid to farmers expected to be announced in June or July.
Mr Weir said that meant a cut of about 28% in the amount of milk Northern Rivers farmers were selling to National Foods through Dairy Farmers during the 2011-12 financial year.
“This is typical of what’s happening ... where farmers are carrying all the risk,” Mr Weir said.
“If you are a farmer and you milk 300 cows, you milk 300 cows, not 300 this year and 200 next year.
“We can’t just milk 200 cows. They want us to, but that’s not viable.”
Equally, Mr Weir said he was worried the discussion on price, particularly in light of the Coles-led discounting war, would end with dairy farmers having to accept a lower per litre price for their milk.
Mr Zandstra agreed the deal meant National Foods would be buying less milk from the co-operative in 2011-2012 and the reduced sales would hurt farmers.
However, he said it could have been worse. National Foods had wanted to buy even less milk from the co-op and Dairy Farmers had been forced to go into mediation with the processor just to get the deal they got.
Mr Zandstra said the co-op was determined its farmers would, at the very least, see no reduction in the price for their milk.
“You tell Paul we’re doing our damndest,” he said.
To add insult to injury, Mr Weir said Parmalat, which makes Pauls-branded milk, and Norco were both looking for extra milk to fill shortfalls in supply, but producers contracted with Dairy Farmers were not allowed to sell those processors their excess milk.
Instead it all went to their processor, sold at a “second price”, which was usually below the cost of production, and then on-sold to other processors at the higher rate.
Mr Zandstra took issue with that, saying farmers were always paid the full contracted rate for excess milk on-sold to other processors.
National Foods did not respond to The Northern Star’s requests for comment.
THE FARMER’S PLAN
NORTHERN Rivers dairy farmers could help ensure their collective future by chipping in together and building a manufacturing plant for long-life or powdered milk, Tuncester dairy farmer Paul Weir has suggested.
Mr Weir said having such a plant would mean local farmers would be able to add value to any excess milk created by supply cuts, such as the one in the latest supply agreement between the Dairy Farmers milk co-op and National Foods.
That would let local farmers maintain and even increase their income, instead of losing money by selling milk below cost at their producers’ “second price” rate for excess milk.
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