Guarding the keys to the future of dairy research

The University of Sydney Dairy Research Foundation at Camden, south west of Sydney, is a vital guardian of the keys to the future of dairy science, according to director Professor Yani Garcia.

The foundation, he says, is a modest building with the future of dairy research inside in the form of a committed group of hard-working PhD candidates and teachers.

The DRF is a pivotal part of the university’s Dairy Science Group, a breeding place which has developed more than 100 PhDs and rolled out more than 500 heavyweight scientific papers since its establishment in 1959.

“The foundation’s purpose is to help the university develop more resources to re-invest in future research,” said Garcia.

“We are also the university’s arm for engaging with dairy farmers and the broad industry, by comparison with other foundations that focus primarily on fundraising activities.

“As part of the University of Sydney Dairy Science Group, we bring together academics and students for dairy related research and teaching.

“We make a strong science-based contribution to industry in what is a classic win-win scenario.”

Garcia said some of the income that supports the foundation each year comes from its annual dairy farmer-focused DRF Symposium which is expected to attract around 200 delegates to Port Macquarie in late July this year.

Other income sources include donations, memberships and providing laboratory services. Most of his research has been supported by Dairy Australia through the industry-driven program FutureDairy.

Garcia also leads the Sydney Dairy Science group, which carries out the research and teaching activities at Sydney University.

Garcia was born into a crop and beef farming family in Argentina. He graduated from university with an agronomy degree, before completing a Masters’ degree in animal science and finally a PhD on pasture-based dairy systems in New Zealand.

He joined the University of Sydney in 2003 to work with past director Prof. Bill Ferguson with whom he co-developed FutureDairy, a national program still ongoing. Garcia was appointed director of the DRF after Bill Ferguson retired in 2008.

“I’m driven by change and new technologies, by finding solutions through innovation and I have a passion for seeing young scientists developing and gaining traction in this vitally important industry.”

 

Fonterra lifts farmgate milk price

Dairy processor Fonterra has announced an increased forecast Farmgate Milk Price for the upcoming 2018 season, to $6.75 kgMS.

Chairman John Wilson says the revised forecast Farmgate Milk Price is a lift of 25 cents on the original forecast of $6.50 per kgMS in May 2017 and reflects the ongoing rebalancing of supply and demand in global dairy markets

“We are seeing growing confidence on-farm across the country and, with global demand for dairy strengthening, the signs are for a good start to the season for our farmers and their rural communities although following a challenging period of very wet conditions for some of our farmers,” said Wilson.

“The increased Farmgate Milk Price will be welcome news to farmers as they continue to invest in their businesses off the back of an improved 2016/2017 season, with the usual reminder to budget cautiously especially in the early part of the season.”

Chief Executive Theo Spierings says the Co-operative is well positioned to take advantage of improving demand for dairy nutrition across our ingredients, consumer and foodservice markets.

“Our forecasts are prudent given that we are still early in the season and we are starting with very low levels of inventory, and we are focused on continuing to demonstrate strong business performance so as to bring greater returns for our farmers,” he said.

China’s biggest food company looks to Australia for milk product supply

Australia’s dairy industry is set for a boost with a symposium bringing together for the first time representatives from China’s biggest food company – the state-owned COFCO corporation, with leading Monash University researchers, and dairy industry partners, on Thursday 20 July.

The delegation from COFCO’s Nutrition and Health Research Institute (NHRI) is visiting the University to meet with Australian research partners and industry representatives for the inaugural Australia-China Joint Research Centre (ACJRC) Symposium in Dairy Manufacturing.

The ACJRC, an initiative supported by the Australian Government Department of Industry, Innovation, and Science, is a virtual centre that links researchers in the field of dairy manufacturing at Monash University and Soochow University in China.

By showcasing the capabilities of the Chinese and Australian research partners, the symposium will further collaboration between the two countries, and provide real potential for the development of the Australian dairy industry.

Australia currently produces 6 per cent of the world’s dairy products, sitting fourth in the world behind New Zealand, USA and the EU.

Director of the ACJRC in Future Diary Manufacturing and Monash University Professor in Chemical Engineering, Cordelia Selomulya, said it made sense for Australian companies to establish themselves in the higher value Chinese export market and the Centre would enable Australian food companies focused on China to fast track their export opportunities.

“There is increasing competitive pressure on the Australian dairy industry with the USA and EU looking to expand into the Asia-Pacific region. Whilst Australia cannot compete on volume, our industry should focus on adding value by creating premium products,” Professor Selomulya said.

Monash University is leading the research into membrane technology and manufacture, of which the dairy industry is one of the biggest users. Membranes are being used in the production of probiotics, protein enriched products, and infant formula.

“The Australian dairy industry is consistently faced with challenging economic and seasonal conditions and with the middle class population across Asia expected to grow to more than three billion people by 2030, there are real opportunities for the industry,” Professor Selomulya said.

The other partners involved include Mengniu Dairy in China, along with Bega Cheese, Devondale Murray Goulburn, Fonterra, the Food Innovation Centre at Monash University, the University of Queensland and the Gardiner Foundation in Australia.

NSW Dairy Fund applications to fire up innovation

Industry advocacy group Dairy Connect has called on farmers, academics, industry stakeholders and research institutions to take advantage of innovation project funding available in this year’s NSW Government Dairy Industry Fund.

CEO Shaughn Morgan said today that a new round of funding will open on 18 July with up to $700,000 available to support projects and initiatives that will contribute to dairy industry growth, profitability, sustainability and resilience.

“Innovation is critical to future success across a broad spectrum of dairy industry activity up and down the value chain,” he said.

“We support the fund and urge critical stakeholders and agencies to prepare submissions for R&D funding.”

Funding applications are open to individuals, universities, research organisations, consultants, not-for-profit organisations, state and local government, farmers and community groups – joint applications showing collaboration are encouraged.

NSW Department of Primary Industries Deputy Director General, Michael Bullen, said the $1 million fund has a track record in supporting successful projects.

“This round offers $700,000 for project proposals which are aligned with the strategies developed in the NSW Dairy Industry Strategic Action Plan,” Bullen said.

“The industry aims to grow markets for NSW milk, build industry confidence, support strategic farm business transition and improve farm productivity.

“This is a significant opportunity to boost the value of NSW’s dairy industry, which produces more than one billion litres of milk and contributes $584 million to the state’s economy each year.”

Applicants should first submit a brief preliminary project proposal, which will be assessed by the Dairy Industry Fund Steering Committee, representing the three Dairy Australia Regional Development Programs, Dairy NSW, Murray Dairy and Subtropical Dairy, and the two farmer advocacy bodies, Dairy Connect and NSW Farmers Dairy Committee.

Successful applicants will be invited to prepare a full project proposal and have the opportunity to present a summary to the Dairy Industry Fund Advisory Committee for feedback prior to their final submission.

Preference will be given to projects which demonstrate significant scale to the benefits they would bring to the NSW dairy industry.

Mr Bullen said Project 20:20 Pathways to Change, was a good example of a successful project showcasing the feed-base, people, business, natural resource management and herd performance of best practice farms across the state.

“Detailed guidelines outline the application process and the types of projects which are eligible for funding,” he said.

Applications are open from 18 July until 18 August 2017.

 

High end dairy product opportunities in China

A pick-up in China’s appetite for dairy imports will create trade growth opportunities for Australia, albeit largely in higher-end products, according to a visiting Chinese dairy expert.

In Australia for a series of industry presentations, Rabobank Shanghai-based senior dairy analyst Sandy Chen (pictured) said after a two-year hiatus from the global dairy market, China’s appetite for dairy commodity imports is starting to revive, at a time when global supply across the export engine is returning to growth.

Longer-term, Chinese dairy demand will continue to expand, he said, creating trade opportunities for Australia, however much of this will be limited to higher-quality and value-add dairy products.

Mr Chen said while Australia was in a good position to take up some of the medium-term trade growth opportunities into China (with China’s import gap set to widen), many challenges would remain and hinder access to the Chinese market.

“China remains a market and industry in transition,” he said, “with the country’s dairy consumption fluctuating significantly over the past 15 years, while local production is also still undergoing considerable structural change.

“In terms of dairy consumption growth, we have seen this plummet from an annual growth rate of close to 19 per cent for the most part of last decade (2000 to 2008), to just a two per cent growth rate since 2012. And looking out to the medium-term, we are expecting dairy consumption growth to remain in low single digits of around two to 2.5 per cent out to 2022.”

Chen said while China’s per capita dairy consumption remained well below that of some of its east Asian neighbours, “such as Japan, Korea and China’s Taiwan”, there were some dairy product categories exhibiting strong growth opportunities.

“For example, annual cheese consumption in Japan is two to four kilograms per person, while it is close to two kilograms per person in Korea and Taiwan,” he said. “However in China, it is currently less than 100 grams per person.”

“While this sees China only import around 100,000 tonnes of cheese each year – largely for its food-service sector such as burger chains – Australia supplies nearly a quarter of all China’s cheese import requirements, having seen good trade growth in recent years.

“Butter consumption is also growing faster than other dairy categories, but it also represents a very small component of overall dairy consumption, so, like cheese, there is considerable opportunity for growth.”

Other sectors exhibiting strong growth opportunities include yoghurt and ‘premium’ white milk (which has a higher protein content of 3.3 to 3.4 per cent) compared with ‘mainstream or standard’ milk (with a protein content of 2.9 to 3 per cent).

Chen said while Australia has been importing fresh pasteurised milk into China, representing five per cent of China’s liquid milk imports, it was facing intense competition from domestically-produced milk.

“I see the export of fresh liquid milk into China being a very niche market,” he said, “given the high air freight costs and increasing local competition. To remain sustainable exporters supplying that market will to invest in a strong brand presence to warrant a premium retail price.”

 

‘More Income from Cows’ at dairy symposium

Critical reproductive challenges arising from genetic selection for milk yield will be front and centre at the University of Sydney Dairy Research Foundation’s 2017 Symposium at Port Macquarie next month.

A total of 200 plus producers, researchers, industry specialists and science PhD candidates are expected to attend the farmer-oriented symposium to be held over three days from Tuesday July 25.

The theme of this year’s symposium is the four-letter acronym MILC or More Income Led by Cows.

Keynote speaker is a world-recognised expert in dairy cattle reproductive biology, management and nutrition and Professor of Animal Sciences at the University of Florida, Dr. Jose Santos.

Jose Santos’ presentation will focus on important husbandry changes in the US that have allowed milk yields to continue to grow alongside greatly improved cow reproduction performance.

The program will showcase also the talents of emerging dairy scientists with interactive presentations by PhD students competing for audience points based on quality, relevance and interest.

DRF director Yani Garcia said today the program was designed to deliver valuable fresh intelligence on issues including genetics, animal health and welfare, environmental stewardship, diary marketing and management and new technologies.

The agenda on Tuesday July 25 is tagged as an Industry Day and includes a NSW Farmers’ dairy committee AGM; Dairy Connect Farmers’ Group meeting; an industry forum; and a ‘pathways to change’ panel discussion closing the day.

On Wednesday July 26, the morning speaker program includes Jose Santos, Dairy Research Foundation director, Yani Garcia, the Blue River Group’s Grant Fuzi, dairy producer Tim Bale and Gundowring ice cream guru James Crooke.

In the early afternoon, successful industry players, Rob Cooper, Adam Darley, Chris Shirley, Jamie Drury, and Leppington Pastoral Company executive Michael Perich will discuss instances where they have used outside experts to improve their enterprises.

Later that day, the CSIRO’s Steve Crimp will help delegates explore megatrends that are expected to impact on agriculture during the coming 20 years and Scibus’ Neil Moss will address extreme weather events.

Jose Santos will re-emerge to present the latest news on US heat-stress research and Agriculture Victoria’s DairyBio team spokeswoman Jennie Pryce will canvass her preference for heat tolerant cows and the impact of climate on diary production.

On Thursday July 27, interested delegates will board buses for a Hastings Park Dairy working farm visit at Brombin with hosts Leo and Sue Cleary and Luke and Meaghan Cleary who switched to exclusively A2 milk production in 2012.

At the farm, delegates will also attend professional platforms presented by young emerging scientists exploring breeding and genetics, feed and feeding and environment and welfare that day.

Voluntary dairy industry code welcomed

Dairy Connect has welcomed the launch today of the Australian Dairy Industry Council’s voluntary Dairy Industry Code of Practice covering off standard form contractual arrangements.

CEO Shaughn Morgan said that on first-reading the Code appeared to be a good first step on setting out guidelines for commercial arrangements between value chain stakeholders in the dairy industry.

“The only caveat from our point of view at this stage is that it would be the application of the Code and how it was interpreted that would be its true test in the marketplace,” he said.

“The Code appears to set a framework that is consistent with what Dairy Connect has been advocating for since the Murray Goulburn and Fonterra price meltdown and clawback in April last year.

“There has been a pressing need for an equitable and voluntary cross-industry code along the lines of the UK industry code.

“We have raised the need for this as often as we could with Federal and State Agriculture Ministers and industry stakeholders during the past 12 months

“The ADIC Code raises the importance of transparency as well as indicating that prices must be clear and precise, with a price setting mechanism that is clearly understood.”

Shaughn Morgan said that point 6 in the Code discusses exclusivity of supply and says that the contract between the farmer and processor must allow the producer to supply milk to other processors’.

“It also states that ‘the Code does not preclude a processor or a farmer negotiating exclusivity in their contract.’  Any such clauses must be done on a level playing field,” he said.

“However, it is good to see that our initial push for a code similar to the UK Voluntary Code of Conduct to be adopted has led to this important first step.”

It will be also important for collective bargaining groups to be able to play a role and to have all parties negotiate in good faith.

ADIC said it is anticipated most of the milk fresh produced in Australia will be covered by the Code of Practice.

ADIC Interim Chair, Terry Richardson said the Code was designed to address a range of contractual issues which farmer organisations had been trying to address and rectify for a significant amount of time.

ADIC Deputy Chair, Grant Crothers said the organisation believed the Code would improve contracting arrangements between farmers and processors.

It would offer greater transparency through earlier and clearer pricing signals for farmers, which would mean less risk for farmers and more balance along the supply chain, Grant Crothers said.

Dairy Connect will monitor the Code over the coming months and the way in which it is implemented.  We will provide appropriate feedback to Government and industry bodies.

New dairy code launched, addresses farmgate crisis

The Australian Dairy Industry Council (ADIC) has launched the first Dairy Industry Code of Practice for standard form contractual arrangements.

Although the code is voluntary, it is anticipated most of the milk produced in Australia will be covered by the code. Significantly, following the last year’s farmgate crisis, it includes a provision that processors will not retrospectively cut what they pay dairy farmers.

In addition, there are provisions to ensure all farmers receive payment entitlement that accrued over the term of a contract or supply agreement (including any ‘loyalty payments’); and that if a farmer produces more milk than required or contracted to their primary processor and the processor does not want to purchase the additional milk, then the contract between the farmer and processor must allow the dairy farmer to supply the additional milk to other processors.

Through consultation with state member organisations, farmers and processors, the ADIC developed the code to help ensure greater transparency and fairness in milk supply and pricing.

ADIC Interim Chair, Terry Richardson said it is important that contracts are fair, simple, realistic and easily understood by both parties.

“The Code will address a range of contractual issues which farmer organisations have been trying to address and rectify for a significant amount of time.

“Both farmers and processors sat down to work together cooperatively and in good faith to establish this code”, said Mr Richardson

ADIC Deputy Chair, Grant Crothers said, “we believe the Code will improve contracting arrangements between farmers and processors; and offer greater transparency through earlier and clearer pricing signals for farmers, which means less risk for farmers and more balance along the supply chain.”

The Code was initially drafted on 27th September 2016 at a workshop attended by processors, farmers, Mick Keogh from the ACCC and representatives from the Small Business and Family Enterprise Ombudsman.

It aims to address issues with dairy contracts in a way that works for both farmers and processors and will apply to standard form contracts between processors and farmers, but does not preclude a farmer negotiating an individual contract with a processor.

Murray Goulburn raises farmgate milk price

Dairy co-operative Murray Goulburn has lifted its opening farmgate milk price by 50 cents to $5.20 kg MS.

MG said in a statement that its original price of farmgate milk price of $4.70 kg MS was announced earlier than in prior years in order to try to assist suppliers with budgeting and business planning.

“Since then, MG has had the opportunity to review the 2017/18 budget assumptions, which include dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres,” the statement said.

“The updated FMP has also taken into account improved commodity prices reflecting anticipated market returns, together with additional contracted sales.”

Dairy industry comes together to help fight hunger in Australia

For the last six years, big players in the dairy industry including Murray Goulburn, Parmalat, Fonterra, and Lion Dairy and Drinks, have come together to help Foodbank provide more than 8 million litres of milk to vulnerable Australians experiencing food insecurity.

“Our charity partners regularly inform us that people who are struggling to put food on the table often have to sacrifice dairy products,” said Foodbank Australia CEO, Brianna Casey.

“This makes regular milk donations from the dairy industry vitally important in providing a consistent source of calcium to Australians in need.”

This financial year, the collaboration has produced one million litres of fresh milk for Foodbank’s Milk Program. On top of this, the dairy processors also regularly donate other products from their ranges such as yoghurt and cheese.

To ensure the supply has a wide reach, each partner is responsible for donating fresh milk in specific states and territories. Parmalat provides fresh milk in QLD and the NT, Murray Goulburn in NSW/ACT, Fonterra in Victoria, and Lion Dairy and Drinks in WA, SA and Tasmania

“Our annual Foodbank Hunger Report tells us that rural and regional communities are 11per cent more likely to be food insecure than their metro counterparts,” said Casey.

“In fact, more than a third of the food and groceries distributed through Foodbank’s network of more than 2600 charities goes to country Australia.

“Despite the prevalence of food insecurity in rural and regional areas, these communities are also some of our most generous in terms of donations of milk, fresh produce, eggs, and meat, so initiatives like the Foodbank Milk Program means that Australian dairy processors are often helping farmers in quite a unique way.”

The Foodbank Milk Program is one of the food relief organisation’s longest running programs. Within six years of its launch, Foodbank has been able to deliver more than 8.6 million litres of milk to Australians in need.

“The countless meaningful contributions and extraordinary community spirit shown by our milk partners, even during tough times for the industry, has ensured Foodbank can provide one of the core ingredients of a well-balanced diet to vulnerable Australians,” said Casey.

 

A2 Milk ups revenue guidance again

The a2 Milk Company has increased its full year revenue guidance for the second time in two months, in response to continued strong demand for its a2 Platinum infant formula in China.

The company said in a statement group revenue is now forecast to be approximately NZ$545 million ($A518 million) for the 2017 financial year, an increase of approximately NZ$20 million on the previous update.

In addition, the company said it had been working closely with its infant formula manufacturing partner, Synlait Milk, to uplift the production schedule for the remainder of the year.

As part of the commentary given at the time of release of the company’s first half results on 15 February 2017, the company advised that its investment in marketing would likely be higher in the second half by up to NZ$15 million, based on the planned phasing of communication and development activities across the year.

Due to changes in the phasing of the marketing investment, primarily in China, marketing expenditure in the second half is now expected to be approximately NZ$10 million higher than the first half of the 2017 financial year.

Nature One Dairy secures China baby formula deal

Nature One Dairy has signed a deal to manufacture baby formula, specialised milk powder products and other health-related products for Chinese pharmacy group Sinopharm.

The deal would involve export of the products to China.

China’s new policy on infant formula, which takes effect on the January 1 2018, limits the number of brands that manufacturers can register in China. This is part of the Chinese government’s move to improve food safety in the world’s most populous country.

Nick Dimopoulos, CEO of Nature One Dairy said the strategic partnership will the company to tap into Sinopharm’s core business which covers distribution, retail, research, development and manufacture of prevention, treatment, diagnosis, care, and other health-related products across China.

“Our aim is to be able to produce a wide range of formulated products to meet the demands of different consumer groups. We are excited to be able to work with Sinopharm on their infant formula brand Happy Veve, as well as to co-develop new products for the China market with Sinopharm who is the largest retailer of medicines and healthcare products,” he said.

He said Sinopharm decided to partner with Nature One Dairy because of its pharmaceutical-grade manufacturing facility and stringent food safety and quality management program.

 

Lion roars back with reported sales increase

At the back of an industry crisis, when consumers reportedly turned away from cheap supermarket milk to more expensive labelled brands, hoping to help struggling farmers, dairy processor, Lion, has posted an unexpected 19 per cent jump in sales. It has also launched a new campaign Milk loves you back”, to encourage Australians to drink more milk – certainly a clear signal to the rest of the industry that it looks to take its products further.

Managing director of Lion Dairy and Drinks, Peter West said the company’s key fresh milk brands of Pura, Dairy Farmers and Masters had indirectly benefited from the 2016 dairy crisis. He was quoted by The Australian as saying profits jumped considerably, with consumers doing an about turn to discounted milk recently.

The report also states that Lion has also “quietly increased” the amount of milk processed annually from 750 million litres to almost a billion ­litres, thus gaining market share and taking on more contracted dairy farmers.

Lion is now market leader in flavoured milk sales, through its Dare brand; in yoghurt with Yoplait and Farmers Union brands; and in speciality cheeses with Tasmanian Heritage and King Island brands.

Nationally, Lion has become the biggest fresh milk retailer, outside the supermarkets’ $1 per litre private label brands.

With 400 farmers now supplying Lion in Tasmania, Queensland, NSW, Victoria, Tasmania and Western Australia, Mr West said its fresh milk, yoghurt and speciality cheese sales were all attracting more consumers.

Lion also has farmers waiting to become suppliers, a consequence of the company’s farmgate milk pricing.

A big difference with Lion’s dairy business is that 95 per cent of products are sold in the Australian domestic market.

It was also reported that Mr West said Lion was now advancing into Asian markets, particularly with Farmers Union Greek yoghurt, a big hit in Singapore.

Murray Goulburn to pay a lower farmgate price than forecast

Murray Goulburn announced on 6 June in a statement to the ASX that it would pay just $4.70 kg/MS for its milk at the beginning of the 2018 financial year.

The company had originally forecasted that it would pay between $5.20 kg/MS to $5.40 kg/MS for the year, noting: “This range is subject to various assumptions, including dairy commodity prices, exchange rates and achieving cost out initiatives, as well as achieving milk intake of approximately 2.5 billion litres.”

In the 6 June statement, Murray Goulburn’s  chief executive officer, Ari Mervis, said that in setting the FY18 FMP forecast, the company has taken a prudent view on key assumptions for commodity prices.

“Although global commodity prices have shown some recovery since this time last year, whole milk powder and particularly skim milk powder prices remain under 10 year averages. This has been somewhat offset by firmer butter and cheddar prices. We have also had regard to Global Dairy Trade auction results over the past two months and current futures pricing, both of which suggest some ongoing price volatility in global markets.”

In correspondence to suppliers, Mervis noted that while the FY18 opening and forecast prices were an improvement on FY17, the company’s performance remains below his expectations.

The company said that a further update on the strategic review is expected to be provided at the time of MG’s full year results in August.

 

New milk powder factory set to open in SA

The Union Dairy Company (UDC) has confirmed it expects to begin production at its new South Australian milk powder plant in July.

Construction of the facility in Penola, in SA’s south east is almost complete, and 40 staff have begun training, according to Daniel Aarons, managing director of UDC.

Aarons told Adelaide Now the factory will be focusing on “premium, high-spec, high quality milk powder”. According to Aarons, there is a strong global demand for Australian milk products, which are seen as high quality, clean and green.

UDC has also been in discussion with South Australian and Victorian dairy farmers, and it has been decided that approximately 50 per cent of the Penola factory’s milk supply will come from south east SA.

The factory plans to operate 24/7 and produce approximately 30,000 tonnes of whole and skim milk powder each year.

Dairy farmers not happy with Fonterra price plan

Victorian dairy farmers say Fonterra’s plan to only recompense suppliers who have continued to supply the dairy processor since last year’s farmgate price crisis could breach the incoming code of conduct.

As the Australian reports, unlike the other major dairy processor Murray Goulburn which has cut its clawback loan scheme for all suppliers, Fonterra will not recompense suppliers who are now supplying other processors.

Instead, the company will pay an extra 40 cents on top of its forecast farmgate price of $5.30 to $5.70 kgms to current suppliers only.

According to the United Dairyfarmers of Victoria, this is not fair for those suppliers who have left Fonterra and may breach the new code of conduct which comes into effect on July 1.

 “Fonterra has listened to industry and is taking steps to provide a more stable commercial environment for their farmers by providing an indicative forecasting for the season’s milk price,” said UDV President Adam Jenkins in a statement.

“However, this was an opportunity to draw a line in the sand and start rebuilding trust in the industry after the milk crisis, but nothing has been done to rectify the heartache caused to many farmers who bore the burden of management decisions last year.”

Jenkins said Fonterra’s refusal to compensate farmers who switched processors for financial reasons would make the dairy industry more inequitable.

“Farmers who were financially forced to leave their processors should not be forced to continue to bear the cost of processor actions and serious questions must be answered about the fairness and equity of the treatment of those who have left through no fault of their own,” he said.

“They should be paid a fair price for the milk they delivered last year and all farmers who supplied should be paid no matter who they now supply.”

As the ABC reports, a Victorian law firm is organising a class action against Fonterra for its clawback loans, with the court process due to start in July.

David Burstyner, from Adley Burstyner, is working with Harwood Andrews on the action.

Referring to Fonterra’s latest plan, Burstyner said, “It just seems to me like a shameless attempt to once again trick farmers to continue supplying and that’s a different thing to making up for short changing them last year.”

 

MG’s dairy farmer backflip may affect Fonterra

Dairy co-operative Murray Goulburn’s decision to not pursue $183 million in “overpayments” arising from last year’s farmgate milk price crisis could have ramifications for its main competitor Fonterra.

In April last year, MG retrospectively cut its farmgate milk price (the amount it pays suppliers for milk) and left farmers with significant amounts to pay back. Shortly after, Fonterra followed suit and cuts its farmgate price.

As the Australian reports, Fonterra is legally obliged to either match MG’s farmgate price or pay a higher price. As such, the company now must pay farmers about $60m more for the milk it purchased form them during 2015-16.

Fonterra chief executive Rene Dedoncker will hold a meeting with framers in Melbourne today to discuss the situation.

According to the Australian, farmers are likely to take legal action if Fonterra does not pay the full amount owing.

Competition watchdog takes action against Murray Goulburn

The Australian Competition and Consumer Commission (ACCC) is taking legal action against milk processor Murray Goulburn, alleging it misled farmers about farmgate milk prices.

The ACCC alleges that from June 2015 until February 2016, MG misled farmers when it set an opening farmgate price (the amount it pays farmers) of $5.60 kgms and a forecast final farmgate price of $6.05/kgms, and that it considered the forecast Final FMP of $6.05/kgms was the most likely outcome for FY16, when that was not the case.

Further, the ACCC alleges that from February 2016 until April 2016, Murray Goulburn misled farmers by representing it had a reasonable basis for expecting to be able to maintain its opening farmgate of $5.60/kgms for the remainder of the season, and that it considered a Final FMP of $5.60/kgms was the most likely outcome for FY16, when that was not in fact the case.

The company’s subsequent decision to retrospectively cut the farmgate price left many farmers in financial trouble.

“The ACCC alleges that Murray Goulburn’s conduct had an adverse impact on many farmers who, as a result of Murray Goulburn’s representations regarding the farmgate milk price, had made business decisions,” said ACCC Chairman Rod Sims.

“The farmers relied on Murray Goulburn’s representations and were not expecting a substantial reduction in the farmgate milk price, particularly so close to the end of the season when it was not possible for them to practically readjust their expenditure.”

As the ABC reports, Sims added that MG’s former managing director Gary Helou and former chief financial officer Bradley Hingle could face penalties as a result of the action.

“I don’t want to pre-empt the court proceedings. There could be multiple contraventions here and each contravention would have a penalty of up to $220,000 per breach,” he said.

Parmalat to upgrade SA dairy facility

Milk maker Parmalat will spend $12 million to upgrade its facility in the Adelaide suburb of Clarence Gardens.

The company’s Australian chief executive Craig Garvin said its investment shows the company’s commitment to South Australia, which he believes is important in light of the recent wave of manufacturers exiting the state.

“These new capital expenditure investments will allow Parmalat to significantly increase production in the state, including state-of-the-art machinery for our flavoured milk brands, which will ultimately see us sourcing more milk from SA dairies,” Garvin told Newscorp.

According to Garvin, the installation of a new processor has also allowed the facility to start exporting three fresh milk brands from SA to China.

Parmalat, which manufactures brands such as Pauls Milk, Ice Break Iced Coffee, Vaalia yoghurt, Oak and Breaka flavoured milk, was earlier this year involved in a contracted industrial dispute.

In January, workers at the company’s Echuca facility who were planning industrial action arrived at work to find they were locked out. The lockout, which lasted for 60 days was resolved following negotiations between the Australian Manufacturing Workers Union and management.

A2 Milk forecasts sales jump

NZ milk company A2 Milk is forecasting higher than previously expected sales in the six months to June, as a result of increased demand.

The company said in a statement demand has been particularly strong in Australia, but also through the cross border e-commerce (CBEC) channel into China.

“The Company confirms that for the 9 months ended 31 March 2017, Group revenue was NZ$388.5m ($358m),” the statement read.

The company said that, in response to increased demand, it will increase its production for the remainder of the year.

“On the assumption of continuing strong demand for a2 Platinum infant formula and production deliveries being achieved consistent with the revised production schedule, the Company is now expecting infant formula sales for second half FY17 to exceed sales achieved in first half FY17,” the statement said.

“As a result, Group revenue for the 2017 financial year is forecast to be approximately NZ$525m ($483.8m).”