Federal Nationals Agriculture Minister David Littleproud has announced a range of supports for the dairy industry if The Nationals are re-elected to Government.
The Nationals in Government will provide funding to the dairy industry to research and develop more contemporary trading options for the dairy sector, to give farmers more choice, flexibility and price transparency.
Mr Littleproud said the Nationals in Government would invest $560,000 to have Australian Dairy Farmers contract an independent research group to develop, consult and market test a new trading and marketing platform, reporting back in February 2020.
“This initiative, in addition to our implementation of a Mandatory Code of Conduct, responds directly to the ACCC report into the dairy industry which found that that dairy farmers are battling a range of market failures due to a strong imbalance in bargaining power,” Mr Littleproud said.
“We want to not only strengthen dairy farmers hand in negotiations with processors, we also want to provide farmers more choice in the way they interact with the milk market to give farmers more market power.”
“Dairy farmers need more flexibility in how they sell milk – a new platform will give them more options, opportunities and flexibility,” Mr Littleproud said. “Dairy farmers currently have limited selling arrangements, basically a supply contract. A new platform could allow dairy farmers to market their future supply, and give them options to get better prices and reduce business risk.”
The project will look at the potential for a farmer to sell milk to multiple processors, or contract a portion of their future milk supply as a hedge – with an option to pull out and sell elsewhere if the farmer receives an offer to pay more for their milk.
“Trading future supply is available to other agricultural commodities but the dairy industry has not modernised in the same way,” Mr Littleproud said. “Perishability is often flagged as the barrier but if more contemporary trading models can deal with this and provide more certainty and more choice for dairy farmers to market their milk, I am all for it.”
“This is a forward looking, thoughtful investment which could deliver a big change for our dairy farmers.”