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Dairy storm around desk

A BATTLE is brewing among Western Australia’s dairy players over plans for a single desk selling system, three years after the industry was deregulated.

WAFarmers is leading the push, saying the move would improve producers’ powers of negotiation over farm gate milk prices.

However, Peters and Brownes – which buys milk from 50 per cent of the State’s dairy farmers – is not convinced that the single desk approach is the way to go.

Industry insiders say it is unlikely that any dairy industry policy changes will go through unless Peters & Brownes supports it.

WAFarmers dairy section president Tony Pratico said the single desk proposal had two main objectives: to develop an improved negotiating process for a farm gate milk price for all WA farmers; and to provide producers with the opportunity to retain any relationships they have with existing customers.

He said it was not a return to a fully regulated dairy industry.

The main idea is to set a single benchmark price that will allow all farms to remain viable.

“We’re working through how we can retain a relationship with a processor and not under-mine the ability of an individual to negotiate,” Mr Pratico said.

Peters & Brownes managing director Nigel Thomas said he was not convinced that the single desk proposal would benefit the industry.

“Someone needs to explain to me the benefits of going back to the single selling desk,” he said.

“We’ve developed a relationship with a negotiating committee that represents the farmers we buy from. They report that only 8 per cent of our farmers want to go back to the single desk. That’s just 4 per cent of the farmers in the State.”

Dr Thomas said any move back towards a regulated market would harm the farmers who had made considerable investments in their operations to meet the needs of processors such as Peters and Brownes.

Since deregulation dairy farmers have complained that prices have been forced down to a level where some cannot afford to keep operating. Many are producing at rates above current prices.

This, in turn, has led to about 25 per cent of the farmers leaving the industry.

Agriculture Minister Kim Chance ordered a parliamentary inquiry into the industry in June, chaired by Tony McRae.

That inquiry received 70 submissions from farmers, retailers and producers, and the single desk suggestion was one of the outcomes.

Another driver for changes to the industry was the threatened collapse of Challenge Dairy Cooperative’s deal with Chinese food company Sanyuan.

That deal was seen as a boon for the industry.

Challenge is understood to be paying farmers about 24 cents a litre for their milk.

National Foods is buying at around 28c/L and Harvey Fresh pays 31c/L.

However, these producer do not always buy all of the milk from a farmer at that rate.

Some of it is bought at the lower manufactured milk rate.

Peters & Brownes is buying from its farmers at around 29 cents and takes all of their milk at that price.

 

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