Updated pricing system needed


Updated pricing system needed

DAIRY farmers are calling for a simpler and fairer milk payment system, with more emphasis on the value of milk solids.
Two reports commissioned by Jersey Australia, funded by Farming Together, had shown pricing systems don’t necessarily represent the current market value of milk components, to the disadvantage of higher component farmers.
Jersey Australia said the current payment system was outdated, complex, confusing and didn’t accurately reflect the true component value of milk solids.
It has called for the system to better recognise the efficiencies and value generated through processing high density milk compared to low density milk.
Koonwarra dairy farmer Shawn Hollingworth milks jerseys and said the industry’s payment system had become complex over the past 30 years.
“I believe payment systems need to be simpler. As of May 1, all major processors in Australia are companies, there are no more cooperatives,” he said.
“I feel milk processors will do what needs to be done to drive the best return for shareholders, because that is their job.”
Mr Hollingworth said a voluntary code of conduct signed by milk processors last year was unlikely to make any difference.
“The code of conduct is all nice and fluffy, however companies can still set whatever milk price in whatever form they like,” he said.
“There is no regulation there.”
Jersey Australia is advocating for simpler milk payments with one price for milk solids, butterfat and protein and an appropriate volume charge that penalises lower solids milk.
Jersey Australia said it simply hoped to start the conversation about simpler and fairer milk prices.
Mr Hollingworth said the current payment system is “slightly more beneficial” to lower component producers.
He said under Jersey Australia’s proposed payment system, the “coin would be flipped”.
“Higher component herds would get more money and lower component herds, less,” he said.
Mr Hollingworth said incentives, such as volume or production incentives, should be removed from the current milk payment system.
“They penalise the little guy,” he said.
Jersey Australia’s reports found the current milk price systems do not show transparency between the market value for milk products and the price paid to farmers for their components.
“It is reasonable to conclude that Jersey profile milk is relatively cheaper to collect and more efficient to process in relation to yields and handling costs than lower milk solids density milk,” board member Jane Sykes said.
“There is value in high density milk which is not being recognised in the current payment systems.”
Ms Sykes said Australia’s payment system dates back to the 1980s.
“The fairest and simplest thing to do is make it a single price for milk solids, rather than individual ratios for fat and protein,” she said.

Shake it up: Koonwarra dairy farmer Shawn Hollingworth said the way farmers are paid for their milk needs to be simplified to be fairer for all farmers.

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Posted by on May 29 2018. Filed under Rural News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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