Bigger changes required on pricing

By Rodney Woods

PROPOSED CHANGES to the country’s milk pricing system do not go far enough, according to a Katunga dairy farmer.

Daryl Hoey said the change proposed by Jersey Australia, which includes more emphasis on the value of milk solids, was not going to be much better than the current system.

“I fully accept it (the current system) is flawed, but I’m not convinced the proposed changes could be better,” Mr Hoey said.

“The equal weighting of fat and protein is way too simplistic.”

Jersey Australia believes the current payment system is outdated, complex and confusing, something Mr Hoey agrees with.

“I don’t disagree with that at all. We have to break open the milk pricing system so it’s far simpler than what it currently is,” he said.

Two reports commissioned by Jersey Australia and funded by Farming Together had shown pricing systems did not necessarily represent the current market value of milk components, to the disadvantage of farmers.

Jersey Australia is advocating simpler milk payments with one price for milk solids, butterfat and protein and an appropriate volume charge that penalises lower solids milk.

Jersey Australia board member Jane Sykes said it hopes to “start the conversation” about simpler and fairer milk prices.

“We won’t be able to change it on our own; we need wider industry support and pressure at the farmer level,” Ms Sykes said.

“We understand not everyone is going to agree with the findings but we need to get the conversation started.”

Mr Hoey has another solution.

“I have an alternative that should be investigated,” he said.

“I’d like to see milk pricing of fat and protein closer to the protein-to-fat ratio and any step-up or loyalty throughout the year, should completely reflect the market place.”

The UDV says proposed changes to the milk price structure need to better represent the market value of fat and protein.

UDV president Adam Jenkins said the group had been pushing for this for a while.

‘‘From last year’s conference we asked processors to be more in line with the market,’’ Mr Jenkins said.

‘‘We have been advocating for a long time that we need to change the structure.

‘‘If you look at it as is, protein pricing is much higher than what is on the market. We need more alignment.’’

Mr Jenkins agreed with Jersey Australia that the current system was outdated.

‘‘It is ridiculous. There are 32 different levels of pricing structures. It’s too complex,’’ he said.

‘‘We’ve outsmarted ourselves to the point where we are paying a price to actually produce profitable milk.

‘‘Is the milk volume going up or down? It’s clearly going down. To grow milk volume, farmers need to be profitable.

‘‘You wouldn’t plant wheat in the summer and expect a return, so pricing needs to reflect the comparative advantage that Australia has.’’

Mr Jenkins said a whole industry approach was needed to get a simpler pricing structure.

‘‘We need industry to show leadership and we will be having more conversations around tackling pricing structures this year,’’ he said.