Trust is still a problem

June 21, 2017

Dairy concerns: Strathmerton's Tim and Bridget Goulding have cautiously welcomed Fonterra's opening farmgate milk price, but still have concerns with transparency of the company to its suppliers.

Fonterra suppliers have cautiously welcomed a good opening milk price from the dairy company, but say it still has a long way to go to regain their trust.

The major supplier announced its official opening average milk price of $5.30/kg milk solids last Wednesday, with an upgraded forecast average closing price range of $5.40 to $5.80/kg MS.

Fonterra also previously announced an additional 40¢/kg MS for suppliers, following last year’s controversial ‘clawback’ repayment program.

Tim and Bridget Goulding currently milk more than 100 cows on their property in Strathmerton, but normally would be milking about 150 to 160 and had been supplying Fonterra and Bonlac for 20 years.

‘‘In a low input system, it will be possible to make an income on (the opening price), but the main thing is the carrying of the money from the year before,’’ Mr Goulding said.

‘‘If you were starting afresh, it’s quite a good opening price.’’

‘‘It’s the repayment we’ve got to make on that now, it is a loan and the principal repayments on it start on the 15th of July dairy cheque and continue to come out for three years,’’ Mrs Goulding said.

‘‘We will just gradually increase numbers again, the main thing is the ability to deliver on their projections, because it is just that,’’ Mr Goulding said.

‘‘Having opened at $5.30, it doesn’t leave much room for the market to flatten off again.’’

‘‘That is a concern, as in their ACCC submission, Fonterra does not agree with calls to ban step-downs, they say it would mean opening at a lower or more conservative price,’’ Mrs Goulding said.

‘‘I don’t think we can ever be looking at what our closing price will be again until it’s actually money in our bank, because 55 days out from the end of the season and they took the money back off everyone, it’s disgusting.’’

Like many farmers since the farm gate milk price crisis first began, the Gouldings have been in ‘re-active management’, which has forced them to make decisions they’d never normally need to do, like culling stock.

This year, they kept their young stock to bring them back up after a difficult season last year with Fonterra’s pricing.

‘‘That $1.91 for those two months, it slashed your ability to buy the fodder to run a sizeable herd and we had to go into low input.’’

Mrs Goulding said to survive that pricing many farmers had sold their herds, reduced their herds, or managed to slog through.

‘‘It’s crippled the dairy industry,’’ she said.

The Gouldings are now calling on Fonterra to lose their ‘good news’ PR spin and be honest with their suppliers, especially concerning opening prices.

They would also like to see the company answer questions taken on notice asked by suppliers at recent meetings, which have gone unanswered for three weeks.

The actions of Fonterra in recent times still hasn’t been enough to restore the Gouldings’ faith and trust in the company.

‘‘We’re asking for them to behave ethically and some transparency, and they say while they are being transparent and are trying to do a better job, it’s not coming through.

‘‘What’s just come out about farmers from a different company getting offered to go over a higher payment than farmers that have been there the whole way through, it’s pretty disgusting.’’

Mrs Goulding said she still classified herself as a loyal Fonterra supplier, but did have to take into account they had a repayment loan with the company.

‘‘Someone has got to stay there and keep them accountable.’’

A class action against Fonterra is now under way for the ‘clawback’ farmer repayment loan scheme it employed after Murray Goulburn announced its own clawback.

Murray Goulburn has since forgiven the Milk Supply Support Package repayments, a move welcomed by suppliers, but Fonterra has yet to forgive its loan system.

‘‘Yes, I am worried about the money, because this is our business, this is our farm that’s gone without, basically,’’ Mrs Goulding said.

The couple has signed up to be part of the class action.

‘‘It’s setting a precedence. There’s this awful thing where farmers are against one another a little bit now, which never used to be the case.

‘‘Everyone stuck up for each other, but I was shocked when I was down at the United Dairyfarmers of Victoria meeting in Melbourne to hear two farmers speak against the motion brought up there, saying it was time to draw a line in the sand, to move forward and that it was a bad look for the industry.

‘‘What’s happened is a bad look. We shouldn’t have to be in this position, to be making Fonterra accountable for what they’ve done.’’

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