The sign-on bonuses, loyalty payments, seasonal bonuses and other adjustments are making it difficult for Australia’s dairy farmers to accurately compare opening price offers, according to the Australian Dairy Farmers.
Under the dairy code, processors were obliged to publish their minimum opening prices for the season on June 1.
But the varied presentations are making it difficult to compare.
Australian Dairy Farmers, said the lack of clarity in opening milk prices would make it difficult to determine accurate financial projections for the coming season.
Under the Dairy Code of Conduct, all dairy farmers must have an agreement signed with a processor by the end of the month.
“This season, it’s harder than ever for dairy farmers to compare competing offers,” ADF president Ben Bennett said.
He said they were increasingly being asked to compare milk supply agreements that resemble a sales promotion rather than a straightforward commercial offer.
“Processors are trumpeting support packages, loyalty bonuses, war-related cost support payments and special incentives from the rooftops, all while avoiding the one figure farmers actually need to know — what is the genuine base milk price being offered?"
Mr Bennett said the growing complexity of milk price packages offered by processors was creating significant confusion for farmers attempting to make one of the most important commercial decisions for their business.
“The reality is that many farmers are still questioning whether the underlying price being offered covers their cost of production.
“A headline price means very little if it can only be achieved through a maze of conditions, incentives, volume requirements, quality payments and regional adjustments.
“Dairy farmers should endeavour to get multiple income estimates and seek independent advice, to ensure they know where their individual milk price sits next financial year.”
ADF said the situation had become so complicated that even industry efforts to provide independent comparisons were becoming increasingly difficult.
“We developed a milk price comparison tool to help farmers make informed decisions, but the sheer complexity and inconsistency of some processor announcements means even we are spending significant time trying to determine what is actually being offered,” Mr Bennett said.
Mr Bennett said farmers deserve the same transparency standards already applied across many other sectors of the economy.
He said the trend appeared to be a deliberate move away from direct price comparison.
“This isn’t happening by accident. Whether intentional or not, the outcome is the same – farmers cannot compare competing offers on a like-for-like basis.
“A dairy farmer must be able to sleep at night without worrying what they are going to get paid.”
Mr Bennett said ADF had repeatedly called for greater milk price transparency throughout the Dairy Code of Conduct review process.
“We have been raising this issue for years,” Mr Bennett said.
“Unfortunately, stronger transparency measures were not adopted during in the Dairy Code Review recommendations, and what we’re seeing now is exactly why those reforms were needed.”
ADF said it hoped the Australian Competition and Consumer Commission would be paying close attention to the growing complexity of processor pricing announcements.
“The ACCC has consistently highlighted the importance of transparency, informed decision-making and reducing information asymmetry in markets. Those principles should apply equally to dairy farmers.”
VFF UDV president Bernie Free delivered a warning about payments and bonuses outside the milk supply agreement.
“Seasonal support payments are welcome, particularly at a time when dairy farmers are facing significant cost pressures, but farmers should be careful not to let those payments distract from the fundamental decision they are making about who they will supply milk to for the season ahead,” he said.
“While seasonal support payments may provide additional income, they do not offer the same certainty or regulatory protections as a minimum milk price contained within a milk supply agreement.
“The starting point for any comparison should be the milk supply agreement. Farmers need to understand the minimum milk price being offered, examine the income estimates closely, and understand exactly what is driving those estimates.
“If processors believe current market conditions and ongoing cost pressures justify higher returns to farmers, there is a strong argument that those returns should be incorporated into the milk price rather than delivered through separate arrangements outside the Code.”
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