Dairy farmers fear pay dispute could cost them $3 million as milk processor tries to drop prices
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A group of Queensland and New South Wales dairy farmers fear they could lose up to $3 million if a major milk processor drops the price it pays to farmers.
Gympie farmer John Cochrane is representing 193 dairy farmers currently in arbitration with their processor, Parmalat.
Parmalat, which produces the brand Pauls, was not able to reach a pay agreement with its suppliers from the collective bargaining group Premium before the 2016 contract ended on December 31st.
"There is a lot of farmers just hanging on the edge now and a price drop will put them out of business," Mr Cochrane said.
"If they get the full drop it will be a loss of over $3 million to the group of farmers who supply them."
Mr Cochrane said Parmalat wanted to drop the price it paid to farmers by 1.5 cents per litre of fresh milk.
"The price right now for farmers is varied based on quality and volume, but it is around the mid-50 cents a litre mark," he said.
"Parmalat want to drop that in excess of 1.5 cents per litre."
Mr Cochrane said he was worried that if Parmalat succeeded in lowering the price, other milk processors could follow suit.
"Without question, you always watch your competitor and that as what Parmalat is doing," he said.
"I am very concerned that this negotiation could have a rippling effect across the other processors.
"They will be asking 'can we gouge the farmers for a bit more do to add to our bottom line?'"
ABC Rural has contacted Parmalat for a response.
Queensland farmers protected from global dairy crises
Majority of the 193 farmers in the group come from Queensland, including the Western Downs, Southern Downs, Northern Downs and through to Burnett Region.
There is another cluster around Central Queensland, and 12 in northern New South Wales.
Mr Cochrane said he still did not think the current price drop Parmalat wants is fair, but he would settle for it to remain the same.
"All farmers need an increase in price, however at this point we are asking Parmalat to hold the price they are paying," he said.
"You need to compare with other processors in the area, such as Dairy Farmers, Lion and Norco, and we think we are competitive with the price we have now.
"We don't think the prices the other processors pay warrant a price drop so we need someone independent to adjudicate this."
Mr Cochrane admitted Parmalat had a good history of paying farmers fairly.
"Parmalat has paid a higher price in general for as long as a I can remember, but right now they are saying the price they are paying is too high and they need to reduce it to be competitive."
Many Australian dairy farmers took financial hits last year following a drop in the global dairy price.
This was particularly evident in Victoria when Murray Goulburn and Fonterra made retrospective cuts to the price they pay to farmers, and asked dairy farmers to pay pack the difference.
However, Mr Cochrane said because Queensland farmers supply the domestic market they were largely immune to global price fluctuations.
"The Victorian price bounces around and works off the world market, if people want consistent quality in [retail] price they need to look after Queensland farmers."
Mr Cochrane said there were two different milk industries in Australia, one focussing on international markets and the other relying on domestic fresh milk consumption.
"Here in Queensland everyone drinks the same amount of milk on a daily basis so we need to supply consistently."
The group of dairy farmers expect the pay dispute to be resolved by March.
Topics: livestock, dairy-production, rural, business-economics-and-finance, industrial-relations, agribusiness, agricultural-prices, brisbane-4000, maroochydore-4558, lismore-2480, toowoomba-4350, bundaberg-4670
