What needs to change?
What needs to change?
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Collective bargaining, in the first instance, is not the answer here. It will destroy the industry. It’s just the complicated response we have taken to a simple problem, being milk pricing and an inefficient and high cost-processing sector, whose product mix does not suit the milk supply curve they have pushed farmers into. The processors do not have the price premium to pay for it so they put that on to farmers to shoulder. That has to stop, but collective bargaining is not the answer to this. It should only be the last resort.

Going down this path will just make life more complicated and add costs to what is already a flawed process and pricing structure that farmers will bear the costs of. All the money for this is coming from the one milk pool. We would just be pitting farmer against farmer. It will turn out to be an arms race that cannot be won. It’s a race to the bottom.

The other part of this equation regarding collective bargaining is the stability of these groups, because, if it’s good for one group of farmers then it will be seen as good for all and the fear of missing out will amplify their uptake without much regard for their long term benefit or costs. How stable will these be regarding membership is also in question. This, if left uncontrolled will have a worse outcomes than the complicated pricing structures that now plague the industry.

The other major issue is, will these collective bargaining agreements be commercial in confidence with regard to the milk price negotiated by the group? Will no one now know what each group has negotiated regarding price and conditions? Within the one processor they could now have multiple agreements with multiple bargaining groups. This will do nothing for the industry regarding fairness and equity of milk pricing. It will be a huge step backwards. As all the money for negotiating these milk pricing arrangements come out of the one milk pool related to that particular processor or processors, if they supply to multiple processors, each processor will be cross subsidizing the other processor to some extent. This whole process is fraught with danger and could destroy the industry. It may work if only a few percent of the total number of farmers head down this path but once this becomes mainstream and standard practice it is unsustainable.

This then leads to the next logical step in this process. This then leads to the logical end point, that we should look at an all encompassing collective bargaining arrangement for the whole southern milk pool similar to the French model, namely a milk supply co-op. But it has to also take into account what has happened in the liquid milk states or what’s left of them, because their needs are not quite the same as what we require in the south but we need to work with them, help them and not forget them as we have for far too long. An emphasis on being selfish to achieve the cost of production plus a 15/20/25 /50 /75% margin for profit. Take your pick.

If this industry is to survive, no one’s milk is worth more than the next person’s milk, no matter how big or small they are, just because your ego says you want more money for your milk because in some way you are more special and deserve more or are more deserving than the next dairy farmer. It will kill the industry very quickly if these games continue. So the processors will just keep pandering to these egos and split and confuse the industry in the game they play of pinching each other’s milk, rather than doing what’s necessary to grow the industry or make it more profitable long term, for both farmers and processors?

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5 months ago · 0 votes · 0 comments
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