What needs to change?
What needs to change?
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One thing that strikes me as a pox on this industry is the way the production payment system is skewed toward the very top end of the tree, which in reality, constitutes a subsidy from the bottom to the top.

Let me illustrate with the following hypothetical situation:
Farmer Joe Blow P/L is a corporate, and has bought up 6 farms of average production each of 200,000 kg MS, making a million KG MS when combined, with production payment bonus of

Now consider the case of ten farmers, each owning separate farms but with average production of 100,000 kg MS per farm, for a combined production of 1m KG MS.

There can be in some instances as much as 70 cents per kg MS difference in the milk prices paid. (In my example, that's $700,000, or $70k per individual farmer). This practise has no basis in fairness, in cost of servicing or milk collection, or indeed commonsense...it is all about coercing the big guns to commit large volumes of milk to one processor or another, but that could easily be achieved among like minded individuals in many cases also. So why don't the ten 100k MS farmers get together to achieve the same result you ask? Because this bonus is only available where the milk is sent through a single ABN as things stand at the present, and of course that ensures only the biggest guns in the industry, and especially those with multiple farms, can benefit from it. It's just plain wrong!

Further to my point, the economics are just not sustainable....in future, when 80% of the farms are owned, and by say 100 corporate or large private entities, how will this bonus be funded? The pool of milk (and funds earnt from product made) isn't a magic pudding as far as I know.

And if you'll bear with me just a little more, consider this: If all the small to medium farmers, plus all those who although larger are basically unprofitable at this particular moment in time, (be that through their own lack of skill or effort, or indeed something more related to climate/stage of investment cycle etc), packed it in and culled their cows, how would the remainder fare, given that perhaps 50% of the milk pool disappeared?? I imagine the processors would be in some very serious trouble indeed, and the carnage would be manifest...who knows?

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4 months ago · 0 votes · 0 comments
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