Milk

[tryagain]

Instead of sidetracking a different thread I thought I'd start a new one about the about the latest social media hype surrounding the Dairy milk industry and post this video. It's from a few years ago but from my point of view is still very relevant. There is a lot of good sentiment towards dairy farmers that from what I can tell isn't really being directed in the right direction.

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[raider]

Exactly !  When this latest incident happened I heard a dairy farmer say they needed us to drink more milk not neccesarily the dearer stuff.

[glenm64]

I just dont understand how a bottle of water (which is basicly free) costs more than milk.
Wouldnt it be easier to just put a 50c/litre levy on it that goes directly back to farmers, so its out of the grubby corporate hands.
Then it is seperate to world prices bla bla bla.
Maybe Im just a simplton .

Cheers Glen

[McGirr]

This thread is going to be interesting.

First thing is we dont import cows. They are all Australian.

All the milk is from dairy farmers.

Yes some big companies own these dairy farms.

Yes woolies and coles buy their milk from dairy farmers. They then sell them under their own brands at a cheaper price. I have no issue with this. Its called marketing.

Yes there are other brands of milk people can buy.

Everyone one can choose what brand of milk they want.

We can put this scenario to alot more products also.

Mark

[baggs71]

My mate and a few friends all own dairy farms....its tricky..not sure if I should portray their views.we can all watch videos of facts and non facts etc.....but the farmers all agree....buy brand name milk...nuff said

[tryagain]

My mate and a few friends all own dairy farms....its tricky..not sure if I should portray their views.we can all watch videos of facts and non facts etc.....but the farmers all agree....buy brand name milk...nuff said

I would like you to portray their views, there is always two sides to the story and I rather have the full picture if there is something I am missing. I have no doubt they would rather people pay more for milk, I can't think of an industry that wouldn't like people to pay more for their products.
What I don't get is why people think buying brand name milk helps farmers in the short term (which is what the current issue is), the ones who benefit from this, are Colesworth and big OS owned milk producers, the very same companies they blame for screwing over the farmers. Norco and other smaller dairy farmers cooperatives are the ones who haven't slashed prices paid to the farmers, so correct me if I am wrong but as Coles (not sure about woolies) actually buy the $1/L milk here in SEQ from Norco, farmers are actually getting more $/L from the Coles branded milk than from the big OS owned brand names at the moment. 

[Zooks4life]

Coles mostly buys its milk from murray goulbourn in vic. What coles buys is 3% of what mg produce. It mostly all goes overseas

[baggs71]

Unfortunately they do not want their views expressed....its their belief that nothing they say will be helpful as the problem is bigger and deeper than a quick fix...i buy local coop milk...

[jclures]

Do any of you remember the old milko? you know the bloke that used to deliver your milk to your door. 
I do, I was one, and to hear dairy farmers whinging I find amusing. I remember attending meetings having dairy farmers telling us the sooner they got rid of milkmen the better it would be, as they thought we made to much profit from their milk. Telling us all we needed was a pair of sand shoes and then made the profit.

Well guess what they got there way, and got rid of us in Qld, snigger snigger, guess what the big supermarkets then had no competition, they now can pay the farmer what they like.

[fergy]

Haha there's more than two sides to this story

[Garfish]

What I found Most interesting was the social media posts saying buy devondale, etc. who are Murray Goulburn. It was MG who did the dirt act of backdating milk price reductions. It wasn't Coles or Woolies who backdated the price cut, it was Murray Goulburn who are still largely a coop, with some listed shares. 
Don't get me wrong it was a dog act to effectively backdate the price cut.

So social media says to support the company who cut the farmers price?  Doesn't make sense.
Just  Buy more milk , I'll have to start drinking baileys?

[Burnsy]

I am an educator working in Agriculture education and as far as I am concerned milk is just the tip of the iceberg. The mining boom is over, the government wants you all to believe that we are to have the innovation boom next and that's where it's at. Tell me what is Damo the dump truck driver who got laid off from his $140000 a year FIFO job, or me for that matter is going to add to the innovation boom? We live in a global economy and as far as I am concerned as a nation we are so far behind the eight ball suggesting that we are going to be the world leaders in innovation and it will provide employment for the masses is just ridiculous. We can't even manufacture anything let alone be innovators.  Anyone with half a brain can see the next boom is going to be in primary production, why do you think China is pushing so hard to buy Australian land? If we don't start valuing our agricultural producers and the land they work from, our children are screwed. Australia has the ability to be a major player in world food production over the next century but if we don't wake up and pull our fingers out the boom will happen our land will be used and we won't own one part of it. It seems most people are to short sighted and lazy to make the sort of concerted long term effort that is required to stop this happening but we are apparently smart enough to be innovators!! Start valuing our farmers by purchasing locally produced goods from locally owned stores. Without increasing farm door profits, no farmer can be expected to keep their gates open, employ more workers and purchase the equipment and technology that they are going to need to be world leaders.

[glenm64]

I am an educator working in Agriculture education and as far as I am concerned milk is just the tip of the iceberg. The mining boom is over, the government wants you all to believe that we are to have the innovation boom next and that's where it's at. Tell me what is Damo the dump truck driver who got laid off from his $140000 a year FIFO job, or me for that matter is going to add to the innovation boom? We live in a global economy and as far as I am concerned as a nation we are so far behind the eight ball suggesting that we are going to be the world leaders in innovation and it will provide employment for the masses is just ridiculous. We can't even manufacture anything let alone be innovators.  Anyone with half a brain can see the next boom is going to be in primary production, why do you think China is pushing so hard to buy Australian land? If we don't start valuing our agricultural producers and the land they work from, our children are screwed. Australia has the ability to be a major player in world food production over the next century but if we don't wake up and pull our fingers out the boom will happen our land will be used and we won't own one part of it. It seems most people are to short sighted and lazy to make the sort of concerted long term effort that is required to stop this happening but we are apparently smart enough to be innovators!! Start valuing our farmers by purchasing locally produced goods from locally owned stores. Without increasing farm door profits, no farmer can be expected to keep their gates open, employ more workers and purchase the equipment and technology that they are going to need to be world leaders.

I see a flaw in your argument.
Only an incompetent, greedy or corrupt government would allow a foreign nation to buy into their sovereign land.
Oh ....
Wait a minute.

[Burnsy]

Call me a pessimist Glenn but I can only see one reason China would want a 90 year lease on Darwin Harbour. Where is all the water and land in Australia and what do you need to grow food

[alnjan]

In a nutshell, unfortunately all farming industries have a price set by the market unlike the manufacturing industry that sets a price on the cost of production.  The market is driven by a lot of different factors, profit being one of them and they don't really care if the price they give the farmer covers his production costs or not. 
Just like contractors and trades set a price that covers their cost when they give a quote, I could imagine what would happen if the end client so no I am not going to pay that hourly figure I am only going to pay you half as much the job would not get done.  The farming industry at present has no leg to stand on and still have no chance of meeting their expenses. 

http://www.abc.net.au/btn/story/s4464750.htm

[McTavish]

So much 'noise' around this issue.   Would be great to see a flow chart of who get's what.

Farmer $X
Factory $x
Distributors$x
Retailers $x
Total price at the counter = $x

Then you get to see who's doing who?

Most industries have pricing norms to work on.    Where is this in the dairy industry?

[Nomad]

Thats actually a pretty hard question to answer (based on a couple of quick google searches)but we can start to fill the gaps.
.........Will redo this tomorrow need to rethink my calculations

[doc evil]

There's always 3 sides to any story....
Side A
Side B
and the truth......
unfortunately, we probably never hear the truth!!!!

[tk421]

Drinking more milk won't cut it. Most milk is actually turned into other products - cheese, milk powder etc.

I have friends who own one of the largest dairy herds in Southern Africa so this is my quick overview of a very complex issue based on their input (acutally its simple supply and demand)- It is not a Coles or Woolies thing. Milk prices worldwide are low (it's not just milk, but all dairy products incl. milk powders).
US farmers are selling at less than cost of production (they're getting US$18 per hundred pounds (9 gallons) - it costs them US$20 per hundred pounds to make). UK farmers were warned back in January that prices would fall, but MG and Fronterra totally failed to estimate the global markets and kept the prices they pay Aussie farmers artificially high for 6 months hoping demand would pick up again. Those farmers have been overpaid because MG and Fronterra misjudged the market. Peversley that over payment made increasing supply in Australia more attractive so production increased. Fronterra is a NZ co-op by they way.  Aussie and NZ farmers have wanted access to world markets for years. Well this is the reality of competing on the world market.

This oversupply has been caused by lots of things:

• Milk quotas in Europe have been stopped, that's an extra 9.5 billion litres of milk now on the global market.
• European stocks had been depleted based on Russian and Chinese demands - so demand outpaced supply and prices went up over the last few years.  Europe has since ramped up production chasing that higher price. BUT....
• Russia has stopped buying European milk in protest at sanctions for Ukraine, reducing demand. That European milk that went to Russia is now being sold in other markets driving down prices. At the same time Eastern European producers are selling at extremely low prices and increasing production as they modernise - which Russia is buying.
• Demand in China has dropped.
• Feed prices in the US have dropped making their milk cheaper (fracking has increased oil production so corn that went into biofuels is now being sold as animal feed - feed prices have dropped by about US$11 per 100kg milk  or 1/3) making marginal cost of production lower. Current estimates are that 75% of every new tonne of production across the USA is expected to be sold on the global surplus market.
• Chinese investment in Australian dairies has actually increased supply making prices fall as well

[Pog]

Well summed up.

Whilst the situation is not good for many producers, dairy is not the only industry affected in this way.

Meanwhile, the Facebook sheep jump on a band wagon and go off 1/2 cocked and achieve nothing, but they get to feel good about it.

[Paddler Ed]

One more thing that has been discussed in the press, and may not be the best idea ever, is the introduction of a floor price. This was done for a long time with Wool, and led to a massive oversupply to the Australian market, a large increase in the size of the national herd and a big bill that the Aussie Government ended up footing... and wool priced at about 200% of the market price... Some articles on it for you:
-ABS 2003 Year Book (a long read, but detailed)
-ABC Landline; the pitfalls of the end of a Price Support scheme from 2010
Now the wool scheme ran from 1972 until 1991 and resulted in a massive stockpile of wool; that was all paid for above market price, and then ended up being sold at a knockdown price... at a cost to the Australian government.

An interesting read on the history of the Australian dairy industry from the ABS's 2004 Year Book

Some more links to read:
http://www.dairyaustralia.com.au/Markets-and-statistics/Prices/Farmgate-Prices.aspx
Another ABARES report from http://www.agriculture.gov.au/ag-farm-food/food/publications/foodmap-a-comparative-analysis; the Dairy section is of particular interest obviously.

If people want to read more I'd recommend the following search words:
-Value chain (this tends to look more at where value is added at each stage, and what the barriers and enablers are)
-Supply chain (more basic - what goes from where to where)
I also tended to add ABARES or ABS to get decent results

[oldmate]

The real winners, and mainly since Internet and forums have started are popcorn supplies. Man they must be rolling in it. I do like mine buttered

[tryagain]

so this is my quick overview of a very complex issue

pretty well sums up what I had read and my understanding of the situation.

Meanwhile, the Facebook sheep jump on a band wagon and go off 1/2 cocked and achieve nothing, but they get to feel good about it.

As annoying as I always find this, the thing that has bewildered me the most is the media in general singing from the same songsheet on this, which lead me to post in the first place.

[jayjay]

Interesting that it is only MG & Fonterra that have dropped their prices- given that this is a global issue, one wonders how long before other milk processers will follow...........

And totally agree re the foreign investment issue- how shortsighted it is to be literally selling the farm- so much rural land in Aust is already in foreign hands- paying a far higher price than any local aspiring farmer could........

[tryagain]

Interesting that it is only MG & Fonterra that have dropped their prices- given that this is a global issue, one wonders how long before other milk processors will follow...........

I'm pretty sure this is because they are the main exporters and therefore exposed to international price fluctuations. I think (not sure) that a lot of domestic supply prices would be set in supply contracts and therefore in the short term at least not be affected.