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Supply and demand issue for dairy

milk

Consultations between the dairy industry and the Western Australian Minister for Agriculture have taken place, following the rejection of a proposal by Harvey Fresh suppliers which would keep three producers in contract.

WAFarmers Dairy Section President Michael Partridge, who met with Western Australian Minister Alannah MacTiernan as part of her series of meetings, said the problem was simple, but the solution was not.

“We, as well as the WA Minister, understand there is a need to balance supply and demand, and doing that by terminating contracts is not the right way,” Mr Partridge said.

“Processors have the ability to balance the state of play by communicating effectively and working through the issue with their supply base, so contracts must be handled fairly and equitably to ensure a sustainable and profitable future for the industry.

“Contract terminations cause damage to the company’s reputation, and to the industry’s reputation as a whole, and will discourage future investment, and young people getting involved on our industry.

“Not only do we experience difficulties in balancing the annual spring flush of milk, but we are an isolated state and this makes balancing the market that much more difficult.”

Mr Partridge said the industry had to decide whether to grow or shrink.

“We have two options – we either shrink down to a flat supply curve which requires different management practices and cost structures to deliver to the market exactly what it requires, or we grow so we always meet domestic demand but require processing infrastructure so that supply can be put into export products,” he said.

“If possible, we need government assistance to help us work through these issues, and to help us come to a resolution which will safeguard the future of Western Australia’s dairy industry and associated supply contracts for the foreseeable future.

“We encourage Parmalat to work through this with their supply base and we will assist in any way we can to ensure there are no more forced exits from the industry.”

Mr Partridge said the Western Australian Minister was sympathetic to the situation and had regularly expressed her concerns about the current state of the industry during her consultations with dairy farmers and other stakeholders.

“We greatly appreciated the time that Western Australian Minister MacTiernan took to listen to suppliers and industry, and look forward to further engagement on the issues facing WA dairy,” he said.

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