The United Dairyfarmers of Victoria has welcomed Bega’s trialing of a simplified milk payment system for suppliers and is urging more processors to consider similar initiatives.
The trial will give Bega suppliers the option of being paid one price for nine months of the year and another price for the spring months, starting in the southwest.
While the step is welcomed, UDV will be seeking more precise details from Bega on its plans for the rollout as well as updates as the initiative progresses.
Nevertheless, UDV President Adam Jenkins said the trial was a long-awaited step forward and the result of significant advocacy efforts from the state’s dairy farmers.
“UDV has been calling for a simplified spring differential and removal of the linkage of months to allow farmers to manage their own feed regimes for some time,” said Mr Jenkins.
“It will result in more milk being produced at lower cost which is good for processors and farmers.”
Mr Jenkins said the move would encourage farmers to produce milk when it best suited their farm and natural resources, rather than taking risks and chasing milk prices. UDV is urging other processors to trial or adopt similar systems.
“We understand farmers have different businesses set up around different pricing structures, but we need a payment system option that allows us to maximise our comparative advantage by encouraging farmers to produce milk efficiently and at times which suit their natural resource levels, all while acknowledging processors’ needs,” said Mr Jenkins.
“This is particularly important given the significant challenges posed by drought and extreme dry conditions, including high feed prices, which many dairy farmers are facing around the state.
“The Bega trial demonstrates that simple payment systems are possible.
“UDV calls on all processors to trial this realistic spring differential, as well as median milk price reporting to help farmers understand how far they are from the weighted average. Productivity bonuses should also be capped to ensure new/young farmers trying to establish themselves in the industry are getting paid a fair price.”