Thousands of dairy farmers across southern Australia are facing huge debts and have question marks hanging over their businesses after Murray Goulburn and Fonterra slashed milk prices in April.

Labor stands with these farmers and their communities.

We have already indicated Labor will support the Turnbull Government's proposed relief package, which includes access to concessional loans and financial counselling, but more needs to be done.

The suddenness with which these farmers had their profitability pulled out from under them should also prompt a rethink about the protections available to small agricultural producers doing business with huge firms.

We must ensure a crisis like this does not happen again.

The Government should join Labor in committing to review the use of 'claw-back' provisions in agricultural commodity contracts and how limiting or restricting their use could improve price transparency for farmers.

The dairy farmers affected by the current crisis have been caught out by contact provisions that had rarely been exercised in the past, and which few realised could lead to them being saddled with hundreds of thousands of dollars in debt.

Australian farmers producing other agricultural commodities are also potentially exposed by the use of these provisions, which shift the cost of dealing with sudden price falls from huge entities to individual family farms.

Their use should be reviewed with a view to getting a better balance of protections for producers and growers.

The Agriculture Minister has also been strikingly silent on my call for the Murray Goulburn Board to invoke its ability to adjust its profit sharing arrangements.

Murray Goulburn's directors have the ability to vary the profit split between investors and the farmers who supply to the firm "in certain abnormal circumstances".

Earlier this week I called on the Board to exercise this right, suspend returns for unit holders and pay farming families more for their milk. This would give instant cash relief to farmers right now.

I again call on Murray Goulburn's directors to do the right thing, and urge Barnaby Joyce to do likewise.

FRIDAY, 27 MAY 2016

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  • David Williams
    commented 2016-05-28 17:33:24 +1000
    There are two levers open to the MG board to put the milk price back up. 1. Alter how much goes to outside equity holders and pay that in milk price, and 2. Reduce the forecast $40m profit and pay that in milk price. To do otherwise will drive some farmers financial ruin which can easily be avoided.