At the Senate hearing into the dairy industry in Melbourne today, MG chairman Philip Tracy said similar price crashes to that which had devastated the Australian milk market in April could occur again.
Responding to questioning by Senator Janet Rice, Mr Tracy said there had been much volatility in dairy markets recent years and that would continue.
“There will (be similar price crashes),” he said.
“It’s volatile, both in commodity markets and the risk associated with some of these growing lucrative markets.
“You can’t remove all that volatility.
“That is why we said at our AGM (annual general meeting) in October, it is time to review our milk price mechanism.
“Traditionally paying 90 per cent of our forecast (milk price) has been achievable in all but three years in the past 65.
“And there have been two situations in the past eight years where we have set an opening price and we weren’t able to hold that opening price.
“So that pricing mechanism needs reviewing.”
MG told the hearing the co-operative paid 90-92 per cent of the forecast final milk price at the beginning of the season.
“The review will determine whether this approach remains fit for purpose amid ongoing
volatility in commodity markets,” Mr Tracy said.
“We also support working closely with other industry bodies to ensure milk price transparency and the proposed introduction of an Australian commodity milk price index.”
Earlier, Western District dairy farmer Karrinjeet Singh-Mahil told the hearing the industry had organisations capable of overseeing milk pricing and ensuring more transparency — the United Dairyfarmers of Victoria and Australian Dairy Farmers.
But Ms Singh-Mahil said more power needed to be handed to them to carry out those roles.
She also took a swipe at Fonterra in following MG’s price forecast at the start of the season.
She said Fonterra didn’t have to follow MG’s price.
Ms Singh-Mahil said dairy farmers would have changed their business management if the price falls were foreshadowed earlier.
“We would have changed our management,” she told the hearing.
“We wouldn’t have carried so many cows.
“We carried the can for their (dairy companies’) bad management.”
Source: WeeklyTimes
Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/murray-goulburn-chairman-appears-before-senate-inquiry/news-story/3b690b77f2a2e708f2c3598515f29f06