Friday, March 29, 2024

Farm sale ‘won’t push up prices’

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Dairy industry leaders in Australia have poured scorn on claims the sale of Australia’s largest dairy farm from New Zealand to Chinese interests will push up prices of milk and cheese. Labelling those suggestions as “silly scaremongering” and “farcical”, industry leaders said the Van Diemen’s Land Company (VDL) in Tasmania, while big, produced 100 million litres of a total national milk pool of about 9 billion litres.
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Independent MP Andrew Wilkie was quoted as saying the deal to sell VDL to China’s Moon Lake Investments had created supply and price uncertainty and he feared the prices of milk and tasty cheese could slip further away without further government intervention.

Federal Treasurer Scott Morrison approved the sale of the VDL to Moon Lake Investments. VDL was owned by the New Plymouth District Council.

Tasmanian Farmers and Graziers Association Dairy Council chairman Andrew Lester said the suggestion the VDL sale would push up prices of dairy products “was just not even reality”.

“Anyone involved in the industry knows that it is not going to be the case. It is scaremongering on Mr Wilkie’s part,” he said.

“In a fairytale it would be nice for an Australian company to buy VDL but it has never been owned by an Australian company so the sale is nothing much different.”

Lester said Moon Lake Investments had committed to processing milk in Tasmania.

That would create job and the upgrade of the property would bring money flowing into the state.

Tasmania had about 440 dairy farmers and this season the state would produce about 900m litres of milk.

That production was down on expectations of almost a billion litres of milk because of dry seasonal conditions.

There were a number of dairy processors operating in Tasmania alongside Fonterra Australia, the processor supplied by VDL. The others included Murray Goulburn, which also had Tasmanian Dairy Products, plus Lion and Cadbury.

Lester said there was “no urgency for another processor to come on board” as the state had excess processing facilities.

In Victoria, any concerns the sale would affect pricing of cheese and milk were squashed.

“No definitely not,” United Dairyfarmers of Victoria president Adam Jenkins said.

“It was already foreign owned by the New Plymouth Council from New Zealand.

“It is only 100 million litres. In terms of Australia, it is a small amount of the whole equation.”

“In a fairytale it would be nice for an Australian company to buy VDL but it has never been owned by an Australian company so the sale is nothing much different.”

Andrew Lester

Tasmanian Farmers and Graziers Assn

Jenkins said the dairy industry welcomed foreign investment and Moon had indicated it would invest in the company, which employed 140 people.

“It signals a lot of upside, rather than downside,” he said.

Fonterra produced butter, powders and cheese in Tasmania and collected about 1.8b litres of milk in Australia. It also produced nutritionals, cream, milk and powders in Victoria and was rebuilding its cheese plant at Stanhope after a fire.

Jenkins said if Fonterra did lose the 100m litres from VDL it would “definitely have an impact” on processing facilities but that was the nature of the free market.

But in the current economic conditions it would be more cost-effective to supply Australia’s existing dairy processors than Moon Lake building its own plant.

If economic conditions changed and it was cost-effective for Moon Lake to build its own plant then the rest of the dairy industry would be reaping the rewards from an improvement in dairy trading conditions.

A Fonterra spokeswoman said it had a “long, positive and long-standing relationship with VDL and we look forward to it continuing with the new owner”.

She said half of the products made by Fonterra in Australia were destined for the food-service market, with the remaining half made into ingredients for the export and domestic markets.

“A range of factors are considered when pricing our products for sale, including global commodity prices and the cost of production,” she said.

“Fonterra is firmly committed to Australian dairy.

“In recent years we’ve made a number of investments that have grown Australian jobs, including a $6.5m boost of our cheese production capability at Wynyard and the construction of a $31m fresh milk plant at Cobden and most recently a $120m investment to build a state-of-the-art cheese plant at Stanhope.”

www.weeklytimesnow.com.au

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