While this announcement is good news for suppliers of the big co-operative it will also be good news to suppliers of all the other processors. Most match Fonterra at the end of the season, there or there abouts, so when the big dog barks the others tend to listen. They might not be happy about it though.
Submissions to the Dairy Industry Restructuring Act have made for interesting reading. Last week we reported Synlait was unhappy with how the milk price is calculated. It thinks Fonterra moved about 50c from one pot to another to boost returns to farmers.
This week we have Westland making a similar complaint. In its submission Westland said the transparency of the calculation of the milk price needs improvement to appear less manipulated.
These processors could probably argue all night long about how to calculate the milk price but maybe that’s all that is needed – more transparency so everyone knows where they stand.
Of course, in this age of increasing competition for milk one can’t imagine a processor wanting to screw down the price paid to farmers too much.
What we are seeing is the base price bolstered by incentives such as Symlait’s Lead with Pride programme that rewards good farmers. That’s the future for all dairy farmers, surely.
In a world where the spotlight is on environmental management and good animal welfare, simply saying you’re working to improve isn’t good enough anymore.
If a farmer sees more money in the pocket of a neighbour who works sustainably better, though, things might just change rather more quickly.
Bryan Gibson
