BCCM Says Fonterra Sale Another Blow For Australian Dairy Farmers

By Melina Morrison

“The announcement by Fonterra that it intends to sell its Australian dairy processing assets is yet another blow to dairy farmers and a reminder about the precarious nature of our food security when staples like milk are passed around like commodities. This move, if it results in greater concentration of ownership of Australian dairy assets, will impact not only farmers but also consumers at the supermarket checkout.

The story of consolidation of Australian dairy assets is a sorry tale. As big business interests have come to dominate Australian dairy, we have lost most domestic control and influence over a staple product essential to Australian consumers. Australian farmers are bystanders as our former great commodity businesses are traded between other owners.

What we have seen instead is a concentration of milk processing, including into the hands of retailers after the regulatory green light was given to Coles’ purchase of processing plants from Saputo. The danger now is that we could see more and more dairy farmers potentially squeezed out of the market because of pressure on farm gate prices, driven by the need to satisfy shareholder returns rather than promote the sustainability of those producing our milk.

"A better prospect to preserve this vital industry is for primary producers to be more involved in the value chain to make dairy production a success and to make it profitable to farm. Co-operatives are the only way, in a largely deregulated and export-oriented industry like Australia’s, that dairy farmers can achieve a measure of bargaining power."

The irony of Fonterra’s decision based on the desire to grow further value for its farmer stakeholders, is that those farmers are in New Zealand not here.

Only Norco, the last remaining advanced dairy processor and co-operatively owned by Australian dairy families, remains to hold the line for Aussie farmer interests.

There is a public policy imperative to understand ownership and maintain domestic sovereignty over food supplies.

Only Australian co-ops can guarantee this.”

About the Author:

Chief Executive of the Business Council of Co-operatives and Mutuals (BCCM)

About BCCM: 

The Business Council of Co-operatives and Mutuals (BCCM) is the national industry peak body and the voice for Australia’s co-operative, mutual and member-owned enterprises.

It is a member funded and driven organisation representing co-operatives and mutuals across all industries. The Council’s more than 120 members represent over 11 million members including 60,000 businesses combined. Co-ops and mutuals provide essential services and affordable pricing to their members across the economy from banking, insurance and superannuation to retail, agriculture, health, social care and housing. One in eight Australians are members of a co-op or mutual.

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