UPDATED 4:40pm
Dollar a litre house-branded milk is not responsible for the dairy crisis in Victoria and the shockwaves it is sending through the Australian industry.
That’s the message from NSW-based Bega Cheese’s executive chairman Barry Irvin, who puts the blame for the plight of dairy co-operative Murray Goulburn’s farmers squarely on the shoulders of the company’s leaders.
“Cheap milk isn’t the issue,” Mr Irvin told this week’s Agribusiness Outlook conference in Sydney.
“It’s a distraction to blame Coles and Woolworths.
“It’s the fault of the people who offered them (processed milk at) those prices.”
Mr Irvin said it was “very sad” to see the negative media coverage of the dairy industry, but stressed Murray Goulburn’s leaders should be made accountable for their decisions.
“It’s very sad to see the stories in the press at the moment. But they have to be told,” he said.
“People will make errors, but they have to be held to account or the situation will repeat.”
Mr Irvin said Murray Goulburn (MG) faced a difficult task to rebuild their brand.
“(MG’s directors) put all the pain of their risk management onto farmers (and) farmers don’t forget broken trusts very easily, if at all”.
Publicly-listed Bega - a former farmer co-operative like MG - produces cheese and milk powder products.
Mr Irvin said his company had focused on demand driven markets and maintained farmer returns despite the milk price used in cheese returning as little as 70 cents per litre.
“Fresh milk is a small part of what happens to Australian dairy production,” he said.
But the drop in Murray Goulburn and Fonterra’s milk price risked “another big New Zealand cooperative following them down”.
Mr Irvin said popular calls for a levy on fresh milk to support farmers were misguided.
The best way to help farmers was for consumers to back enterprises with sustainable business models, he said.
“The market should support businesses that support their supply chain.”
Peak lobbyist Australian Dairy Farmers said it supports the goodwill motivating people who called for a reversal of major processors decisions.
“Damage was done when a major processor stepped down their price in 2009 and then reversed the decision,” ADF said in a statement.
“We want fairness to prevail. Processors must address the unfairness of their actions. The recent step downs never should have occurred.
“ADF is doing everything possible right now to make sure dairy farmers are never put in this position again.
“This includes working in particular with processors, as well as the ACCC, ASIC and federal government to address unfair contracts, improve supply chain transparency and better balance the risk between retailer, processor and supplier.”
