Fonterra commits to fund Dairy Australia: Farmers applaud Kiwi giant

Farmers want major milk processors to contribute $5m to Dairy Australia, and the Kiwis are first off the board. See what the other processors would pay.

Sharing the load: Fonterra is the first processor to step up with an offer to fund Dairy Australia. Farmers hope others will follow.

Dairy farmers have applauded trans-Tasman dairy giant Fonterra’s commitment to pay a “proportionate financial contribution” to Australia’s research and development corporation – Dairy Australia

Australian Dairy Farmers president Rick Gladigau said Fonterra’s commitment “was a very positive step” and it “is a fantastic and timely example for all dairy processors to consider”.

Federal Agriculture Minister David Littleproud said “if the dairy industry is unified about wanting a processor levy, I am prepared to work with the industry to explore the options.”

Labor agriculture spokeswoman and Tasmanian MP Julie Collins failed to respond.

Fonterra Australia managing director René Dedoncker said “we support the notion of processors making meaningful contributions – both financial and time – to ensure that Dairy Australia has the resources it needs to address the industry’s priority areas, and we commit to making proportionate financial contributions.

Long time coming: Fonterra has agreed to contribute to Dairy Australia.

“This is not a once-off, short-term contribution. As a major processor, we are committed to setting up a long-term co-investment arrangement which needs consultation and alignment.”

Farmers, who contribute $31m in levies on their milk to DA each year, have been appealing to processors for months to chip in about $5m to cover half the R&D body’s post farmgate work in promotion, manufacturing research and market access.

Fonterra Australia’s share of that $5m would equate to about $900,000, based on it bringing in 1.4 billion litres this season as part of the 8.8 billion-litre national milk pool.

On that same basis Saputo would contribute $1.27m, Bega Cheese $970,000, Lactalis about $450,000, Bulla $340,000, while Burra and ACM each chipped in about $230,000, plus $130,000 from NORCO, leaving about $470,000 to be recovered from smaller players.

Neither Bega Cheese nor Canadian giant Saputo responded to repeated calls, texts and emails on whether they supported making a direct contribution to DA, via a mandatory processor levy.

Mr Dedoncker said Fonterra preferred a voluntary levy, but said “it’s too early to say what our financial contribution will be, as the next step is to work with Dairy Australia to align on priorities for co-investment, while making sure appropriate governance and accountabilities are in place to transparently report the benefits of our contribution”.

Fonterra’s commitment follows last week’s announcement of the Dairy Levy Poll results, in which an overwhelming majority of farmers voted to oppose any increase in their levy payments to DA.

As the nation’s peak dairy lobby group ADF called on its 5000 farmers to oppose an increase, given processors ongoing failure to contribute.

Yet as things stand dairy processors contribute virtually nothing to Dairy Australia, but are granted a seat on its board and its selection committee, are listed as Group B shareholders and were even represented on the advisory committee that recommended lifting farmers’ DA levy contributions by 20 per cent, from $32 million to more than $38m.