Federal Agriculture Minister Barnaby Joyce says Murray Goulburn (MG) must explain to its suppliers what steps it will take to support farmers and restore confidence in the dairy sector.
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Mr Joyce, and Prime Minister Malcolm Turnbull, met with the MG board, in Canberra on Tuesday.
He said the pair would also meet Fonterra’s Australian management.
“The Coalition government strongly supports Australia’s hard working dairy farmers,” Mr Joyce said.
He said Tuesday’s meeting was the first of a series of formal talks on what was required to build a more profitable dairy industry in Australia.
“The government’s interests are in supporting Murray Goulburn suppliers,” he said.
“There can only be strong and profitable dairy processors if we have strong and profitable dairy farmers.”
Mr Joyce said Australia’s dairy farmers deserved fair returns at the farm gate, as well as transparency in milk price arrangements and supply contracts.
United Dairyfarmers of Victoria president Adam Jenkins, of South Purrumbete, said producers were waiting the outcome of Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investment Commission (ASIC) investigations.
“From the dairy industry point of view, everyone wants to unite and move forward,” Mr Jenkins said.
An important part of solving the dairy crisis was understanding why it arose in the first place.
“We still need to recognise and rectify issues which landed us in this situation,” he said.
MG, Australia’s biggest milk processor, dropped the price it paid farmers by $1 kg for milk solids.
The co-operative also required farmers to pay back the difference, affecting about 2500 producers.
Meanwhile, the Australian Greens called on the government to act, to prevent retrospective price decreases while the ACCC investigated.
South Australian senator Nick Xenophon called for an urgent review of unfair contract laws to prevent the ‘claw back’.
“Current unfair contract laws don’t appear to give protection to those dairy farmers who made decision in good faith, based on forecasts and statements by Murray Goulburn management, only to find they are in deep debt because of the ‘claw back provisions’,” Senator Xenophon said.