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Dairy Industry Needs Strong Regulator
19/09/06

The Tenant Farmers Association has called for a strong dairy industry regulator, with teeth, that can adjudicate between retailers, processors and producers of milk.

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Speaking before the national Dairy Event at Stoneleigh, TFA National Chairman, Reg Haydon said, “There is something wrong with a market which continually shows declining returns to farmers, consistent returns to processors and increasing returns to retailers. We have seen dairy farmer after dairy farmer go out of business because they can no longer cover their costs of production from the low milk price that they are receiving from processors”.

Over the past 10 years we have seen milk prices paid to producers fall by around a third whilst costs of production have steadily climbed.

“Dairy farmers have experienced an escalation in costs. The implications of enhanced dairy hygiene regulations, requirements for dairy farm assurance, increasing environmental regulation, new laws on pollution and waste coupled with increased diesel and fertiliser prices have all added to the cost burden faced by dairy farmers. You cannot go on adding to the regulatory and financial burden of a sector which is already losing money. The price received by dairy farmers must reflect the cost of production and provide a return for their managerial and capital input to the business. It is no exaggeration to say that dairy farmers have simply been driven out of business by the market failure that exists” said Mr Haydon.

“Given the structural imbalance that exists within the market place, the TFA believes it is time we had an industry regulator with the ability to investigate both processors and retailers to ensure that excessive profits are not being made at the expense of producers and the long term interests of consumers. The regulator should also ensure that the manner in which supermarket and processor contracts are drawn up are fair and non-discriminatory. Indeed, the TFA would like to see the concept of a regulator with teeth apply across all of farm produce but it would be sensible to start with the milk sector as it is the one which is in the most critical need of action at this time” said Mr Haydon.

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