Package includes $55m of concessional loans after Murray Goulburn and Fonterra slash prices for previous 11 months
The federal government has announced a dairy industry assistance package, including $555m of concessional loans, as farmers face hardship after cuts in the milk price.
In a joint statement the deputy prime minister, Barnaby Joyce, and the human services minister, Alan Tudge, said an assistance package was needed because “Australian dairy farmers have had their incomes retrospectively cut by dairy processors Murray Goulburn and Fonterra”.
In April Murray Goulburn and Fonterra cut their farm gate prices for the previous 11 months, leaving dairy farmers owing thousands of dollars each.
Victorian dairy farmers have faced milk solids price cuts from as much as $6/kg down to as low as $4.70/kg.
The package includes $55m of dairy recovery concessional loans with 10-year repayment terms, which will be immediately available for Murray Goulburn and Fonterra suppliers. A further $500m of loans will be available over 2016-17 and 2017-18.
Joyce said on 1 August the repayment rate for loans would be set as low as 2.66%, down from the current 2.71%.
“Farmers will be able to borrow $1m or half of what they owe which, whichever is the lesser, so they can assist themselves to get through this current crisis,” he said.
The other elements are: $20m to fast track the upgrade of the Macalister irrigation district; $2m to establish a commodity milk price index; $900,000 for nine financial counsellors in Victoria, Tasmania, South Australia and New South Wales; and $900,000 for an existing dairy industry business skills program.
Joyce said: “I was pleased to meet dairy farmers in Victoria last week and the Coalition wants to send a clear message that the Coalition stands shoulder to shoulder with them.”
He said the commodity price index would help ensure dairy processors don’t unexpectedly reduce farm gate milk prices late in the season.
“The index would introduce greater transparency and market signals in domestic and global milk prices,” he said. “The Coalition will consult with the industry on the design of the index that would provide dairy farmers with valuable information for use in supply negotiations with processors and to assist in following international price trends.”
Joyce said the Macalister project would upgrade the 1920s and 1950s-era Southern-Tinamba area irrigation network, delivering almost 10 gigalitres in water savings which can be put back into increasing the region’s agricultural production.
Tudge said the Coalition was taking immediate action to ensure eligible dairy farmers have fast-tracked access to the support they need to get through the tough times.
“We’ve ramped up the number of staff processing farm household allowance claims,” he said. “An extra 18 people have been brought in to process claims and to work directly with farming families on their individual cases, with a special focus on people in financial hardship.”
On Tuesday Labor’s agriculture spokesman, Joel Fitzgibbon, said his party would offer bipartisan support for an industry assistance package, so caretaker conventions were no barrier to the government acting on the crisis.
Fitzgibbon said Labor would announce a policy “over the course of the next few days” and it would aim to achieve “a longer-term structural reform in the industry”.
Fitzgibbon said it was important interest rates were set sufficiently low for concessional loans that farmers would make use of them.
“The reality is that the government borrows at about 2% and lends at 3% so, save for administrative costs, and doubtful debtors, the government actually makes money on these loans,” he said.
“Now the extension of that concern is that the government has put forward concessional loans as the sort of panacea – the magic solution to drought problems when we all know that it’s far more complex than that.”
Fitzgibbon suggested farmers could be given assistance to invest and upgrade to organic milk farming, which would command higher prices. He ruled out Labor support for a milk levy.
A Fonterra spokeswoman told Guardian Australia it needed to reduce milk prices as it was losing money paying farmers $5.60/kg. No farmers were being asked to return money already paid to them this season, she said.
Fonterra is offering its suppliers loans of up to .60 cents/kg at an interest rate of 3.95% to assist with cash flow.
“Moving forwards, what the industry needs to focus on is ensuring farmers have timely and transparent information about milk price to help them plan ahead and manage volatility,” the spokeswoman said.
“We know farmers are being impacted. We are working closely with farmers to help them.”
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| Barnaby Joyce says the Coalition wants to send a message it is ‘shoulder to shoulder’ with dairy farmers. |
The federal government has announced a dairy industry assistance package, including $555m of concessional loans, as farmers face hardship after cuts in the milk price.
In a joint statement the deputy prime minister, Barnaby Joyce, and the human services minister, Alan Tudge, said an assistance package was needed because “Australian dairy farmers have had their incomes retrospectively cut by dairy processors Murray Goulburn and Fonterra”.
In April Murray Goulburn and Fonterra cut their farm gate prices for the previous 11 months, leaving dairy farmers owing thousands of dollars each.
Victorian dairy farmers have faced milk solids price cuts from as much as $6/kg down to as low as $4.70/kg.
The package includes $55m of dairy recovery concessional loans with 10-year repayment terms, which will be immediately available for Murray Goulburn and Fonterra suppliers. A further $500m of loans will be available over 2016-17 and 2017-18.
Joyce said on 1 August the repayment rate for loans would be set as low as 2.66%, down from the current 2.71%.
“Farmers will be able to borrow $1m or half of what they owe which, whichever is the lesser, so they can assist themselves to get through this current crisis,” he said.
The other elements are: $20m to fast track the upgrade of the Macalister irrigation district; $2m to establish a commodity milk price index; $900,000 for nine financial counsellors in Victoria, Tasmania, South Australia and New South Wales; and $900,000 for an existing dairy industry business skills program.
Joyce said: “I was pleased to meet dairy farmers in Victoria last week and the Coalition wants to send a clear message that the Coalition stands shoulder to shoulder with them.”
He said the commodity price index would help ensure dairy processors don’t unexpectedly reduce farm gate milk prices late in the season.
“The index would introduce greater transparency and market signals in domestic and global milk prices,” he said. “The Coalition will consult with the industry on the design of the index that would provide dairy farmers with valuable information for use in supply negotiations with processors and to assist in following international price trends.”
Joyce said the Macalister project would upgrade the 1920s and 1950s-era Southern-Tinamba area irrigation network, delivering almost 10 gigalitres in water savings which can be put back into increasing the region’s agricultural production.
Tudge said the Coalition was taking immediate action to ensure eligible dairy farmers have fast-tracked access to the support they need to get through the tough times.
“We’ve ramped up the number of staff processing farm household allowance claims,” he said. “An extra 18 people have been brought in to process claims and to work directly with farming families on their individual cases, with a special focus on people in financial hardship.”
On Tuesday Labor’s agriculture spokesman, Joel Fitzgibbon, said his party would offer bipartisan support for an industry assistance package, so caretaker conventions were no barrier to the government acting on the crisis.
Fitzgibbon said Labor would announce a policy “over the course of the next few days” and it would aim to achieve “a longer-term structural reform in the industry”.
Fitzgibbon said it was important interest rates were set sufficiently low for concessional loans that farmers would make use of them.
“The reality is that the government borrows at about 2% and lends at 3% so, save for administrative costs, and doubtful debtors, the government actually makes money on these loans,” he said.
“Now the extension of that concern is that the government has put forward concessional loans as the sort of panacea – the magic solution to drought problems when we all know that it’s far more complex than that.”
Fitzgibbon suggested farmers could be given assistance to invest and upgrade to organic milk farming, which would command higher prices. He ruled out Labor support for a milk levy.
A Fonterra spokeswoman told Guardian Australia it needed to reduce milk prices as it was losing money paying farmers $5.60/kg. No farmers were being asked to return money already paid to them this season, she said.
Fonterra is offering its suppliers loans of up to .60 cents/kg at an interest rate of 3.95% to assist with cash flow.
“Moving forwards, what the industry needs to focus on is ensuring farmers have timely and transparent information about milk price to help them plan ahead and manage volatility,” the spokeswoman said.
“We know farmers are being impacted. We are working closely with farmers to help them.”