It is the first time in 10 years about 120 dairy farmers in Western Australia and their counterparts interstate have had a say on the levy, which last financial year provided $31.9 million – or 50.15 per cent – of Dairy Australia’s $63.6m annual revenue on national milk production of 8.8 billion litres.
After the last dairy levy poll in 2012, the levy process and rate was reviewed in 2015 and the levy rate reviewed again in 2017, with neither review recommending change via a poll.
But a subsequent review by an independent 15-member Levy Poll Advisory Committee (LPAC), which included Jindong dairy farmer and Western Dairy’s immediate past chairman Peter Evans as WA’s only participant, last year unanimously determined a poll was required this year.
The LPAC also determined the poll’s four levy options to be voted on by dairy farmers from today.
The LPAC also recommended dairy farmers support its preference for a 20pc increase in the rate.
The current levy is comprised of payments of 2.8683 cents per kilogram of butter fat and 6.9914c per kilogram of protein in farmers’ milk and is automatically deducted from monthly milk cheques by milk processors and transferred to Dairy Australia.
The levy payments cost dairy farmers about 4.7c/kg on milk solids, equivalent to about 0.36c a litre, on the bulk milk they produce.
A Dairy Poll Information Memorandum sent out to farmers by Dairy Australia earlier this month detailed amounts in cents per kilogram for butter fat and protein and together as milk solids, each of the increased levy options would cost farmers.
It also included the approximate cost in cents per litre of each option.
According to the memorandum, the LPAC’s recommended 20pc levy increase would cost farmers about 1c more, to 5.7c/kg, on milk solids, equivalent to about 0.43c/l on bulk milk.
Between July 1 and June 30, 2027, the recommended 20pc increase would lift the amount raised by the levy each year for Dairy Australia from $32.7m projected with no change, to $39.2m, the memorandum pointed out.
Dairy Australia’s annual revenue in that period was projected to be $65.7m without a levy change and $72.8m with a 20pc increase, it stated.
It projected Dairy Australia’s annual expenditure during the period would increase from $67.5m with no change to $74.2m with a 20pc increase.
In support of its 20pc levy increase recommendation, the LPAC argued in the memorandum the Consumer Price Index rose 21pc in the 10 years to 2021, with “a consequent erosion in the capacity of Dairy Australia to maintain its services”.
In that period, Dairy Australia’s expenses were greater than revenue in seven of the 10 years, it pointed out.
Reserve funds held by Dairy Australia have fallen from $36m in 2012 to $28m in 2021.
“Without any change in the levy and no increase in expenditure, reserves would be predicted to fall to $15m by 2027,” the memorandum stated.
Dairy Australia’s board of directors considered $15m the minimum level of reserve funds needed to sustain current service levels, it stated.
The memorandum stated Dairy Australia “routinely commits” to contracts for research and development for at least three years at a time and, as at June 30, 2021, had $48.8m of contracted commitments for strategic investment in future years.
“Our financial reserves allow investment in research and more effective management of future scenarios that might impact business continuity,” Dairy Australia said in the memorandum.
It outlined levels of “tangible benefits” to flow from each of the levy rate options in four key areas – farm labour, regional services, addressing climate change and policy development.
To varying degrees depending on the rate option chosen by dairy farmers, the three increase options would support more employment tools and resources to help farm businesses find and employ people, Dairy Australia said.
They would provide workforce support “customised to individual farm business needs” through partnerships with agricultural recruitment specialists, human resource management specialists, immigration agencies, high schools, vocational education providers and universities, as well as fund “large scale” recruitment campaigns and onfarm work experiences to attract those considering a career in farming, it said.
Similarly, farmers would benefit from more accessible regional services and extension tailored by regional boards to local needs, with Dairy Australia regional points of contact, technical expertise and access to advanced technical services to support development and implementation of new onfarm innovations.
Helping dairy farmers “address the climate challenge” and assess value, risk, liabilities and entry into carbon markets, as well as provide access to “a trusted group of advisers” who can facilitate participation in carbon markets, were also envisaged benefits, Dairy Australia said.
As well, it said an increased levy rate would allow it to work with State governments and industry partners to quantify “the magnitude of climate change-related impacts onfarm, to better understand the scale and pace of adaptive measures required.”
This week Mr Evans urged every WA dairy farmer to have a say on the levy rate by voting in the poll.
“I urge everyone to carefully consider the options and the long-term level of investment they want to see in the future of their industry and to have their say when they vote,” Mr Evans said.
He warned voters planning to post their vote in, to vote and send the completed ballot paper back early to ensure it was received in time and counted.
According to Dairy Australia every existing dairy services levy payer should have received a printed copy of the memorandum, voting materials and voting instructions.
Dairy farmers can also register and vote online via dairypoll.com.au.
