The Options Were

Dairy Farmers Made Their Vote Count

The Dairy Service Levy funds activities that are an extension of individual farm businesses. At the time of the Levy Poll in 2007, the levy rate had been unchanged for 10 years while the cost of services provided to the industry had increased and reduced the of levy income. During much of that time the costs of services secured by Dairy Australia on behalf of the industry had increased and reduced the purchasing power of the funds raised by the levy. A fall in milk production would have reduced the buying capacity of Dairy Australia even further. Its reduced income would restrict its capacity and flexibility to deliver services and respond to the industry’s changing business needs.

The Options Reviewed

In DairyPoll 2007, dairy farmers were asked to rank three levy rates in their order of preference.

Option A:  Increase to 1.15 per cent of Estimated Average Milk Price (0.362 cents per litre)

The industry and Dairy Australia both acknowledged that this rate did not provide the long-term capacity or flexibility to provide farmers with the current level or range of services. It does however, when combined with the company’s flexibility to responsiveness at short notice, give some capacity to address any emerging issue that may arise.

Depending on the intensity of the issue, it is likely to be addressed at the expense of an activity or program previously identified as high priority by the industry. The specific level of increase under this option would be 15 per cent.

Option B:  RECOMMENDED Hold at 1.0 per cent of Estimated Average Milk Price (0.315 cents per litre)

No increase to current rate – Dairy Australia’s recommendation

Dairy Australia’s recommendation to hold the levy at the current rate was influenced by its recognition of the extraordinary circumstances associated with the drought. This rate equates to about 0.315 cents per litre or $3150 for every million litres of milk produced. Maintaining the current rate is effectively a ‘Hold, pause and assess’ option. By making this recommendation it is likely that the rate would be reassessed after conditions improve and milk production stabilises. At that time levy payers would be given the opportunity to participate in another Dairy Service Levy Poll.

Option C:  No Services, Zero Levy

Dairy Australia would wind down its operations.

Notes:  All future milk price estimates are based on statistical analysis by specialist Dairy Australia staff using latest available data. All projections and estimates may vary and are subject to supply/demand pressures and the vagaries of the industry.

For Options A and B, Dairy Australia would continue to pursue its policy to:

• leverage funds and services from governments and other stakeholders, 
• pursue additional and new sources of income, 
• wisely utilise reserves, 
• identify and pursue efficiencies in purchasing research and other services, and 
• pursue internal efficiencies.