Dairy Australia : Committee supports no change to dairy levy

Wednesday 25 January 2017| From Dairy Australia

The Dairy Levy Poll Advisory Committee (the Committee) has unanimously decided not to request a levy poll.
The decision has been made after a number of meetings where the Committee discussed a submission from Australian Dairy Farmers (ADF) and Dairy Australia (DA) and the issues, challenges and opportunities facing the dairy industry. The joint submission canvassed various options regarding the levy and the advantages and disadvantages of each option, with a final recommendation that there be no change.

The Chair of the Committee, John Lawrenson, said the Committee had been very mindful of the current state of the dairy industry and the impact prices are having on farm profitability.

'In considering the level of the levy, the Committee was cognisant of the need to ensure that an appropriate level of funding is available to Dairy Australia to support the current and future long term research, development and extension strategy for the dairy industry which is critical to improving farm productivity.'

'The Committee was conscious of the impact that falling farmgate prices and milk production will have on DA's future income - both the levy and the matching Federal government funding,' Mr. Lawrenson said.

The Committee considered Dairy Australia's 3-year Strategic Plan (2016/17 to 2018/19) and the anticipated benefits from the projected research, development and extension (RD&E) investment during that period. The Committee also reviewed the services that Dairy Australia provides to dairy levy payers, in particular, the raft of programs it delivers that address the key needs of the industry in accordance with its remit, in relation to farm profitability/productivity, skills development of those working in the dairy industry, and programs aimed at protecting the industry's long term licence to operate.

The Committee also took into account the evidence that Dairy Australia's investment creates spin off benefits for rural Australia flowing from its investment and that the investment also leverages the effectiveness of the levy in generating further funds in excess of $20M from government (both State and Federal) and other sources.

Finally, Mr. Lawrenson said the Committee also reviewed benefit cost analyses from recent investments.

'The Committee noted the positive returns to industry from Dairy Australia projects, the significant increase in investment in extension to compensate for the reduction in state government activity and the increased investment in pre-farmgate RD&E,' Mr. Lawrenson said.

There is an opportunity for dairy levy payers who are Group A members of Dairy Australia and who disagree with the Committee's decision to request a levy poll by lodging a petition with Dairy Australia within 75 days of the Committee's notification which would see a resolution being put to Dairy Australia's Group A members to convene a levy poll.

Background

In late 2015, following consultation with dairy levy payers which culminated in a vote on the issue, dairy levy payers supported the removal of the compulsory requirement for Dairy Australia to convene a levy poll at least every five years. Changes to legislation have now been passed which provide that a Levy Poll

Advisory Committee (LPAC) will be convened at least every five years to determine if a change to the levy should be recommended. The Dairy Produce Act was amended in early 2016 and in December, the Minister for Agriculture and Water Resources, the Hon Barnaby Joyce, signed the Dairy Produce (Dairy Service Levy Poll) Instrument 2016 (the Instrument). The Instrument sets out the process for establishment of the LPAC and the process that it must follow for review of the dairy service levy.

The LPAC for this levy review cycle was formed in 2016. It is comprised of an independent Chair, nominees from Australian Dairy Farmers (ADF), Dairy Australia (DA) and the Australian Dairy Products Federation (ADPF), and nine levy payer representatives, selected from applicants who responded to an invitation to participate that was sent to all dairy levy payers. Those nine levy payer representatives provided broad representation of dairy farmers, with diversity of gender, dairy herd size, feed system and dairy farming region. A total of 11 of the 15 members of the LPAC are dairy levy payers.

The Instrument requires that ADF (as industry representative body), and DA (as industry services body), must jointly make a recommendation to the LPAC in each levy review cycle about whether there should be a change in the levy rates, and if so, the nature of the change. ADF and DA recommended that the current levy rate be maintained.

Dairy levy payers who are Group A members of Dairy Australia and who disagree with the Committee's decision, can lodge a petition with Dairy Australia within 75 days of the Committee's notification which would see a resolution being put to Dairy Australia's Group A members to convene a levy poll. The petition should include a proposal about what the level of the levy should be, and will need to be supported by a sufficient number of Group A members of Dairy Australia, whose levy payments combined constitute at least 15 per cent of levies paid in the previous financial year. The proposal that there be a levy poll will then be put to a vote by Dairy Australia's Group A members.

If at least 50% of voting Group A members vote in favour of holding a levy poll, the Committee will reconvene to consider the options to be included on the ballot paper for the levy poll. The ballot paper must include the option included in the petition.

Media enquiries:

Felicity Gallagher - Media Manager, Dairy Australia
03 9694 3809 / 0417 540 059 / [e-mail]

More information

To find out more visit the Dairy Levy Poll Advisory Committee website.