It said it wants to make it simpler and fairer with more emphasis on the value of milk solids.
Jersey Australia believes the current payment system is outdated, complex, confusing and doesn’t accurately reflect the true component value of milk solids.
It has called for the system to better recognize the efficiencies and value generated through processing high-density milk compared to low-density milk.
Current system ‘complex’
Board member Jane Sykes said two reports commissioned by Jersey Australia and funded by Farming Together had shown pricing systems do not necessarily represent the current market value of milk components, to the disadvantage of Jersey farmers.
The reports stated higher component milk is 8.5c/kg Milk Solids or 0.6c/liter of milk cheaper for processors to cart and handle.
They found current milk price systems in Australia are complex and do not show transparency between the market value for milk products and the price paid to farmers for their components.
“It is reasonable to conclude that Jersey profile milk is relatively cheaper to collect and more efficient to process in relation to yields and handling costs than lower milk solids density milk,” the reports state.
“There is value in high density milk which is not being recognized in the current payment systems, to the disadvantage of Jersey farmers.”
Sykes said Australia’s payment system dates back to the 1980s.
“Back then fat was seen as the least desirable product and was priced accordingly. Over the past few years there have been major shifts in the milk market but our prices don’t reflect that.
“The fairest and simplest thing to do is make it a single price for milk solids, rather than individual ratios for fat and protein.”
Industry support needed
Jersey Australia is advocating simpler milk payments with one price for milk solids, butterfat and protein and an appropriate volume charge that penalizes lower solids milk.
Sykes said the organization needs wider industry support and pressure at the farmer level for the issue to be addressed.
“We understand not everyone is going to agree with the findings but we need to get the conversation started,” she said.
Sykes said the reports did not recommend pricing to benefit any breed, but encouraged premium quality and higher solids milk.
Jersey Australia president Chris MacKenzie said the review was needed because Jersey and other high component herds were being unfairly disadvantaged.
“There is growing demand for butter but nothing has been done to reflect that in prices for farmers,” MacKenzie said.
“This is about fairness for everyone.”