Extension for dairy contracts

Harvey Fresh has offered to collect milk from the five dairy farmers it was ready to axe in January, providing each supplier with a six-month contract extension option.

The Parmalat-owned company announced in July it would cut five supply contracts in the new year because of a “sustained global dairy oversupply”. But the dairy processor offered the five farmers a six-month reprieve last week to extend each contract to June 30 next year.

A Harvey Fresh spokesman cited a possible increase in next year’s dairy export sales as the reason for providing the extension in a statement.

“Harvey Fresh believes that an increase in exports of UHT and bulk milk may be possible in the new year and has been able to offer the five farmers with a six-month contract option,” he said.

“The company will make a further assessment of its UHT and overall export market position in March, 2017, and whether it can provide any further extension to the contracts.”

The news is a temporary reprieve for fourth-generation Waterloo dairy farmers Dean and Ellen Barbetti, whose milking future looks bleak as they prepare to sell off their herd.

The Barbettis, who have suppliedHarvey Fresh with about 1.5 million litres of milk annually for the past eight years, recently spent $270,000 upgrading their dairy on the back of positive price signals given to them by their processor.

Mr Barbetti said they had invested the money because they had confidence in the WA diary industry.

“Our contract expired at the end of the last financial year, but we felt safe, as we’d done in previous years, to supply out-of-contract until we negotiated a new agreement, ” he said.

“On the strength of positive price signals we made the decision to invest in the upgrade of the diary and if we knew what was actually around the corner for us there is no way we would have spent the money, preferring to invest the money into my superannuation.”

The Barbettis say they remain hopeful their situation will change before it’s too late.

“If we can’t find a resolution for the milk we may have to look at switching over to producing cattle and once that decision is made it would be very difficult to change back, ” Mrs Barbetti said.

“The industry doesn’t seem to be the same as it was in years gone by, where people worked together for the benefit of the industry as a whole in the good and bad times, ” she said.

The extension comes a month after three former Brownes Dairy suppliers’ contracts were terminated.

Dale Hanks and Graham Manning, both of Harvey, and Tony Ferraro, of Yarloop, were forced to dump milk when the Archer Capital-owned processor stopped collecting their supply.

WAFarmers dairy section president Michael Partridge welcomed the Parmalat contract extension, saying it helped the five farmers avoid a situation similar to the one the Brownes trio faced.

“The industry is looking more positive going forward and we appreciate the efforts Harvey Fresh and Parmalat is making to look after their guys,” he said. “It’s been a very challenging six months and we look forward to more improved times and positive outcomes going forward.

“The decision takes pressure off and allows us to focus on a long-term solution.”