Australian Milk Contracts Levy Fines for Under-Supplying Markets
Dairy farmers in Western Australia are being asked to sign milk supply contracts that would levy $1.75/cwt fines for every hundredweight of milk below 90% their farm’s monthly quota, according to ABC News.
The contracts are being let by Brownes Dairy, located in Balcatta just north of Perth, Australia. A dry winter is raising concerns by dairy farmers that they might not be able to meet the contract specs.
According to ABC News, the contracts also say the company may refuse to pick up and pay for milk if market prices exceed 10% of the contract price. The farmers would also be prohibited from supplying other processors with excess milk without Brownes’ permission.
Farmers can continue to ship milk to Brownes without a contract, but then they have no protection whatsoever. The current milk price in the area is about $16/cwt.