The options

Dairy Australia’s recommended vote: Option B Maintain current level and scope of services, which is the industry endorsed option. This represents an increase of approximately $320 per year for a farm producing 1 million litres of milk, or $0.00352 per litre.

This recommendation is fully supported by Australian Dairy Farmers Ltd (representing dairy farmers) and the Australian Dairy Products Federation (representing manufacturers and processors).

Option A - increase from approx $0.00320 to $0.00368 per litre

This option provides the industry with the resources to fund projects and initiatives that would deliver its strategic objectives to 2016 and also provide some funding for unforeseen challenges and additional initiatives. The industry also believes this figure goes some way to maintaining the levy’s value in real terms.

It is important to note that by the time of the next poll, expected in 2017, a 15 per cent levy increase in 2012 would still only represent an increase of less than 1 per cent per year over 20 years.

Financial Impact

A 15 per cent increase would raise an estimated extra $4.5 million a year in levy revenues to an average $35.6 million over the next five years (assuming a 2 per cent increase in milk production per annum). This would add approximately $480 to the levy contribution of a farm producing 1 million litres of milk per year, taking its total amount of levy paid to about $3,680 per year.

Option B - recommended option - increase from approx $0.0032 to $0.00352 per litre

This option allows Dairy Australia to execute its 5-Year Strategic Plan. It has been endorsed by the dairy industry’s peak bodies – the Australian Dairy Industry Council, the ADF and the Australian Dairy Products Federation.

While it is recognised that this option limits the amount of money available for new activities and to meet unforeseen industry challenges, it does provide the funding required to enable Dairy Australia to continue to manage and deliver its current programs effectively.

Financial impact

A 10 per cent increase would raise an estimated extra $3 million a year in levy revenues to an average $34 million over the next five years (assuming a 2 per cent increase in milk production per annum).

This would add approximately $320 to the levy contribution of farm producing 1 million litres of milk per year, taking its total amount of levy paid to about $3,520 per year.

Option C - no levy, no Dairy Australia

The Dairy Service Levy Poll is required by legislation to include an option to vote for no levy. This means the levy would be abandoned, Reserves would be run down and this would rapidly end the provision of services to the industry by Dairy Australia.

Dairy would be the only significant agricultural industry left without an industry-funded research and development corporation and, under current legislation, there would be no ongoing mechanism for delivery of the Australian Government contributions, which currently stand at approximately $17 million a year.

Financial impact

Current contracts would need to be fulfilled or terminated early. Some contracts may continue to receive funding from Reserves for a period of time and attract matching funds from the Australian Government, but this would cease when Reserves are exhausted. Dairy Australia would be wound up and any of its residual funds would be paid to another entity. The programs managed by Dairy Australia would need to be provided in other ways, which would likely be less efficient and ultimately more costly.