Anger over dairy paymnent change
Dairy farmers have voiced concerns about a change in milk payment days by processor Brownes.
Last week, the company announced a new payment schedule for its 55 suppliers, due to take effect in April.
Many producers have questioned the need for the change, arguing it will be a major imposition on their business to realign their direct debits with new payment days.
Currently, suppliers are paid for the previous month's milk supply on the first working day closest to the 15th of the month, with an optional cash flow assistance payment based upon the full payment of the first 10 days of milk supply from the previous month.
Under the change, the time before the payments will be extended by about seven days.
Brownes told producers that under the change, they would be paid for the previous month's supply on the last working day prior to the 21st of the month and, to assist with cash flow, suppliers could receive approximately 30 per cent of their monthly milk payment on the last working day prior to the eighth day of the month, which is calculated on the first 10 days supply of the previous month.
Western Dairy chairman and Harvey-based dairy farmer Dale Hanks said there had been no consultation from Brownes, just an email telling producers "this is what's happening".
He said producers with hire purchase and farm finance obligations would be hardest affected by the change.
"Those farmers locked into payments and living close to the edge will have to have to re-juggle their payment schedules and if you locked into a hire purchase contract that can be an extremely difficult thing to do."
But a spokesman for Brownes said its suppliers have been given nearly two months to make whatever adjustments their businesses needed.
"This minor change to payment schedules should not have an adverse commercial impact," he said.
"Brownes has always enjoyed an open dialogue with our farmers, and we've been clear in that dialogue about the need for continual business improvement."
Meanwhile, industry speculation is rife about a possible buyer for Brownes.
Archer is trying to sell the 129-year-old business four years after buying it from New Zealand dairy giant Fonterra.
The milk operations revenue has declined in earnings in the year to June 30, 2014, dropping 36 per cent to $10.6 million.
An industry source has told _Countryman _Andrew Forrest's Minderoo Group had offered to purchase the embattled dairy just prior to Christmas last year.
It is understood Mr Forrest made an initial offer for the purchase of Brownes, which was later rejected by the Archer board.
Details of the amount offered have not been revealed.
Brownes has declined to either confirm or deny the rumour.
