Catering For The 21st-Century Customer: Tips To Modernize Your Business

The world of business is changing at lightning speed. With customer demands and consumer habits evolving continually, modernization is key. If your business is lagging behind, and you’re keen to ensur...

News Company - avatar News Company

Treating suspected autism at 12 months of age improves children's language skills

The theory is that if therapies are started early enough, it might be possible to alter the trajectory of autism.ShutterstockTherapies given to infants before they receive a diagnosis of autism may le...

Andrew Whitehouse, Bennett Chair of Autism, Telethon Kids Institute, Univeristy of Western Australia, University of Western Australia - avatar Andrew Whitehouse, Bennett Chair of Autism, Telethon Kids Institute, Univeristy of Western Australia, University of Western Australia

Team-building exercises can be a waste of time. You achieve more by getting personal

The key to an effective team-builiding exercise is understanding a team is a social network built on connections between individuals.www.shutterstock.comSomeone we know recently told us about a team-b...

Julien Pollack, Associate Professor, University of Sydney - avatar Julien Pollack, Associate Professor, University of Sydney

Changing the Australian Constitution was always meant to be difficult – here's why

Debates about constitutional change in Australia inevitably raise the poor success rate of referendums. Only eight out of 44 attempts have ever succeeded and there has not been a successful constitut...

Anne Twomey, Professor of Constitutional Law, University of Sydney - avatar Anne Twomey, Professor of Constitutional Law, University of Sydney

Lights out! Clownfish can only hatch in the dark – which light pollution is taking away

Some 22% of the worlds' coastlines are exposed to artificial light at night. Emily Fobert, Author providedClownfish achieved worldwide fame following Finding Nemo, but it turns out these fish don&rsqu...

Emily Fobert, Research Associate, Flinders University - avatar Emily Fobert, Research Associate, Flinders University

An electronic chip that makes 'memories' is a step towards creating bionic brains

Researcher Taimur Ahmed holds the newly designed chip.Author providedWhat better way to build smarter computer chips than to mimic nature’s most perfect computer – the human brain?Being ab...

Sumeet Walia, Senior Lecturer and Vice Chancellor's Fellow, RMIT University - avatar Sumeet Walia, Senior Lecturer and Vice Chancellor's Fellow, RMIT University

As the federal government debates an Indigenous Voice, state and territories are pressing ahead

The Queensland treaty process is still in the early stages and negotiations will not begin for several years. But it's still a historic step forward for Indigenous communities.Tracey Nearmy/AAPQueensl...

Harry Hobbs, Lecturer, University of Technology Sydney - avatar Harry Hobbs, Lecturer, University of Technology Sydney

Your body as a weapon: the rise of the 'revenge body' online

A 'revenge body' is built to show someone how well you are doing without them. With the advent of social media the phenomenon is increasingly popular.ShutterstockMonths after a public breakup with her...

Mair Underwood, Lecturer in Anthropology and Sociology, The University of Queensland - avatar Mair Underwood, Lecturer in Anthropology and Sociology, The University of Queensland

Stop worrying about screen 'time'. It's your child’s screen experience that matters

Guidelines advise children under two shouldn't have any screen time, but most do anyway.Photo by Jelleke Vanooteghem on UnsplashMost (80%) Australian parents worry children spend too much time with sc...

Brittany Huber, Postdoctoral researcher, Swinburne University of Technology - avatar Brittany Huber, Postdoctoral researcher, Swinburne University of Technology

Finally, the NDIS will fund sex therapy. But it should cover sex workers too

Whether sex therapy should be a funded disability support has been controversial since the NDIS was rolled out.From shutterstock.comThe Administrative Appeals Tribunal recently granted a woman with mu...

Matthew Yau, Adjunct professor, College of Healthcare Sciences, James Cook University - avatar Matthew Yau, Adjunct professor, College of Healthcare Sciences, James Cook University

Politics with Michelle Grattan: Megan Davis on a First Nations Voice in the Constitution

Last week on this podcast we talked to Ken Wyatt about the government’s plan for a referendum – hopefully this parliamentary term – to recognise Indigenous Australians in the Constit...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Team-building exercises can be a waste of time. You achieve more by getting personal

The key to an effective team-builiding exercise is understanding a team is a social network built on connections between individuals.www.shutterstock.comSomeone we know recently told us about a team-b...

The Conversation - avatar The Conversation

Americans focus on responding to earthquake damage, not preventing it, because they're unaware of their risk

Heavily built-up areas can experience more disastrous damage in an earthquake.AP Photo/Marcio Jose SanchezOn July 4 and 5, two major earthquakes, followed by several thousand smaller ones, struck Sout...

Matt Motta, Assistant Professor of Political Science, Oklahoma State University - avatar Matt Motta, Assistant Professor of Political Science, Oklahoma State University

Did we mishear Neil Armstrong's famous first words on the Moon?

It's the case of the missing 'a.'Nick Lehr/The Conversation via NASA, CC BY-SAOn July 20, 1969, an estimated 650 million people watched in suspense as Neil Armstrong descended a ladder towards the sur...

Melissa Michaud Baese-Berk, Associate Professor of Linguistics, University of Oregon - avatar Melissa Michaud Baese-Berk, Associate Professor of Linguistics, University of Oregon

The supermarket giant Woolworths this week broke ranks and announced it was going to stop selling A$1 per litre milk. It will now charge A$1.10, or A$2.20 for two litres.

Chief executive Brad Banducci made it clear that there was more to the decision than straightforward economics:

We’ve heard the outlook will continue to be extremely tough for dairy farmers… This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live.

The Labor Party has been threatening to impose a minimum farm-gate price.

Will what Woolworths is doing help farmers? Only a bit.

Milk prices are internationally set

The so-called “milk wars” began on Australia Day 2011 when Coles announced it was cutting milk prices to A$1 a litre.

Woolworths and Aldi followed suit.

The milk market does not just consist of dairy farmers, supermarkets and customers. There are also the processors – companies such as the ASX-listed Murray Goulburn, Parmalat, Lion and Fonterra – that stand between farmers and supermarkets. Then there is the international market for dairy products like butter, cheese and milk powder.

The biggest determinant of farm gate prices in Australia is not what the major supermarkets do, but world dairy prices.

The Department of Agriculture says 37% of Australian milk production is exported.

Add to that the roughly 35% that goes into locally consumed butter, cheese and milk powder that is subject to competition from imports. You can quickly see the prices of nearly three-quarters of the milk produced in Australia are set globally.

Dairy Australia has a higher estimate. Because even fresh milk is subject to foreign competition, it believes 90% of the annual movement in farm-gate prices comes from changes in international prices.

Those changes are beyond the effective control of Australian farmers and regulators.

Many of them are the result of changes in the exchange rate.

International prices are generally set in US dollars. That means a rising Australian dollar can cut the return to Australian farmers, while a falling Australian dollar can enhance it.

Farmers have been angry at Coles and Woolworths for squeezing prices. Protest rally in Melbourne, 2016. Mal Fairclough/AAP

Processors get the cream

It is tempting to think an increase in retail prices, like the Woolworths 10 cents, would help farmers. But it normally wouldn’t, much.

Someone between the cow and the customer would get the 10 cents, but not necessarily the farmer.

When the Australian Competition and Consumer Commission examined the dairy industry last year it:

did not obtain any evidence that supermarket pricing, including $1 per litre milk, has a direct impact on farm-gate prices

Further, farmers’ lack of bargaining power means they are unlikely to benefit from an increase in the retail (or wholesale) prices of private label milk or other dairy products

Even if processors were to receive higher wholesale prices from sales to supermarkets, this does not mean the processors will pay farmers any more than they have to.

This time it will be different. Woolworths says “every cent of the increase will end up with Australian dairy farmers”. The processors have guaranteed it.

Normally there would be no guarantee that an increase in the wholesale price would flow through to farmers. The processors could pocket it, and the inefficient ones could use it to stay in business, to the long-term detriment of customers.

Consumers are at one end of the line…

Banducci said Woolworths was “acutely aware of the budgetary pressures facing many of our customers and have not taken this decision lightly”.

He is right to recognise it will hurt customers.

It won’t, mind you, hurt customers who buy branded milk like a2 – whose marketing success under chief executive Jayne Hrdlicka has pushed the value of the company to A$10 billion, making it bigger than Lendlease, Medibank Private, the AMP and Coca-Cola Amatil. Not bad for a company that didn’t exist at the turn of the century.

Instead it will hurt customers who can afford it the least. For a typical family of four with average milk consumption, the extra 10 cents a litre works out at about A$40 a year.

…and farmers at the other

Dairy farming is difficult, and much of Australia is less than ideally suited to it. Farmers have to contend with volatile prices, drought and isolation.

They are the least powerful players in the “value chain” that runs from cows to customers via importers, processors and supermarkets.

Neither government intervention nor higher retail prices can do much to help them.

Read more: Low milk prices unearth the supply chain's dirty secrets

Authors: The Conversation

Read more http://theconversation.com/vital-signs-why-more-expensive-milk-wont-help-farmers-much-112145