The battle for milk in Australia has just got tougher for processors like Fonterra.
The plan for the single body was developed in response to a key recommendation of the Australian Dairy Plan which called for transformational change to industry structures and advocacy arrangements.
The restructure proposal has been dogged by controversy since it was launched last year with some groups attacking the plan to include processors in the organisation and others attacking the proposed governance structures.
The proposal had been developed by a Joint Transition Team, led by Victorian farmer Shirley Harlock, as a separate part of the overall Australian Dairy Plan.
But the key three reform organisations - Australian Dairy Farmers, Australian Dairy Products Federation and Dairy Australia - have decided not to proceed with the proposal after many months of industry consultation.
Instead the three organisations have been given primary responsibility for driving through different aspects of the reform sought by people across the industry.
Australian Dairy Farmers president Terry Richardson says dairy organisational reform is an industry priority and is necessary to achieve a more profitable, confident and united industry and to fully reslise the benefits offered by the Dairy Plan.
"Reform aims to deliver a stronger and more unified industry voice with an ability to champion common issues, as well as represent diverse views across the dairy supply chain.
"It also works to strengthen advocacy and streamline execution of whole-of-industry strategic priorities."
Dairy Australia chair James Mann conceded that the proposal to create a single, whole of industry body was always considered to be ambitious.
After extensive consultation, it is clear that restrictions prevent the use of levies for agri-political activity and that an all-in-one industry model is unable to address the priority of a stronger and more unified industry voice, as it cannot accommodate the requirement for independent representation, he adds.
"It would also compromise government investment in R&D.
"Other models that combine advocacy with levy funded industry services cannot progress at this time for the same reasons."
Australian Dairy Products Federation president Grant Crothers believes the reform has identified a priority need for a 'whole of industry' voice that can represent common issues to both dairy farmers and processors.
The revival of an appropriately resourced and well-funded Australian Dairy Industry Council would be an interim measure ahead of any other proposal, he says.
Australian Dairy Farmers will lead a working group comprising the six state dairy farming organisations to consider how to optimise policy and advocacy development at a national and state level, together with funding arrangements. Former Meat & Livestock Australia Managing Director David Palmer will continue to provide support in this area.
Dairy Australia will commit to greater resourcing for strategic policy development and enhanced transparency or RD&E priority setting.
Australian Dairy Products Federation will facilitate and promote opportunities for collaboration and co-investment by processors on whole of supply chain interests.