Farmers still milked dry

THE dairy industry believes the rising cost of milk charged by Woolworths to aid dairy farmers is a tokenistic gesture.
Woolworths increased the cost of its supermarket branded milk from February 19, raising the cost of two and three litre varieties to $2.20 and $3.30 respectively.
While many industry figures see the increase as tokenistic, they also see it as the first step of many in the right direction.
“The $1 milk disaster began on January 1, 2011, and I hope today is the beginning of its end,” Federal Minister for Agriculture and Water Resources David Littleproud said.
“Coles and Aldi continue to sell milk at $1. This drives down prices to farmers. Supermarkets can’t pretend selling milk cheap doesn’t hurt farmers and they’ve got to be called out on this rubbish.
The majority of South Gippsland dairy farmers are unlikely to see their ballooning debts alleviated in the interim with a Woolworths milk price increase alone.
And it’s true that grain prices during the past year have almost doubled, as well as electricity prices throughout the past few years, putting enormous pressures on farmers’ cost margins and operational costs.
“There are many complex variables involved with milk supply that determine the overall dairy picture we see today,” Koonwarra dairy consultant John Mulvany said.
“The major Gippsland processors like Saputo, Burra Foods, Fonterra and even Bega are generally exporters and not fresh milk producers supplying the Australian market. Therefore, their operations are largely dictated by the world market.”
Mr Mulvany made a distinction between these processors and others such as Parmalat that see an increasing proportion of dairy going onto the domestic market, particularly in New South Wales and Queensland.
“If supermarkets increase their milk price, how much goes to farmers?” he questioned.
“That is largely unknown and increasing transparency is required.
“You could debate the pros and cons of grain prices, and a mandatory dairy code of conduct, but I’d say less than five percent of farmers are feeding their herds grain around here. At the end of the day, farmers need respect. A code of conduct will definitely help the legal profession.”
Leongatha North dairy farmer Bernie Lubitz welcomed the change but still believes more is needed.
“One dollar milk, along with home brands, can now be seen as the root cause of the contraction and collapse of the liquid milk states’ dairy industries,” Mr Lubitz said.
“Deregulation had a small part to play but the home brand strategy and associated stresses it placed on the industry with $1 milk and home branded cheeses, for example, had the biggest impact.
“It took longer to come through but is now impacting the southern milk pool with the flattening of the milk supply curve.
“Let’s be clear, this is not just about the drought. One dollar milk had an impact before the drought. The drought just magnified it.”
The peak dairy farmer group Australian Dairy Farmers (ADF) is urging retailer ALDI to raise the price of its discount milk line in a bid to give hardworking farming families a fair price for their product.
IGA supermarkets are currently in discussions regarding a milk price increase. The Star understands a consensus is believed to be reached this week with an announcement to follow.
Mr Lubitz is concerned about the future of dairy in Australia, noting that only 450 farmers benefit from Woolworths’ price increases due to their contractual arrangements with the supermarket.

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Posted by Tayla Kershaw on Feb 26 2019. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry