On Monday, dairy section president Mike Partridge said WAFarmers supported an online petition started by Queensland Dairyfarmers’ Organisation (QDO), calling for a 10c/L levy on white milk sales to be quarantined and returned to dairy farmers in each of Australia’s eight dairying regions.
He said the Eastern States drought was creating “significant” demand for stock feeds and driving prices up in WA where dairy farmers were already contending with a difficult late start to the season and cold weather slowing spring pasture growth rates.
“While we’re not a drought here, there is no doubt the drought is having an impact through the price of stock feed, it’s going up and everyone knows that,” Mr Partridge said.
“For dairy farmers feed is our biggest input cost.
“We are looking at an increase in our cost of production of 3.5c/L going forward.”
Mr Partridge said a 10c/L levy on the retail price of white milk sold in WA supermarkets would return about 5c/L of that cost of production increase to WA dairy farmers.
“It has been seven and a half years since Coles and Woolworths devalued the dairy industry with the introduction of $1/L milk,” he said.
“I don’t think there is a better time to change that than when we have the support of consumers, industry and government – like now.”
Mr Partridge pointed out that Woolworths had indicated to Federal Agriculture and Water Resources Minister David Littleproud that it would support a levy if other supermarkets did too.
“In the past when we’ve talked to Coles they have made the comment that if they increased the price of milk there was no guarantee any of the increase would flow back to farmers,” he said.
“Well now there is an opportunity for that to happen (through the proposed levy) so we don’t understand why Coles is making excuses.”
Since $1/L milk was introduced WAFarmers has argued it has cut profitability along the supply chain, leaving farmers with no option but to absorb lower or static returns passed back by milk processors and increased costs trying to meet demands for flatter year-round production volumes.
Earlier this year the Australian Competition and Consumer Commission (ACCC) controversially rejected that view in its final report on the dairy industry inquiry.
However, the ACCC called for a mandatory code of conduct to improve supply contract and price transparency and to improve dairy farmers’ bargaining position.
Launched last week by QDO via change.org, the online petition calls on Coles, Woolworths, Aldi and IGA supermarket chains and milk processors Parmalat, which owns Harvey Fresh, Lion Dairy and Drinks, which produces Masters brand milk in WA and Norco to add 10c/L to the retail price of milk in the form of a levy.
It has received close to 75,000 online signatures supporting a levy, with the number of supporters jumping nearly 47,000 in five days.
Mr Littleproud has said he supports “the principle of a temporary levy” to go back to farmers.
If supermarkets agree to a levy Mr Littleproud said last week he would help facilitate its introduction “as a temporary measure while structural reform happens in the industry”.
He said the Department of Agriculture and Water Resources was investigating ways a temporary levy could be implemented.
“We all know many of our farmers are really struggling right now (because of drought in Queensland and New South Wales),” Mr Littleproud said.
“The dairy sector, in particular, is having a tough time.
“Many of our farmers are being paid less than the cost of production – this is unsustainable.
“If our farmers don’t make it through the tough times, they won’t be there to supply Australia milk in the future.
“The fact is $1/L milk has devalued the milk category in the eyes of consumers by making it cheaper than water.
“I’ve met with the two big supermarkets and Woolworths has shown leadership on this issue.
“They say they’re on board so long as other retailers are too.
“Coles is more reluctant but I hope they’ll come on board (and) I intend to speak to ALDI and IGA/Metcash as well,” he said.
Mr Littleproud said the ACCC report had identified “market failure” and he had asked the dairy sector for a united response.
“A temporary levy could give the industry time to sort out its position on the ACCC report and structural reform,” he said.
The QDO petition explains the drought has a greater impact on the dairy industry than other livestock industries because dairy cows required good nutrition and peak health to produce milk.
“So the increasing scarcity and the price of freighting in fodder has hit the dairy industry hardest,” it stated.
“Combined with lower than sustainable farm gate prices, we are imploring consumers to get behind a petition to all supermarkets, in particular Coles and Woolworths, to increase the price on all milk by 10c/L and for processors to guarantee that the full amount will go directly back to the farmers.
“Our dairy friends in WA, South Australia, Tasmania and Victoria (also) need the assistance of the 10c/L drought levy since scarcity has led the price of grain and feed to record highs in all States,” it explained.
p Mr Littleproud this week welcomed Australian Dairy Farmers’ (ADF) call for a mandatory code of conduct for the dairy industry in response to the ACCC dairy inquiry report.
“Now that we have direction from the organisation representing dairy farmers across Australia, we can move forward,” Mr Littleproud said.
“I agree with ADF that a mandatory code must deliver coverage across the entire industry and improve bargaining power for dairy farmers.
“I will work with farm groups to get this code right.
“While a mandatory code should improve bargaining power it is unlikely to change milk prices.”
At WAFarmers’ annual dairy conference in July, many dairy farmers were critical of Brownes Dairy, WA’s largest milk processor with 61 suppliers, not supporting a mandatory code of conduct governing contract negotiations between farmers and processors.
Brownes’ managing director Tony Girgis pointed out new contracts signed in July by all of its suppliers complied with an existing voluntary code of conduct which was the basis of the proposed mandatory code.
