WAFarmers Dairy Council: Milk levy to ease drought in the east should also help WA

As the WAFarmers Dairy Council President, I commend the Federal Minister for Agriculture David Littleproud for his in principle support of a 10c/litre milk levy to help dairy farmers manage the effects of the drought. While we recognise the various responses from retailers and processes in the eastern states, we need Western Australia to be included in a national response.

WAFarmers is in full support of the concept developed by the Queensland Dairy Farmers Organisation for a levy to support drought affected farmers in the eastern states.  The reality is the drought has impacted dairy farmers from east to west. While Western Australia is not in drought; the huge demand for hay from the eastern states has pushed up prices across the country.

Compounding the problem, many of our farmers have experienced an unusually late start which has hit our pasture production forcing farmers to buy more hay and grain than under normal seasonal condition.  With prices for both up by over 20 percent this year, the combined impact on farm viability is huge as it equates to 5 cents/litre in effect making our farms unviable.

Farmers can deal with drought and flood and even fluctuating feed prices, what we can’t deal with is a relentless campaign to hold down the wholesale milk price so that the big retailers can attract shoppers with $1 litre milk. Since 2011 retailers have hit the industry with a milk discounting campaign to attract customers. When one of the major retailers first dropped the retail price of their home branded milk from $2.41 to $2.00 per 2 litre container, value was taken away from all milk sales in the state as all the other brands and retailers fought to remain competitive.

The WA dairy industry has called on the big retailers to end this ludicrous competitive behaviour; in reply the retailers have repeatedly rejected our claims that their discounted milk was impacting farmers. It was suggested to us that the heavy discounting would only remain for six months, but seven years on and milk is still being sold at prices similar to what you could purchase it for back in the 1990’s.  It’s like expecting people to work for 1990s wage rates but suffer 2018 cost of living expenses.

Retailers are still running the old argument with dairy farmers that if the retail price increases, there is no guarantee that farmers would see any return, as the money would likely disappear into the transport and processing supply chain.

Now with this new debate being run nationally of the need for a 10 cent/litre levy to help drought stricken farmers over east which happens to be supported by the big retailers, then logic would dictate that lost income can be returned to WA dairy farmers to reduce the impact of the $1 litre retail war. 

For the first time in a decade there is common sense being displayed by the retailers and processors driven off the back of this eastern states drought levy. Retailers now need to take that common sense and work with the WA dairy industry and use this opportunity to return value back into the local supply chain and for the industry to work together and administer the funds directly back into farmers pockets.

The eastern states levy should be expanded to cover Western Australia to help local dairy farmers cover the costs of rise in stock feed prices if we miss this opportunity then the long term viability of our local industry will remain at risk. 

We believe that Western Australian consumers see great value in having local milk produced by Western Australian cows and would accept paying a little more considering the effort it takes to get it onto their kitchen tables.

By Michael Partridge



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