Fair go for farmers: time for a dairy levy?

7th May 2020 | Eativity editors

Nearly 500 dairy farmers left the industry last year, many because their cost of production was above the market price. Now advocacy groups are calling on supermarkets to support the dairy industry, which is dealing with the impact of bushfires, drought and COVID-19.

CEO of Dairy Connect, Shaughn Morgan, has announced that serious consideration of the urgent introduction of a dairy levy is needed. Meanwhile, national advocacy body Australian Dairy Farmers has renewed calls for supermarkets to increase the retail price of discount milk to $1.50 per litre, with the increase going back to farmers.

“Farmers have been hit hard by the impacts of drought, bushfires and high production costs,” says Australian Dairy Farmers chief executive David Inall. “The price farmers pay for energy, and water and fodder for their cows remains high, but the retail price for their milk has stayed stubbornly low for almost a decade.”

Milk prices have remained low for years.

Major retailers, led by Woolworths and Coles, last year increased the price of their private label milk brands from $1 per litre to $1.10 per litre, with farmers getting the full increase. But Inall says increasing the retail price of discount milk further to $1.50 per litre would reflect the inflation rises farmers should have received over the last decade to account
for the current cost of production.

“We lost nearly 500 dairy farms in one year between 2017/18 and 2018/19 and since 2011, we have lost more than 1500,” he says. “Since 2011, the average profit for a dairy farm in Australia has been $41,553 per annum. If we are to stop farm exits and hardship, then retailers need to increase the price of their store brand retail fresh milk to $1.50 per litre with the increase going back to farmers via their processors.”

“Psst… hear about the levy?”

Federal Agriculture Minister David Littleproud has called for a voluntary levy to support dairy farmers, arguing that it would allow the market to respond, with consumers being able to make purchasing decisions that could benefit farmers.

A dairy levy is not a new idea. In 1999, the Howard Government introduced the Dairy Adjustment Levy of 11 cents per litre on consumers of products marketed as dairy beverages. This levy ran for more than eight years. The recent “drought levy” was also shown to be effective in providing support to dairy farmers

“Dairy farmers have endured drought, fires and now they are dealing with increased uncertainty from the impacts of COVID-19,” Littleproud says. “This has come off the back of years of devaluation of the industry with retailers selling milk for only a dollar per litre.

“During COVID-19, supermarkets have been one of few industries to prosper. There’s an opportunity for them to rebuild trust and ensure more money gets into dairy farmers’ pockets. Dairy farmers don’t want charity – they just want to play on an even playing field.”

Inall says the country’s 5200 dairy farmers appreciate the support of the Federal Government: “It is fantastic to see that the Federal Government recognises this is a major issue for the industry and is prepared to continue pushing for dairy farmers to receive a fairer price for their product,” he says. “The retail prices of other fresh food products tend to fluctuate with demand, but the shelf price of milk has remained relatively flat.”

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