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 has been 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. This increase should go back to farmers.

“Farmers have been hit hard by drought, bushfires and high production costs,” says Australian Dairy Farmers CEO David Inall. “The price farmers pay for energy, water and fodder is high. But the retail price for their milk has stayed stubbornly low for a decade.”

Fair go for farmers: time for a dairy levy?
Milk prices have remained low for years.

We’re losing dairy farmers

Major retailers last year increased the price of their private label milk brands from $1 to $1.10 per litre. Farmers received 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. This would also account for the current cost of production.

“We lost nearly 500 dairy farms in one year between 2017/18 and 2018/19,” he says. “Since 2011, we have lost more than 1500. And 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, 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.”

Fair go for farmers: time for a dairy levy?
“Psst… hear about the dairy levy?”

No hand-outs here

Federal Agriculture Minister David Littleproud has called for a voluntary dairy levy to support dairy farmers. He argues that it would allow the market to respond. Consumers could 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. 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 and fires” Littleproud says. “Now they’re dealing with increased uncertainty from the impacts of COVID-19. This has come off the back of years of devaluation of the industry. Retailers were 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,” he says. “Further, it’s prepared to continue pushing for dairy farmers to receive a fairer price for their product. The retail prices of other fresh foods tend to fluctuate with demand. But the shelf price of milk has remained relatively flat.”