Dairy farmers ‘squeezed on milk prices’
Dairy farmers say they are being sent to the wall over milk prices, as one NSW farmer prepares to walk away from the industry because of increasing costs.
Six weeks ago third-generation dairy farmer Alan Henry made a big decision to start breeding his herd with beef cattle as he prepares to close the 99-year-old dairy his grandfather started.
Mr Henry, who has been milking at his Numbaa property on the NSW south coast for 40 years, says he is being sent to the wall by the supermarkets.
"We don't set the price, we get told our price.
"We're slogging it out and going backwards.
"The three big supermarkets in Australia have got too much power."
He wants the price of milk increased to $2 a litre, and for farmers to be paid $1.25 of that.
The milk price has increased in the past three years, according to industry group Dairy Australia, and with it the amount farmers are getting paid.
But for Mr Henry production is down 25 per cent due to recent flooding, while his input costs have gone up threefold in three years.
He concedes he will receive $50,000 in flood grants from the processor he supplies to, but says that won't cover his losses.
Sue Boyd, who runs the dairy next door, employs 35 people and is also feeling the squeeze.
"For years we've had to borrow more money to keep going," she says.
"It's always about the consumers and the wage earners, but everyone deserves to be paid properly."
In the four months to April, 1400mm - more than three times the average rainfall - fell at her property near Nowra. With everything waterlogged, milk production is down by 25 per cent.
"It's terrible for the cows,'' Ms Boyd says.
"They're much more likely to get mastitis from the amount of mud and water, and it makes their feet really sore."
While she concedes she is getting the highest milk prices she's ever got, Ms Boyd wants prices increased by at least 50 per cent, to make up for years of low prices.
But things have improved for most dairy farmers since a mandatory dairy code came into effect in 2020, says National Farmers Federation senior economist Ash Salardini.
The code followed the ACCC's 2018 inquiry into milk pricing, examining farmers' concerns over transparency on contract and pricing practices.
"Farmers feel like they're being squeezed ... regardless of what the input cost is, regardless of what the demand is, the retail price stays relative constant," Mr Salardini says.
"The mandatory code has helped."
But he says the retail price of drinking milk hasn't budged in the past 10 to 12 years.
"It's stayed in and around a dollar,'' Mr Salardini says.
"It was $1 a litre in 2010-11 and it's $1.30 now, but when you adjust it for inflation the price has probably come down."
He says collectively the big three supermarkets control more than 80 per cent of the market, and that they still dictate prices.
Australian Dairy Farmers president Rick Gladigau says farmers have been saying for years milk is too cheap.
The South Australian farmer says while other commodities have been going up, milk has not.
"It's back to saying to consumers if you want the good Australian-produced quality product, then sorry but you might just have to pay more," Mr Gladigau says.
But while he would welcome a price rise for milk, he concedes farmers also need to look at their own operations.
"Farmers have to look at how efficient they still are,'' Mr Gladigau says.
"There's no point in saying our processors need to pay more, if they can't get it out of the market themselves."
He says the supermarkets baulk at putting the prices up.
"I reckon they feel there will be kickback from consumers by putting up the price of milk,'' Mr Gladigau says.
"It's considered a staple ... but we've seen bread go up when the price of grain goes up."
On the north coast of NSW dairy farmer Paul Weir, who lost more than half his herd in the floods nine weeks ago, has only just begun milking at his dairy again.
The floods all but wiped out his operation, and he calculated fertiliser, fuel and feed this year would cost him an extra $200,000.
He is one of 281 NSW and Queensland farmers to receive an extra five cents a litre for the next two months from the Norco co-operative, to compensate for the flooding.
"That certainly helps,'' Mr Weir says.
"Is it enough? No it's not ... but it's the first of hopefully many."
It takes the average price per litre of milk paid by Norco to about 84 cents.
Woolworths was the only supermarket to reply to AAP's questions.
A spokesperson says farmgate prices are at record highs and that they have accepted millions of dollars in wholesale cost increases from their milk processors in recent years.
"We offer our customers a wide range of milk at different prices to suit household budgets and we are particularly mindful of cost-of-living pressures for Australian families," the spokesperson says.
"The ACCC has noted that retail pricing strategies are unlikely to have a direct impact on the prices paid to farmers, which are set by milk processors.
"In the last 12 months, our Dairy Innovation Fund has provided more than $2 million in grants to 24 Australian dairy farmers to support on-farm projects which enhance resilience, efficiency and profitability."
Mr Henry says he will decide on July 1, when the new price is set with the processor he supplies to, whether to walk away from the industry.
"All I want is an honest day's pay for an honest day's work," he says.
"Anybody you talk to in the street says they're quite willing to pay more for milk, on one condition, that it goes straight to the farmer."