Often when I drag myself out of bed in the mornings – especially in the dark depths of winter – I spare a thought for our dairy farmers, who I well realise will already have been up and at it for hours. Not only up and at it, but working their guts out – as they do every day of the year, rain or shine, morning and night – to keep us supplied with fresh milk.
And what do they get in return? A milk price no better than they received 30 years ago, while their costs of fodder in recent months have more than doubled, and electricity bills gone through the roof. Little wonder that we read in The Land in recent weeks of farmers “pulling the pin”, and of others steering their kids in other, more rewarding career directions.
It’s nothing short of a national scandal that we are able to waltz into a supermarket and buy a flask of fresh Australian milk for less than the cost of an equivalent bottle of water. The trouble started in 2011, when supermarkets – led by Coles with its “Down, Down” promotion – started using low-priced ($1/litre) milk as a back-of-store “bait” to lure shoppers down their aisles.
Related reading: Milk levy is an insult to farmers says NSW Farmers
Little has really changed since, and only now, in response to industry-wide outcry, are we seeing some marginal price rises being applied to selected products by Coles and Woolworths. But the 10 cents “drought relief” levy proposed by Woolworths on its home-brand milk, and the 30c surcharge planned by Coles to its three-litre packs, are just an insult to farmers, when in reality the price of milk should probably rise by at least 50 per cent across the board.
Consumers understand the fundamental economics of drought. They know that meat will be cheap when drought is forcing stock onto the market, and dearer after it rains.
They expect their fruit and vegetable prices to reflect the supply/demand realities of seasonal vicissitudes. They would likewise accept a substantial rise in prices of milk and other dairy products at a time like this, knowing the cost pressures farmers are facing to keep the milk flowing. But what is going to make this happen?
As Australian Dairy Farmers president Terry Richardson put it well in a recent full-page statement in this paper, “This (discounting) pricing practice is not viable and we urgently need a shared solution to assist in building the long-term sustainability of Australian dairy farmers”. Nor is it just a matter of supermarket-bashing. As Australian Competition and Consumer Commission chairman Rod Sims has observed, it’s all just too easy for the big processors to blame the supermarkets for low prices.
In reality, he said, the contracts governing supply of home-brand milk to the major supermarkets allow for “flow-on” price increases, if the processors care to apply them. Clearly, what we have in the dairy industry is a classic case of market failure, and it’s time for some inspired government intervention to re-empower farmers before our dairy herds end up as hamburger mince.
- Peter Austin
