ADF calls for retail milk levy

It comes hot on the heels of the Dahlsen report, which would see the funds generated from a supermarket drinking milk price rise returned directly to all Australian dairy farmers.

The ADF board met last Thursday to decide its stance after the markets, trade and value chain policy advisory group (PAG) discussed the issue earlier this month.

"We will work with the federal government to explore mechanisms such as a retail sales levy to provide a meaningful increase in returns to all dairy farmers," the resolution said, according to an ADF spokesperson.

READ MORE: Dahlsen dairy report available

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In today's letter to members, ADF president Terry Richardson said it supported an increase in private label fresh milk from $1 to $1.10 per litre, but there had to be a permanent solution.

The ADF had considered several potential mechanisms, including:

"So far, our analysis has found that a retail sales levy provides the strongest mechanism," Mr Richardson wrote.

"That is why we are urging retailers to increase the price of their generic fresh milk brands to $1.50 per litre with the increase going back to farmers via their processors."

The Dahlsen report had argued for the funds generated by a retail price rise would be distributed to all dairy farmers via an independent body.

On reading the ADF letter, Mr Dahlsen said that independence was important because it provided "clarity and there's no doubt that it's all to the benefit of the dairy farmer".

Rather than detailing how the funds would be shared among farmers, ADF has instead called for a taskforce to investigate the best approach.

"ADF has recommended to the Minister for Agriculture, David Littleproud, that the Federal Government establish a taskforce to determine actions to resolve these issues and identify the type/s of price intervention most suitable for consideration in the retail sector," Mr Richardson wrote.

Mr Dahlsen said it was good that the ADF had looked at a range of options and come to the same conclusion that the retail price of milk had to rise, with funds returning to farmers.

Asked for comment about a retail milk price levy, Coles instead referred to its direct-to-farmer model.

"Last year Coles introduced a direct contract model for Coles Brand milk in Victoria and central and southern New South Wales which allows us to deal directly with farmers rather than through a processor," the spokesperson said.

"We consider our offer provides certainty of income for farmers through fixed pricing and a choice of 1, 2 or 3 year agreements.

"The arrangement is working well and we're now rolling it out across South Australia and Western Australia."

More to come

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