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Time to stop milking dairy, fair go for farmers

Media Release 6 May 2020

  • Australian Dairy Farmers made it clear to the Senate enquiry that $1.50 per litre would mean the industry is sustainable.
  • Farmers need to receive a better price for their milk, and more farmers need to reap the benefits from the retailer arrangements.
  • Each retailer needs to decide how much support they are willing to provide to our farmers.

Agriculture Minister David Littleproud says the time is now for supermarkets and processors to play a greater role in the future of Australia’s dairy farmers.

“Dairy farmers have endured drought, fires and now they are dealing with increased uncertainty from the impacts of COVID19,” Minister Littleproud said.

“This has come off the back of many years of devaluation of the industry with retailers selling milk for only a dollar per litre.

“During COVID-19 supermarkets have been one of the few industries to prosper so there is an opportunity for them to rebuild trust and ensure more money gets into dairy farmers’ pockets.

“I have asked them to each individually consider extending and increasing the amount of the support they provide dairy farmers who faithfully supply products across the full dairy cabinet.

“This would allow the benefits of any supermarkets’ levy or support schemes to be distributed evenly to Australian dairy farmers, rather than only to those whose milk happens to end up in private label milk.

“Dairy farmers don’t want charity they just want to play on an even playing field.”

Minister Littleproud said a voluntary levy is the best option to support dairy farmers as it allows the market to respond, with consumers making purchasing decisions that benefit farmers.

“It is only fair that retailers play their part in giving farmers a leg up during this difficult time. This is a way of making amends for damage to the industry during the years of $1 milk prices.

“It will ultimately be up to each retailer to determine how much support they are willing to provide to our farmers.

“Processors are also critical to the sustainability of Australia’s dairy industry and we will work with them to ensure the Dairy Code of Conduct delivers fairness and transparency.

“The Dairy Code has introduced clear laws about how farmers and processors are to conduct their business relationship.

“But we need to explore further steps to make sure the balance is right, such as pre-contractual arbitration like the sugar industry enjoys and protecting farmers from potential predatory behaviour from the introduction of non-exclusive contracts.

“We would also welcome discussions on the setting up of a formalised price step up mechanism that dairy farmers can initiate based on cost of production data.”

Fast facts

  • Nearly 500 dairy farmers left the industry last year, many because their cost of production was above the market price.
  • The ACCC in 2018 identified there was a market imbalance between processors and farmers.
  • On recommendation of the ACCC, a Mandatory Dairy Code of Conduct was introduced 1 January 2020.