“Unsustainable” milk prices forcing Australian dairy farmers out of business

Posted by AFN Staff Writers on 7th October 2011

Australia’s peak dairy farming body, Australian Dairy Farmers (ADF), has told a Senate Committee inquiry that Australian dairy farmers are being pushed out of business by supermarkets retailing milk at “unsustainable” prices.

The ADF was addressing the Senate Economics References Committee Inquiry into the impacts of supermarket price decisions on the dairy industry. The inquiry met the ADF representatives on Thursday 6 October 2011.

ADF President Chris Griffin said that in the last eight months, many dairy farmers in Queensland, northern NSW and Western Australia have left the industry because of “cut-throat discounting” of milk by leading Australian supermarkets.

Mr Griffin said, “Milk priced at $1 per litre does not bring in enough money to support farmers, processors and retailers. The ADF is calling on the Federal Parliament to support industry’s recommendation for an enforceable and mandatory Code of Conduct for supermarkets that covers the entire value chain, from farmer to retailer.”

Mr Griffin added that the dairy industry has modelled the potential impact of the discounting of milk. The model outlines a potential annual loss of A$44 million from the value chain due to the shift to home brand products. This would mean a drop of two cents per litre in the farmgate price.

“For the vast majority of northern NSW and Queensland dairy farmers, this would result in the loss of any profit margin on their milk,” he said.

Mr Griffin also pointed out that the United Kingdom had experienced similar milk ‘price wars’ and, in response, the UK Government developed a Groceries Supply Code of Practice.

The dairy industry has called for a Supermarket Commissioner or Ombudsman to be established to investigate complaints and enforce a similar new code in Australia.