Cheap milk, but what’s the cost?

Cheap milk, but what’s the cost?

Australian milk is cheap but it’s killing our dairy industry according to an indepth paper released by John Dahlsen.

It’s with a sense of urgency to help save those remaining in the industry that Mr Dahlsen has proposed a levy of 40 cents per litre on all fresh milk sold.

“The key issue here is nine dairy farmers are leaving the industry a week,” Mr Dahlsen said.

“They are terribly frustrated and desperate.”

His paper points out that in the year 2000 there were 12,896 dairies, which has dropped 60 per cent, with cow numbers decreasing by 34 per cent.

“There are only 5213 dairies left in the country – that’s a rate of almost 10 per cent a year exiting the industry and that’s before this year’s milk prices are released, which are expected to be lower than the previous year.”

In the executive summary of his paper, The Dairy Industry Crisis – the Case for Government Intervention, Mr Dahlsen states “the market has failed and market intervention is required”.

Mr Dahlsen, who has served on boards like Woolworths, Myer Emporium Limited and the ANZ Banking Group, said the 40c/l levy would be distributed to all dairy farmers depending on the volume of milk produced, irrespective of where it went in the market.

“It’s a simple, quick and efficient way to do it, it’s so simple,” he said.

“For a long time milk has been so severely discounted that consumers have lost a sense of what’s fair value.”

He said in New Zealand a litre of milk cost $2.50, while the worldwide average was $1.70.

His paper states milk was made $1/l on Australia Day in 2011, which later rose to$1.29/l, and he labels the discounting “unfair, unnecessary and unconscionable”.

“A 40c/l levy is also completely reasonable when you think of how fruit, vegetables and milk gyrate in price incredibly, sometimes 50 to 100 per cent. But in dairy that can’t happen,” he said.

He said any dip in milk sales would only last for a short period.

Mr Dahlsen’s nephew and Orbost dairy farmer, Chris Nixon, has been involved in the development of the paper and is hoping the proposal can be implemented sooner rather than later.

Mr Nixon said Bulla had released its milk price last Friday, which was 14 per cent lower than its previous year’s price.

“That will be reflective across the board,” Mr Nixon said.

More in the Primary Producer Wednesday, May 27, 2020.