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Australian milk levy a mess: Worst hit farmers get nothing

The dairy industry desperately wants to end the supermarket giants’ $1-a-litre milk discounting.

But Queensland Dairy Organisation’s call for a 10-cent-a-litre “drought levy” is the wrong way of going about it.

Trying to use public sympathy over drought to leverage a milk price increase is absurd and the consequent mess we now face was entirely predictable.

Droughts come and go. So it’s no surprise Woolworths and Coles see the 10-cent drought levy as a temporary measure, to be removed once we get a decent break.

This is not what QDO or the Australian Dairy Farmers wanted. As ADF president Terry Richardson recently said: “Ultimately, we must push for a permanent end to discounted dairy products, whether it’s $1 per litre milk or cheap cheese.”

What we have instead is a drought levy that has created confusion, is being collected on some milk containers and not others, depending on the supermarket, and is being unfairly distributed.

We even have Woolworths collecting the 10-cent a litre drought levy on Victorian milk (supplied by Fonterra) and then handing the proceeds on to Parmalat for distribution to its 220 NSW and Queensland dairy farmers. How is this fair? None of the levy is going to NSW Bega suppliers or Victoria’s Central Gippsland and East Gippsland dairy farmers, who have endured two years of severe rainfall deficiencies.

Many of the Parmalat suppliers receiving an extra 10 cents a litre are farming on the northern NSW and Queensland coasts which have suffered the least in the current drought.

To Coles’ credit, its managers appear to have recognised the inequity of simply handing the levy to one processor, and are distributing the levy they collect through a central fund that’s available to all drought-affected dairy farmers.

Finally, a drought levy on drinking milk is inequitable to Victorian farmers, given most of their milk goes into manufacturing.

Just 644 million litres of Victorian farmers’ 5.9 billion litre annual production goes into drinking milk, which means distributing a 10-cent levy would deliver an extra cent a litre to the state’s dairy farmers. Compare that to a Queensland Parmalat supplier who has been promised 10 cents a litre from the levy.

Sadly the whole drought levy campaign simply reflects the disunity of the dairy industry.

Rather than mounting a co-ordinated campaign to increase drinking milk prices across the board, we’ve ended up with a kneejerk response that has turned into a complete mess.

QDO, ADF and the other state dairy farmer lobby groups need to sit down with processors to thrash out a strategy that ends supermarkets’ “down” discounting.


Source: The Weekly Times

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