Canberra Report - Dairy Industry Needs Government Attention - Wednesday, 26 August 2020

Canberra Report - Dairy Industry Needs Government Attention - Wednesday, 26 August 2020 Main Image

By Joel Fitzgibbon

26 August 2020

The Upper Hunter was once a great and proud dairy region. Sadly, too many of our dairy farmers have now left the sector. It’s been 20 years since John Howard’s Coalition Government deregulated Australia’s dairy industry. What the sector would look like now if left alone, we do not know. But it could hardly look any worse.

In a media statement dated May 6, 2020, Agriculture Minister David Littleproud reminded us that across the country, last year alone, 500 farmers exited the industry. Forced out by rising costs and falling farmgate prices, they are asking the obvious: where will our drinking milk come from?

Deregulation didn’t only produce losers. There were winners, most of them big players with an eye to export markets where they capitalise on our clean and safe product reputation and push products like infant formula.

The big supermarkets saw opportunity too, using fresh milk as a loss-leader in a strategy to build market share at the expense of the corner store. It was a strategy that by 2011 gave birth to “dollar milk” so understandably despised by dairy farmers.

The question now is: does government have the will to save our dairy farmers and the local product they produce? Sadly, there’s little to suggest the answer is “yes”. Indeed, we all reached that conclusion in 2016 when the Turnbull Government refused to stand by our farmers in the face of Murray Goulburn’s decision to make them pay for the losses generated by the processor’s own poor business decisions. Murray Goulburn did so by retrospectively reducing the amount it paid to its farmers, for their supply of fresh milk.

The Government’s only response to the Murray Goulburn debacle was an ACCC inquiry. It took 18 months and identified a number of “market failures”. But sadly, it made only one substantial recommendation: the introduction of a mandatory code of conduct. Another twenty months on, the Morrison Government introduced the Code – better late than never.

But two and a half years on, it is clear – as I predicted – that a mandatory code of conduct would not be enough to save our dairy industry. Farming families continue to struggle, and until we guarantee them a decent price at the farmgate, they will continue to do so. Where will our fresh drinking milk come from when they’re all gone?