OPINION PIECE: A floor to fix the flaw

28 February 2019

Our dairy farmers are giving up in increasing numbers, and who can blame them? It's not as if they haven't fought hard. They have.

But they've been engaged in a Samson and Goliath battle they cannot win.

They need help and they need it now. If we don't act we face the very real prospect our drinking milk will come from imported milk powder.

Those who sincerely think our farming families can be saved by the voluntary actions of the big retailers are mistaken.

Any retail levy is bound to be temporary, will lose value over time and many farmers won't benefit from it.

The last thing we want is for consumers to boycott our supermarkets. That will only hurt the dairy farmers who supply them.

Only government can address the market failure that is driving our farmers to the wall.

The dairy industry is big and complex. It's our third biggest agriculture sector, creating up to 50,000 Australian jobs and generating $13.7 billion. It produces a wide range of products and supplies both domestic and export markets.

Any government intervention must be mindful of the sector's diversity and trade exposure.

Labor is acutely aware of this.

That's why we will have the Australian Competition and Consumer Commission test, assess and shape our minimum farm gate milk price proposal.

Having said that, we expect the ACCC to tell us not why it's all too hard but rather, how we best get the job done for farmers.

Most Australians are protected by a minimum wage and our dairy farmers should be too.

A minimum farm gate price will provide that protection.
Dairy farmers produce a staple, perishable product.

Indeed, fresh drinking milk is arguably a product of necessity.

The Minimum Farm Gate Milk Price will be different in every dairy region because every region is different.

Once the independent and expert body assesses the average cost of producing milk in a given region, it will declare the minimum price farmers can be paid. Of course, the minimum price will be above production costs.

Of course farmers will continue to bargain for the highest price they can secure. But they can budget ahead knowing that their revenue will be at least the floor price.

That guaranteed income should in turn deliver the certainty and confidence needed to plan and to invest in productivity-lifting innovation and infrastructure.

This opinion piece was first published in the Weekly Times on Wednesday, 27 February 2019.