FRUSTRATED NSW milk producers have flagged more industry exits.
Farmers with as much as 12 months still remaining on contracts have been approached by processors to re-sign for three years at close to four cents a litre less – and told if they don’t their contract will not be renewed next year.
Those supplying the big Japanese-owned Lion, formerly National Foods, via the Dairy Farmers Milk Co-operative, have been told to expect similar price drops when contracts are renegotiated from July.
This is on top of drops farmers have already incurred since the start of the milk discounting war a year ago.
NSW Farmers dairy chairman Terry Toohey claimed the farm gate price drops were purely a result of declining private label milk sales following the supermarket slashing of generic brands to a dollar a litre.
“It is quite clear in the dairy industry the actions of Coles, and other milk retailers who have followed, have for-
ced milk processers to reduce the value of farm gate milk to unsustainable levels,” Mr Toohey said.
The majority of dairy farmers had taken the price reduction rather than risking having no contract in a year, meaning they were now operating very close to the cost of production.
“There are no margins for what farmers have invested and that is simply unsustainable.”
NSW Farmers’ survey figures show in the nine months following the Australia Day 2011 milk price cuts, the cost had been $15 million to the farming industry – or $18,500 per dairy farming family across NSW.
NSW Farmers wants the government to step in to ensure bargaining equality and transparency in the dairy product chain – specifically a mandatory code of conduct for supermarkets overseen by an independent ombudsman.
Milk producers also feel little loyalty to processors, who they say are “doing the deals with the supermarkets” and who are willing to “ship in southern milk where costs of production are cheaper, rather than foster long-term relationships with local suppliers”.
Farmers have expressed support for touted international interest in establishing milk manufacturing facilities in northern NSW, which would offer a way into lucrative dairy export markets for farmers milking between the Hunter Valley and Mid Queensland.
Without government action, or additional markets, NSW and Southern Queensland consumers could well be starved of fresh locally-produced milk, they warned.
Fifth generation Mid North Coast milk producers Thomas and Wendy Cooper, who, with family Dennis and Suzie Cooper, milk 185 Holsteins at “Sunny Corner”, Wauchope, said valuable knowledge would be lost to the industry if long-term dairy farmers were forced out by low prices.
The Coopers, who supply the Indian-owned Sungrow factory in Wauchope, took a price cut from 43c/L to 39c/L from January 1, which had combined with tough seasonal conditions to put them under heavy pressure.
“If people in cities want their milk cheaper and cheaper, in the long run there will be costs,” Mr Cooper said.
“One dollar a litre milk is unviable for the farmer – and that means eventually consumers will be looking at long-life milk grown overseas as the only choice on their shelves.”
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