Dairy farmers shutting up shop over unviable market conditions

An advocacy group for dairy farmers is calling on the federal government to consider reintroducing an 11 cent a litre levy on the retail price of milk, saying it could save the industry in Australia.

Dairy Connect CEO Shaughn Morgan said that many dairy farmers cannot continue in the current conditions with low farm gate, high fodder prices, increasing energy costs and “unfair milk supply agreements”.

“Farmer families are exiting dairying because, in current terms, the sector is not delivering a viable economic framework for their farming enterprises,” Morgan said.

Morgan said dairy farmers are at risk of being locked into low milk price agreements for up to five years because of delays in introducing a federal Mandatory Dairy Code of Conduct recommended by the ACCC, which is scheduled for introduction in mid-2020.

An 11 cent milk levy was introduced when the dairy industry was deregulated 20 years ago, but expired after eight years.

Former ACCC chairman Professor Allan Fels, who oversaw deregulation of the sector, said dairy farmers need a fair return to ensure sustainability of the industry.

“To my mind, the levy was an adequate solution for that period following the deregulation of the dairy sector and it expired at a time when the industry had adjusted to the new way of operating,” Fels told the Weekly Times.

“Obviously, times change and sometimes this form of assistance can be re-
examined, particularly in light of the difficulties faced by farmers.”

Dairy Australia has indicated that Australian milk production, for the 2019/2020 season, continues to decline with production down 8.4 per cent on the same time last year.

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