Prolonged drought conditions throughout the Southern Highlands and much of eastern Australia has exposed structural problems within the dairy industry that a milk price increase will do little to fix.
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Supermarket chains Coles and Woolworths recently announced an increase to their milk price of 10 cents per litre while Saputo Dairy Australia, which owns the Murray Goulburn Co-operative, raised its farmgate milk price by 20 cents per litre for the current financial year.
Fourth generation Burrawang dairy farmer, Craig Whatman argues this increase is not nearly enough for the industry’s long-term viability. “We need a minimum of 70 cents per litre farmgate price, and closer to a dollar a litre to get us through this drought,” Mr Whatman said.
“You need a sustainable farmgate price so you can buy and store the hay and fodder you need before droughts hit and to pay for the increasing costs of electricity,” he said.
While the announcement of a temporary retail price increase by Coles and Woolworths was welcomed by many government and industry representatives, it is applicable only to drinking milk, leaving out other dairy products like yoghurt and cheese.
“All the milk and dairy we produce which goes into yoghurt and cheese isn’t included, so it averages out to be about two cents per litre more for us,” Mr Whatman said.
Read more: Taking stock of drought dilemma
“I wouldn’t even call it a band-aid with the way the industry is and the cost of milk production,” he said.
South Coast and Highlands Dairy Industry Group chair Laura Burn said the drought had significantly impacted the dairy industry and "it will take a long time to recover.”
“It definitely starts with retailers and supermarkets but it’s also consumers demanding change. That will make the difference,” Ms Burns said.
There are eight dairy farms left in the Southern Highlands, compared to the 300 that existed 40 years ago. One of those eight is currently for sale. Government assistance including concessional loans, the federal Farm Household Allowance and more than $1 billion in state government drought-relief have attempted to see farmers through, but it is the price of milk, Mr Whatman argues, that will determine the fate of the dairy industry.
“Everywhere is struggling and something’s got to be done.”
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