Greens candidate calls for milk pricing inquiry

GREENS candidate for Gippsland Ian Onley has supported the idea of an inquiry into giving all dairy farmers a share in the domestic fresh milk market, effectively ensuring a partial underwriting of the price paid to farmers for their milk.

“Deregulation of the dairy industry some 20 years ago was forced on to farmers, and many farmers were not agreeable to the change but were given no choice.”

Deregulation of the milk market was initiated in early 1999 by the dairy industry’s peak policy body, the Australian Dairy Industry Council.

It approached the federal government with a plan for a national approach to the deregulation of the drinking milk sector in conjunction with the end of manufacturing milk price support. 

As a result all states repealed legislation governing the sourcing and pricing of drinking milk, and the state milk authorities, which administered those controls, were wound up by July 2000. The overall impact was a decrease in the number of farms engaged in dairy production.

As a result Australian dairy farmers are now in a completely deregulated industry, where international prices are the major factor in determining the price received by farmers for their milk. 

At an average of about US 42c per litre, Australian dairy farmers receive a low price by world standards and therefore have to be extremely efficient.

Mr Onley told the Gippsland Times he sees the possibility of softening the impact of deregulation without imposing draconian regulations on the industry.

“Greens legislation would be informed by a senate enquiry foremost, but I think the most important thing would be to give all farmers a share in the fresh milk market,” he said.

“This would put all companies on a level playing field so companies supplying packaged fresh milk in to the domestic market place were not so able to cherry pick suppliers.

“With this recent drop in price to some farmers, there will be downward pressure on all farm gate milk prices, including those supplying the domestic fresh milk market.

“Dairy farming is one of the most exposed industries to market fluctuations, in effect making them very much price takers. In that environment, for an industry to prosper on a sustainable basis there needs to be a level of regulation, without distorting markets.”