Adjournment – Dairy Industry

Do Australians want to keep drinking fresh Australian milk and having access to some of the finest and best quality dairy products in the world?

An honourable member: Yes.

Mrs MARINO: I’m glad to hear it. As a dairy farmer, I’m here to talk about the Australian and WA dairy industries. Recently, as a co-convenor of the Parliamentary Friends of Primary Producers, we hosted the dairy industry here in parliament focusing on Dairy Australia, Australian Dairy Farmers and the Australian Dairy Products Federation—the manufacturers of dairy products. There was a cross-section of the industry in attendance, including Michael Partridge, a dairy farmer whose White Rocks dairy business is near Brunswick Junction in my electorate. It was an outstanding event, featuring some of the wonderful cheeses and dairy products produced right here in Australia. However, there are real concerns about the broader industry, and that was expressed by the manufacturers as well.

For those of us who are passionate about the industry, we are very worried about the future of the industry. Milk volumes are declining from the historical highs of around 11.2 billion litres per annum, nationally. Dairy Australia projections show a further four to six per cent decline in production, bringing total production to around eight billion to 8.2 billion litres. There’s been a reduction in the national herd to 1.34 million dairy cows as well, and a corresponding reduction of manufactured products and throughput for those particular manufacturers.

In WA we’re down to 116 dairy farmers, with five more due to exit the industry that I’m aware of. At the time the industry deregulated, there were around 300 dairy farmers in WA, geographically spread from just south of Perth, down to the south-west, through to almost Albany. I think we had 125 dairy farmers in my Harvey shire alone. There are not many of us left now. The dairy industry has, historically, underpinned many regional towns and community economies in the dairy production states, and there have been significantly increased costs to produce milk in feed, in fertilisers, in power and in labour—that’s if you can find people prepared to work on a dairy farm currently. The reduction in volumes is, of course, an issue for the manufacturers, for both the domestic and export markets, given Australia is the fourth largest in the global dairy trade.

In the domestic market, there’s absolutely no doubt that the market power of the major supermarkets comes at a cost to milk processes and, ultimately, dairy farmers who are the ultimate price takers with a perishable, vulnerable product. The vertical integration of the supermarkets through Coles’ purchase of two processing plants in Victoria and New South Wales also concerns me, and I can see further vertical integration coming. Coles also owns Jewel Fine Foods ready-made meals facility, also in New South Wales. I want people to keep in mind it was the major supermarkets that cut the heart out of dairy farmers returns with its $1 milk that took significant market share from the historic branded products. This directly increased financial pressure on milk processors as well as farmers.

Here we have the market power and concentration of major supermarkets having a direct negative impact on both milk processors, manufacturers and dairy farmers. They’re also contracting milk directly from farmers, so vertical integration and absolute control of the whole supply-and-value chain, from farm through to consumer, is complete. But we have a perishable product that is fresh milk. It needs to be refrigerated, collected and processed on a daily basis. It places us as dairy farmers in a very vulnerable situation.

In the longer term, we are definitely vulnerable compared to the market and bargaining power and control of the major supermarkets who sell the majority of the milk. There are major challenges for young farmers trying to get into the industry: the cost of a startup and the bank’s willingness to lend, what it costs to the business, the pricing of the risk and the interest rates applied to potential new entrant. These people are few and far between. So a critical role is to keep consumers of dairy products, particularly those who live in cities and metropolitan areas, connected to those of us who are the producers and source of some of the best quality food in the world. Keeping in mind the drinking milk is a dietary staple in 98 per cent of Australian households, this really does matter, whether you’re a young child or of mature age, so I encourage people to keep buying branded Australian milk and dairy products.