AGRICULTURE: by Patrick J. ByrneNews Weekly
Dairy farmers fight for survival
, June 5, 2004
As dairy farmers are being warned to expect further falls in the farm gate prices for their milk next season, desperate farmers are taking to the streets and highways.
Recently, 200 younger farmers blocked part of highways with 120 vehicles near Colac in Victoria. In Gippsland 150 farmers and 90 vehicles blocked the highway. In Shepparton 200 farmers and 80 vehicles protested.
In Queensland they clashed with police outside a Wooloworths supermarket in Brisbane. Other protests are planned for Swan Hill (Vic), Taree (NSW) and Mount Gambier (SA).
Farmers have also taken to protesting outside the offices of members of Federal Parliament.
At the Colac highway protest, Camille and Steven Foster told The Weekly Times
, "What type of union would allow a workforce to accept less money now than they did 12 years ago?"
A declaration by South West Farmers covering the region said that the deregulated dairy industry had made "the fat cats fatter and the farming communities thinner, both in size and number.
"The time to act has since passed. Yet we still sit on our hands or have them tied by the multinationals and the supermarkets.
"It's a bitter pill to swallow that the milk that leaves the farm gate for 25 cents a litre will be sold for five or six times this amount on the supermarket shelf. Now, who does all the hard work and gets next to nothing? The farmer, of course. Why? Because we're price-takers."
A recent report on food prices, instigated by Federal Agriculture Minister Warren Truss, found that the price gap between the farm gate and the supermarket had widened. Indeed, the report, Study of Food Price Determination, may have significantly underestimated the size of the gap.
The report showed that from 1998 to 2001, the price of two litres of milk to farmers had dropped from $1.00 to 70 cents, while the price on the supermarket shelf had increased from $2.40 to $2.60. It also indicated a small increase in the share going to dairy processors.
What the study did not appear to consider in its calculations was that supermarkets require dairy processors to pay them a "rebate", a right to have their product on the shelves. This is believed to be worth several hundred million dollars annually to the supermarkets. This is a cost to processors, reflected in lower prices to farmers.
Being an election year, and dairy being a major factor in a number of very marginal seats, Prime Minister John Howard recently spoke with farmers in several areas. However, his view that "dairy was in great shape" signalled the lack of understanding on the issue in Canberra.
Another meeting in the same area with Labor leader, Mark Latham, indicated that Labor had the scent of trouble in marginal rural seats. Mr Latham offered reforms to the Australian Competition and Consumer Commission as a solution to the problem, but was unwilling to address the core issue, National Competition Policy.
Addressing the meeting with Mr Latham was the Executive Officer of the Australian Milk Producers' Association (AMPA), Michael Kearney, who said that the rural vote was up for grabs because of the crisis many rural industries are now facing from a range of government policies, especially competition policy. "However, if Labor wants the rural vote, it will need to offer something substantially better than what the Coalition is offering."
According to Mr Kearney, supermarkets have been the big winners and farmers the big losers with deregulation.
He said that in the three years after deregulation in 2000, the prices to the consumer went up faster than in the three years prior.
- In Sydney prior to deregulation, prices to consumers were rising 4.7 cents/litre annually, but after deregulation they rose 8.3 cents/litre a year. But after deregulation, NSW farm gate prices fell from 50 cents/litre to 34 cents/litre.
- In Melbourne annual rises to consumers went from 3 cents/litre to 4.6 cents/litre. But the Victorian farm gate price dropped from 48 cents/litre to 24 cents/litre.
- In Brisbane annual rises to consumers went from 4.7 cents/litre to 9.6 cents/litre. But the Queensland farm gate prices fell from 58 cents/litre to 37 cents/litre.
- In Canberra annual rises to consumers went from 2.3 cents/litre to 8.7 cents/litre.
Prior to deregulation, the industry was losing about 250 farmers a year. In the three years after deregulation, this jumped to 750 leaving annually. Average farm debt doubled between 1994 and 2002.
Michael Kearney refers to "the crisis from the deregulated market. Having 10,000 dairy farmers selling to three major processors, which are selling to two major supermarkets, is not competition; it's exploitation.
"This is why dairy farmers have to get militant and fight for their industry, for re-regulation to give them a price into the domestic market, or soon this major rural commodity industry will be reduced to a shadow of its former self," Mr Kearney said.