Rural: Dairy deregulation turning sourby Patrick J. ByrneNews Weekly
, July 1, 2000
As the date falls due for deregulation of the dairy industry, there is mounting concern of the effects it will have on farmers, and growing calls for deregulation to be scrapped and replaced with a new regulation formula.
Last December, the new Victorian Labor Government gave dairy farmers a vote on whether they wanted deregulation with an adjustment package or deregulation with no package.
Farmers, understandably, voted for the former.
That Victorian decision effectively forces the other states to accept deregulation.
Recently, just prior to the National Party’s National Convention, the Managing Director of Pauls Limited, Mr Ray Hill, spoke out strongly against deregulation saying that it should never have happened and that it was going to have horrendous effects on farmers.
In a taped interview with freelance journalist, Pat Boyce, Mr Hill said that the “Big Three retailers” — Coles, Woolworths and Franklins — stood to gain most from price deregulation.
Mr Hill said that his company, part of the Italian-based Parmalat group, and a major processor in Queensland and Victoria, was offering its Queensland farmers the highest price in Australia — 44 cents a litre — in order to ensure that the industry survived.
Under deregulation, Pauls could, for a time at least, get as much milk as it needed at 9-15 cents a litre less than it was now paying.
“We have set our price higher than anyone else primarily to try and keep the farm sector alive. There’s going to be an enormous shakeout in the meantime,” Mr Hill said, adding that it was probably true that, except from the retailer’s point of view, regulation should have been maintained on farm prices.
Deregulation of wholesale/retail prices could still be applied. “Milk is still very cheap. It’s cheaper than Coca Cola. It’s cheaper than water in a lot of cases.”
Mr Hill blamed the Victorian industry, which only has seven per cent of the fresh milk market, for pushing deregulation. “They saw advantage to themselves in destroying the industry in Queensland and NSW. It was done for greed and not much else. That’s the mess it’s in, and it is in a terrible mess. We’ve got farmers going to the wall.
“I think we’ll probably lose 600 of them in Queensland and unfortunately none of them go elegantly. It’s not possible to go elegantly. Unfortunately, a lot of dairy farms are not suitable for anything else and for some it will be horrendous. It’s a shocker,” Mr Hill said.
Pauls is one of Australia’s big milk processors, and Mr Hill’s comments clearly expressed concern for the fate of thousands of dairy farmers under deregulation.
Although he consented to his strongly-worded statement being used for a press release, Mr Hill subsequently publicly retracted his comments.
Until early last year, several smaller milk processors also publicly voiced strong opposition to deregulation. However, within a few months, they also reversed their position and supported deregulation. They gave no adequate reason for their change of heart.
At that time Mr Alex McKenzie, former board member of the United Dairy Farmers of Victoria, told News Weekly that he wondered whether some supermarket chains had unduly pressured these processors in relation to future shelf-space for their products.
Outside the recent National Party National Convention several hundred dairy farmers protested over the party’s support for dairy deregulation. They pointed out that while the effect the Nationals supporting a GST on caravan park residents could cost the party seats, support for dairy deregulation could cost even more seats.
Meanwhile the National President of the newly-formed Australian Milk Producers Association, Mr John Cartwright, has strongly attacked the Federal Minister for Agriculture, Warren Truss, for claiming Federal Government kudos for a dairy deregulation rescue package which was in fact funded by consumers and farmers, and which would still send a third of Australian dairy farmers broke.
He disputed the Government’s claim that consumers would pay for the $1.8 billion compensation package for farmers. He said farmers would be paying for the package themselves through lower farm prices.
Since partial deregulation of milk prices, the retail price has risen by about 19 cents per litre, the return to farmers has dropped by about 40 per cent, while supermarkets have increased their profit margin from 10 per cent to 25 per cent.
Mr Cartwright said that as it now stands, the proposed industry deregulation would mean the loss of $500 million in farm incomes and a multiplier effect of about $2 billion in more than 400 rural communities.
He said that the Australian Milk Producers Association has an alternative to deregulation which would allow dairy producers in all states access to national markets, whilst maintaining farm prices and protecting consumers.