Coronavirus: Pressure to extend milk levy shelf life

Agriculture Minister David Littleproud is pushing the major supermarkets to extend and potentially increase the temporary milk levy.

Dairy farmer Peter Garratt. Picture: Lyndon Mechielsen

Agriculture Minister David Littleproud is pushing the major supermarkets to extend and potentially increase the temporary milk levy, providing a lifeline for farmers “until the full benefits” of the mandatory dairy code of conduct begin to flow.

The Nationals’ deputy leader said the dairy industry was facing an “unsustainable” situation with the “morally bankrupt actions of supermarkets” selling milk at $1 a litre, the behaviour of processors and deregulation.

Writing for The Australian online, Mr Littleproud says almost 500 dairy farmers left the industry in 2019 as the cost of production remained above the market price.

Mr Littleproud writes that he has been in discussions with supermarkets since February about ­“individually extending and reviewing the quantity” of the dairy levy to support farmers.

He says it will “ultimately be up to each retailer to determine how much support they are willing to provide to our farmers”.

“The code’s implementation has taken time to get right but in the interim it was important to try and get farmers some price relief to help them survive drought and an imperfect market,” he writes.

“Despite fierce opposition at the time I was finally able to work with supermarkets to break the dollar-litre milk nexus that stripped the value of the dairy industry to the bone. It was initially broken through the introduction of a temporary levy of 10c on supermarkets’ home-brand fresh milk. That was an important first step because it allowed time for the government to consult with the dairy industry and finalise the dairy code of conduct terms.”

Queensland dairy farmer Peter Garratt, who has worked on his family’s farm for more than 20 years, said many in his profession had “got to the end of their rope” and left the industry due to issues associated with deregulation and dollar-litre milk.

“I’ve got lifetime friends in the district here who have also grown up on family operations and they have finished dairying because the economics have been just so bad for too long,” Mr Garratt said.

“When you add a drought on top of that, it’s been a tipping point for a lot of people. We don’t know how we are going to continue if we don’t see some changes soon”.

He said while the coronavirus had not had an immediate impact on his daily operations, it had highlighted the need for Australian-produced food. “No one wants to drink milk that is brought in from another country,” he said. “Now is the time to act.”

Mr Littleproud writes that not every litre a dairy farmer produces goes into fresh milk.

“It’s also used for things like butter, cheese and yoghurt. Many dairy farmers also supply the branded milk market, and these farmers don’t see any return from the current voluntary levy.

“During COVID-19, supermarkets have been one of the few industries to prosper so there is a unique opportunity for them to rebuild trust and work to extend the voluntary levy to ensure more gets into dairy farmers’ pockets.” Mr Littleproud argues processors are also part of the problem, with the Australian Competition & Consumer Commission effectively finding they have the “power to set the ­prices”.

The Queensland MP says the code aims to eliminate ­issues with supermarkets and processors. “Dairy farmers don’t want charity, they just want to play on an even playing field,” he writes.