Australian dairy lobby leaders unite in call to raise generic milk price

Australian shoppers now pay some of the lowest prices for fresh milk in the western world, analysis by The Weekly Times has found.

AUSTRALIAN shoppers pay some of the lowest prices for fresh milk in the world, new analysis shows, with farm leaders renewing calls for a revaluation.

Until the coronavirus pandemic and its accompanying government restrictions, both British and American supermarkets charged less on average for fresh milk than Australian retailers.

However, grocery chains on both sides of the Atlantic have been forced to alter price tags in their refrigerators after US and UK farmers were forced to pour milk down the drain due to dwindling demand.

The coronavirus price shift has left Australian prices at the bottom of the fresh milk price league table, according to analysis by The Weekly Times, stubbornly fixed at $1.20 a litre.

Australia’s milk price “wooden spoon” has led the nation’s dairy lobby leaders to unite in a call for the generic brand figure to be raised to at least $1.50 a litre.

United Dairyfarmers of Victoria president Paul Mumford said most Australians were prepared to pay 30c-40c extra for milk per litre in order to support farmers.

“We had a dollar-a-litre milk for so long, from Australia Day 2011 until last year. So that price lag, not keeping up with inflation, means the $1.20 a litre figure is nowhere near reflective of the true value of the product,” he said.

“If you ask dairy farmers right across Australia, not just in Victoria, the price for generic milk should really be at $1.50 a litre as a starting point.”

South Australian Dairyfarmers Association president John Hunt said public awareness of the importance of agriculture had been heightened by panic buying-induced shortages.

“If there was any time to raise the generic brand price, it’s now,” he said. “The shortages made people aware about the importance of farmers, the importance of the supply chain.

“Having said that, if it’s raised to $1.50 or whatever, there has to be a flow-on to the farmer. “The price rise has to flow to the farmgate.”

Analysis of international generic milk prices by The Weekly Times found the US average price across retail leaders Albertsons, Ahold Delhaize, Kroger, SuperValu and Walmart was $A1.31 — still too low, according to US dairy lobby leaders.

Across the Atlantic, the UK generic milk price has risen to $A1.38 based on the average across major chains such as Asda, Morrisons, Sainsburys and Tesco.

Likewise, the National Farmers Union dairy board chairman Michael Oakes has called for a retail price rise to better reflect the cost of production incurred by British farmers.

The analysis found the highest prices paid per litre for milk were in the high-wealth nations of Singapore and Hong Kong at $A3.87 and $A4.85 per litre respectively. Both city-states import all food — including fresh milk from Australia — with little space for domestic production.

The Queensland Dairyfarmers Organisation were successful in their quest to end the era of dollar-a-litre milk last year, with the big three supermarkets bumping up the generic price tag to $1.10 in February 2019.

Coles and Woolworths announced the extra 10c would be passed directly to farmers.

However, Aldi moved to rise the generic price to $1.20 a litre in July 2019 and was quickly followed by Coles and Woolworths. All three did not increase direct farmer aid as a result.

The QDO is also calling on the big three supermarkets to bump up the generic price to $1.50 a litre, an issue that has been keenly felt in the domestic market-exposed Sunshine State.

QDO president Brian Tessmann said dairy farmers in both Queensland and northern NSW “need something between 72c and 76c a litre to be making a decent living.”

The $1.50-a-litre campaign was given national impetus late last year, with Australian Dairyfarmers chief executive David Inall identifying the figure as a good starting point.

“Dairy farmers don’t set the price (that) processors pay for their milk,” he said.

“Farmers are price takers and having retailers sell discount fresh milk at the extremely low price of $1 a litre for almost a decade has had a severe impact. If we are to stop farm exits and hardship, then retailers need to temporarily increase the price of their store brand retail fresh milk to $1.50 per litre with the increase going back to farmers via their processors.”

In response to Mr Inall’s call, Aldi, Coles and Woolworths all outlined their contribution to dairy farmer support packages.

Spokespeople for all three supermarkets also noted a written submission by the Australian Competition and Consumer Commission to the senate inquiry into the dairy sector.

The ACCC concluded that the introduction of $1 per litre milk or reductions in other dairy retail prices “did not have an observable direct impact on farm numbers, output or profitability”.

“Rather, we found that movements in farmgate prices can be attributed to changing demand conditions within the export or domestic market, and that almost all contracts for the supply of private label milk allow processors to pass-through movements in farmgate prices to supermarkets.”