I’ve been asked a few times why dairy farmers don’t just refuse to supply supermarkets or tip our milk down the drain in protest at the unsustainable price of milk. Meanwhile, the actions of the Brits in blockading milk processors has been spectacularly successful. I thought I’d put a few “burning” milk price questions to the president of the United Dairy Farmers of Victoria, Kerry Callow, who kindly offered the following replies.
MMM: We’ve all heard that $1 milk is a big deal for farmers but what about consumers? It sounds like a great deal, especially for families doing it tough!
KC: Milk at $1 is obviously attractive to consumers. Especially those with limited incomes and young families to feed. Dairy farming families understand limited incomes. They have had a cut in prices they receive – like having a salary cut. But this is not just about the here and now. It’s also about what’s sustainable. What will consumers have in years to come? Milk at $1 a litre retail is not sustainable for dairy farmers to produce. In Queensland it is reported that already 30 farms have left the dairy industry and more will follow. And consumers will have noticed the challenge in finding non-supermarket brand full cream milk in the dairy sections. This is a strategy for the supermarkets to dominate the supply of milk products industry. It is hard to see how consumers will keep the choices they currently enjoy. Farmers cannot afford to produce milk at the current price.
MMM: Why don’t farmers simply refuse to sell the milk at such low prices?
KC: Dairy farmers also have families to feed, children to educate and bills to pay (power has gone up 16% since the end of June, refrigerant gases required to cool milk have skyrocketed). And dairy farmers also have contracts to supply milk to processors to fulfil. The financial penalty to not supply is greater than the financial penalty to supply at a loss.
MMM: What about tipping the milk down the drain for a few days?
KC: Tipping milk out for a few days doesn’t fix the problem. (Disposing of milk that way does create added management challenges on farm). The problem is that supermarkets have decided to use milk as a ’loss leader’ and hold the price of milk down to ridiculous levels.
MMM: Is the VFF/UDV considering action like the farmers took in the UK? Would it work here?
KC: There is also discussion in New South Wales and Queensland about taking direct action. Because dairy farmers in those states rely heavily on the fresh milk market they are more exposed to the supermarkets pricing actions. Taking direct action is difficult because in this case the focus of dairy farmers angst is not a government or agency or authority, it is a commercial entity that has shown limited capacity to hear farmers concerns or acknowledge that their actions are directly and adversely impacting dairy farming families. That said, farmers are getting frustrated with the current situation.
MMM: Is there a silver lining to the $1 milk campaign?
KC: Not really. The supermarkets will point to milk consumption being higher now than before the retail milk price was slashed. But we think the consumer is heading down the road of less choice for milk products. And now we have other products like cheese and butter being marketed heavily on price. That is not a positive outcome.