Big supermarkets, little farmers: the UK story

In the wake of the milk price war here in Australia, this story about the influence of supermarkets in the UK (click the underlined link) is a little unnerving. How can we prevent this happening here? Victorian farmers are less vulnerable to predatory tactics by big retailers for two reasons:

1. Much of our milk is exported; and

2. Victorian processing is dominated by a powerful 100% farmer-owned co-operative.

Having said that, we do share some concerns regarding the profitability of milk pricing.

Dairy Australia’s Australian Dairy Industry In Focus 2010 report says:

“At an average of approximately US$29 per 100kg of milk last year, Australian dairy farmers generally receive among the lowest prices compared to many major producing countries and so must operate highly cost-efficient production systems.  This is regularly borne out by international comparisons; where Australian farms consistently have costs of production in the lower cost category of all farms in such surveys. The fact that around half of Australia’s milk production has been exported over the last decade reflects this high level of competitiveness.

However, this has become increasingly difficult in recent years. Farm cost structures have increased in response to the need to adapt to drier conditions where rain fed pastures are regularly contributing a lower proportion of the total feed base available to the herd. Consequently, Australia’s share of international trade has trended lower as local milk production has contracted over the past decade.” (p. 10)