Peak dairy farmer advocacy body, Australian Dairy Farmers, released a statement on Tuesday calling for the retail price of milk rise to at least $1.50 a litre and, perhaps, a retail levy.
It comes hot on the heels of United Dairyfarmers of Victoria's in-principle endorsement of a report written by businessman John Dahlsen, which recommended funds generated from a supermarket drinking milk price rise be returned directly to all Australian dairy farmers.
Last Thursday, the ADF board resolved to "work with the federal government to explore mechanisms such as a retail sales levy to provide a meaningful increase in returns to all dairy farmers".
In a letter to members on Tuesday, ADF president Terry Richardson said it supported the increase in private label fresh milk prices to $1.10 a litre, but there had to be a permanent solution.
The ADF had considered several mechanisms, including:
- Farmgate minimum floor price;
- Minimum retail sales prices;
- Retail sales levy;
- Two-tier pricing for farmgate milk; and
- Government subsidised investment in regional processing.
"So far, our analysis has found that a retail sales levy provides the strongest mechanism," Mr Richardson wrote.
"That is why we are urging retailers to increase the price of their generic fresh milk brands to $1.50 per litre with the increase going back to farmers via their processors."
The Dahlsen report proposed funds generated by a retail price rise be distributed via an independent body.
On reading the ADF letter, Mr Dahlsen said that independence was important because it provided "clarity and there's no doubt that it's all to the benefit of the dairy farmer".
And while both Dahlsen and the ADF propose government intervention to create the retail levy, the two differ on the World Trade Organisation implications.
ADF believed it would constitute an aggregate measure of support, limiting the amount it could raise.
Rather than detailing how the scheme would work, ADF has instead called for a taskforce to investigate the best approach, because there were issues with a retail sales levy that "need to be resolved".
"ADF has recommended to the Minister for Agriculture, David Littleproud, that the Federal Government establish a taskforce to determine actions to resolve these issues and identify the type/s of price intervention most suitable for consideration in the retail sector," Mr Richardson wrote.
Mr Dahlsen said it was good the ADF had come to the conclusion that the retail price of milk had to rise, with funds returning to farmers.
Asked about a retail milk price levy, Coles instead referred to its direct-to-farmer milk purchasing model.
A Woolworths spokesperson said the supermarket had "taken steps to support a more sustainable dairy industry while the Federal Government works to deliver the structural reform recommended by the ACCC.".
The current 10-cent-a-litre levy had so far contributed about $50 million in relief to dairy farmers and could deliver another $30m over the next 12 months, she said.
Woolworths said it had also agreed to wholesale cost increases from milk processors in response to rising farmgate prices.
Stock & Land sought comment from Mr Littleproud.
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Marian Macdonald
Writing for farmers in the Stock & Land, The Land, Queensland Country Life, Stock Journal and FarmWeekly, farming in Gippsland.
Writing for farmers in the Stock & Land, The Land, Queensland Country Life, Stock Journal and FarmWeekly, farming in Gippsland.
