Dairy farmers sick of being milked

Dairy farmers are sceptical about whether collectively negotiating better contracts with processors to ensure a sustainable local milk supply will bring desired security while low supermarket pricing has a stranglehold over the market.

Following a report commissioned by Wesfarmers which warned the State’s shrinking industry was vulnerable to imports, revelations surfaced this week that Brownes had purchased three South West dairy herds to shore up supplies.

WA Farmers Federation president Dale Park said some milk purchase agreements may put farmers at a disadvantage in light of the likely supply shortfall and encouraged them to consider joining the collective bargaining group.

“WA dairy farmers are in a strong position, due to the shortage of milk, to negotiate with the processors to force the price of milk up at the farm gate,” he said.

“There are concerns that the new contracts may lock dairy farmers into lower prices and less favourable contractual terms than they may otherwise be entitled to,” he said.

WAFarmers Vasse Zone president Greg Chapman, who also held an executive position in the collective bargaining group, said he advocated a united approach but positive out-comes were not guaranteed so long as processors were wedged in between farmers and “predatory” supermarket pricing.

Mr Chapman said with milk already being imported from the Eastern States and increasing selling of heifers to China to capitalise on strong demand, the only way to stop farmers being “strangled out” of the industry was to lift prices.

“If there was five cents that came into the system right now, there would be a tremendous amount of confidence, but it can’t stop there,” he said.

Acton Park dairy farmer Michael Blake said although holding his own, he had low cow numbers, was producing about half the amount of milk he should be and costs were increasing, causing concern over how much time it would take to recover.

He believed exporting heifers would be a double-edged sword, presenting opportunity if production was good but becoming a “bad reflection on the industry” when done out of necessity.

While he supported collective bargaining, he feared the supermarkets were unlikely to change a working strategy, which could force processors to effectively “give up” under price pressures of their own.

The Federation will continue discussions with Wesfarmers and seek commitments from retailers to develop a model which ensures local product is their preferred source and pricing structures are sustainable.