Dairy price ‘won't hit locals'
WITH predictions that worldwide supplies of dairy products are increasing faster than demand, local dairy farmers like David Binney are watching their surplus milk.
The Kyogle dairy farmer said the latest Rabobank Dairy Quarterly report predictions about decreasing worldwide dairy prices had little impact on local farmers, given that they were supplying the domestic market.
“Worldwide dairy prices do have an impact on local farmers, but this impact is minor,” he said.
The report predicts increased supply from the European Union and the US, coupled with only a slight increase in demand, will lead to a gradual fall in prices towards the end of the year.
Norco CEO Brett Kelly said that there had been downward pressure on prices recently.
“But we're in a domestic market, so we're not really affected,” he said. “We're a little bit protected there.”
Mr Binney said the predictions only affected local farmers who produced surplus milk, as they were forced to send it to southern processors and on into the export market.
“The domestic market is located north of Sydney, while the market south of Sydney is more export-based,” he said.
The report states that current peaks in milk prices will drop worldwide, but that Australia is well-positioned to weather the storm with exceptional conditions forecast for dairy farmers.
Mr Binney said the effects of deregulation back in 2000 were the main factors determining milk prices for local farmers.
“Deregulation made sure the industry was more efficient and that too much milk wasn't produced, which started to push the price upwards a few years ago,” he said.
Since then, prices for local farmers have been in line with Victorian milk prices, plus freight.
Mr Binney said demand in the local market had not changed dramatically since 2000, but processors and supermarkets had forced farmers to wear the costs.
“They have no regard for the cost of production, and there is no pricing consistency,” he said.
“The costs of production have moved up significantly, and they are asking us to sit still for the next 12 months.”
After production costs are taken into account, Mr Binney said that 10 years after deregulation local dairy farmers were making less than they were before 2000, sometimes even producing below cost.
“There is a two-tier milk pricing system, and currently the top price is not even as good as what we were producing milk for in 2000,” he said.
Mr Binney said current milk pricing was a ‘very unfair set of circumstances' which had seen prices fall three to four cents a litre in 2010/11.
“None of the CEOs of the supermarkets or the processors are taking massive cuts. We'd be happy to take it if everyone was,” he said.
“We don't want to make a motza, we'd just like to make a profit and be paid for what we do.
“Something needs to be done about it, and I think a single selling desk is the way to go.”