Labor Party proposal for floor price in milk market if it wins federal election termed ‘hair-brained’ by Ag Minister

A proposal for the minimum price that dairy farmers are paid for their milk to be set by government, if Labor is elected at this year’s federal election, has been labelled “hair-brained” by the incumbent Agriculture Minister.

Key points dairy industry

Key points:

  • The minimum farm gate milk price could be set by the Government under Labor proposal
  • Two decades after deregulation, Labor is prepared for government intervention in the market
  • Dairy farmers are leaving the industry in record numbers as the cost of production exceeds returns

Two decades after Australian dairy industry was deregulated, Labor has promised to have the Australian Competition and Consumer Commission (ACCC) investigate the best way to establish a minimum farmgate milk price.

“Labor believes government intervention is needed to save our dairy sector and our dairy farmers,” Opposition leader Bill Shorten said in a statement.

“If a floor price is needed to end this crisis, that’s what Labor will deliver.”

Dairy farmers have responded cautiously to Labor’s proposal to re-regulate their industry, acknowledging it would have considerable implications.

National lobby group Australian Dairy Farmers said it welcomed the Opposition’s recognition that the industry needs to change.

“There is no question that the dairy industry is in difficult times,” the group’s spokesman said.

It is seeking an urgent meeting with Labor to discuss its proposal, suggesting the farm lobby was not consulted before the policy was announced.

Minister calls proposal ‘hair-brained’

A bill, calling on the ACCC to investigate the best way to introduce a new floor in the farm gate milk price, was introduced to the Parliament by Labor’s agriculture spokesman this morning.

It was defeated in the House of Representatives 74-69.

Agriculture Minister David Littleproud described Labor’s proposal as “hair-brained”.

“The ACCC’s inquiry into milk pricing in April 2018 did not recommend a floor price,” Mr Littleproud said.

“Australia’s entire agriculture trade strategy and success is based on the fact we don’t subsidise, we reward efficiency and good performance.

Dairy farmers have been exiting the Australian industry since a major downturn began in April 2016.

Drought, high electricity, grain and water prices have combined with a low milk price to force many farmers out of the industry and national milk production levels are shrinking.

Figures released today showed Australian dairy farmers left the industry in numbers not seen since the Millennium Drought in the past financial year.

And the national herd size has fallen too.

Dairy Australia estimates more than 75,000 dairy cows were culled in 2018, up 5 per cent on the year before.

National milk production is now forecast to drop by 9 per cent this financial year.

Views divided on $1 milk increase by supermarket

Labor’s announcement comes as major supermarkets Aldi and Coles refused to increase the price of their $1-a-litre-milk, despite Woolworths increasing its price to $1.10.

Woolworths will distribute the extra 10 cents per litre among the 450 dairy farmers who supply it.

While lobby group Australian Dairy Farmers welcomed the Woolworths move, describing it as a “game changer”, the South Australian Dairy Association was lobbying for a “shelf price which reflects all points across the supply chain”.

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Mr Littleproud has repeatedly called for supermarkets to increase the price they pay farmers for their milk.

Work is underway to establish a mandatory code of conduct for the dairy industry in a bid to address competition issues.

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