“We all buy milk!”
That was the chirpy justification one of the supermarkets gave a few years ago for slashing the price of milk to $1 per litre. At the time the dairy industry cried out that this would be unsustainable in the long term but those cries fell on deaf ears. The supermarkets assured producers that their contracts would not be negotiated down (yet) and shoppers just went about looking for the best priced product.
Fast forward to the present day and the dairy industry is in crises. You might have heard about it in the media. If you haven’t then check out this short video by The Project which summarises the issues well. Basically, two of the three biggest milk processors who buy from the farmer and sell to the supermarkets (and into the world market) have slashed the price that they pay to farmers and they made that pay reduction retrospective. Some blame mis-management by the former CEO of the Murray Goulburn Dairy Co-op, but the other processors are all expected to follow suit when new prices are announced for the new financial year.
Basically, imagine your boss saying to you “I know we agreed that your pay would be $56,000 a year, but I’m changing that to $48,000 a year. However, because I have been paying you at the rate of $56000 per year since July, I’m going to cut back what I pay you to make up for the debt you now owe me. I know you need $50,000 to cover your work-related expenses anyway AND that you took out a mortgage based on your income of $56,000 but I can’t help that. The price I am getting paid has changed and I need to break even.”
It is outrageous! If our livelihoods were treated in such a way by our bosses we would be livid! We would revolt! And rightfully so. But the processors and dairy co-ops are able to shrug their shoulders and say ‘we just aren’t getting paid what we thought we would be so we can’t pay what we promised we would’. Producers have nowhere else to sell their product and they have to suck it up.
It’s not just that we aren’t paying enough
Be clear, there are two things at play here. It isn’t just that Australian consumers have shown that they don’t value fresh refrigerated milk enough to pay more that $1 per litre. These dairy processors and co-ops also sell into the world milk markets (yes, there is such a thing). This commodity market operates just like any other (gold, oil, wheat, iron ore etc). The world price of milk solid (remember it’s not just fresh milk from the carton, milk solids are used for all sorts of things) is determined by the supply and demand on the world market. These things fluctuate and China in particular isn’t demanding as much of it this year as previously thought. Farmers are paid one price (called ‘the farm gate price’) and that is what has been cut. For more background on the dairy industry in Australia and more detail about how it works, try this article from The Conversation or this one from ABC Rural. You could also visit the peak industry body’s website.
Some farmers have called for a milk levy to help them get through this crises. I for one am happy to pay a little extra to help get them through this but that is only a short term fix and doesn’t do anything to prevent this situation from arising again. Coles has responded by creating a new homebrand milk that is a little more expensive with the extra money going into a ‘fighting fund’ for farmers. Now just excuse me for a moment while I vomit out expletives about that being a cynical opportunistic marketing exercise. Coles were the ones who started the ‘milk wars’ a few years ago. They played huge part in driving the industry to the brink so don’t for one second see them as the friend of the farmer in this case! Woolworths and Aldi were quick to match the unsustainable price Coles started offering, so they don’t get off scot free either.
I love milk but I don’t want to milk my own cow
Farming is hard work and dairy farming is harder than others. Cows need to be milked at dawn and dusk. Every day. EVERY DAY. Regardless of whether it’s a public holiday or whether you haven’t had a day off or family holiday since 2003. My family goes through at least nine litres of milk a week (yes, I know it’s a lot) and I for one am glad that I don’t have to milk the cow myself to get it. I don’t think I am alone in this. So as a milk buyer, what can you do about this:
- Wherever you buy milk send the signal that you value the fresh refrigerated product by buying a branded product that costs a little more.
- Seek out local producers whom you can buy directly from with the knowledge that all your money goes into their pockets. Flavour Crusader has some great guides to help with this.
- Visit farmers markets and start to talk to the producers of your food. It shows your support of small local operations and is another signal that you value them and their work.
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