Major supermarkets are under pressure to stop selling milk for as little as $1 a litre as dairy farmers battle rising costs and drought.
Agriculture Minister David Littleproud said on Wednesday that he supported “the principle of a temporary levy” of 10 cents per litre on milk sales, with the money “to go directly to farmers”. He said his department was investigating how a temporary levy could be implemented.
“The dairy sector in particular is having a tough time. Many of our farmers are being paid less than the cost of production. This is unsustainable,” Mr Littleproud said.
“If our farmers don't make it through the tough times, they won't be there to supply Australia milk in the future. The fact is $1 milk has devalued the milk category in the eyes of consumers by making it cheaper than water,” he said.
Mr Littleproud said he had met with Coles and Woolworths and discussed a levy, adding that “Woolworths has shown leadership on this issue. They say they’re on board so long as other retailers are too".
While Coles was “more reluctant”, Mr Littleproud added that “I hope they'll come on board. I intend to speak to Aldi and IGA/Metcash as well.”
“If retailers get to a point where they support a 10 cent levy on each litre of milk to go directly to farmers, I am happy to try and help facilitate it as a temporary measure while structural reform happens in the industry. I support the principle of a temporary levy.”
The fact is $1 milk has devalued the milk category in the eyes of consumers by making it cheaper than water.David Littleproud - federal Agriculture Minister
In a statement Woolworths said: “We’ve indicated our willingness to work constructively with the federal government on temporary drought relief measures for dairy farmers and look forward to seeing a policy proposal soon"
A spokesperson for Aldi said "the health and viability of the dairy industry is a conversation worthy of national attention," and that Aldi was committed to playing a role that contributed to the industry's sustainability and success.
A spokesperson for Coles said Coles shared the community's concerns about the plight of farmers and rural communities being hit by drought, and recognised the "devastating impact" the drought was having on farmers in all agricultural sectors.
"Coles has decided that the most effective way we can assist farmers affected by drought across the whole agriculture sector is to raise and match funds at our checkouts to provide to the Country Women’s Association (through its state and territory organisations around Australia) to provide support to drought-affected communities to help cover household expenses such as school expenses and food, medical, electricity and water bills," the Coles spokesperson said.
Coles' total contribution to drought affected farmers and rural communities stood at nearly $11 million, the spokesperson said.
Prime Minister Scott Morrison reacted cautiously when asked about the 10 cent per litre levy push, which was recently proposed by the Queensland Dairyfarmers Organisation.
Mr Morrison said he was waiting for proposals to come from Mr Littleproud. "My message is let's just see what happens and let’s work the issue through. I don’t want to see people paying any more for milk and I don't want to see dairy farmers getting ripped off," he said.
Meanwhile, some dairy farmers have renewed calls for the sale of milk for $1 per litre to be permanently dumped.
“Any time would be a good time to completely get rid of the farcical situation of milk selling cheaper than water in the supermarket aisle,” said Victorian dairy farmer Paul Mundy, from Cobram East in the state’s north.
“I’m probably on 41 cents or maybe 43 cents a litre. It’s that bloody low it’s not enough. An extra 10 cents a litre to me now is great, but it would still be somewhere around 50 (cents a litre). That’s still farcical for what’s involved and the investment that as a dairy farmer we have,” he said.
Mr Mundy said farmers were frustrated that while their costs were rising, the major supermarkets had been selling milk at $1 per litre for years. “$1 a litre milk is obscene...it diminishes the perceived value of dairy to the nation,” he said.
“You tell me something else that stays the same. All our other costs are going up constantly, just the sheer cost of living, our costs of production, everything goes up,” he said.
Erika Chesworth, chairperson of the dairy committee of NSW Farmers, said it was time for the price of goods in dairy cabinets at supermarkets to reflect their true costs, with profits spread across the supply chain “so that we have a healthy supply chain. It’s time, it’s overdue.”
But Ms Chesworth, from Dubbo, said NSW Farmers did not support a levy. “We don’t want a levy because that means it will have an end date, we want an end to supermarket discounting of our products,” she said.
Victorian dairy farmer Brad Adams, from Strathmerton, said the worsening drought highlighted that the sale of milk for $1 a litre was “not a good look for the industry”, and was another reason for supermarkets to drop it.
“It means that water, for example, is dearer to buy than a processed food that people have worked really hard to produce,” he said.