ekka dairy farmers
ekka dairy farmers

‘I’m getting less for my milk than I did in 2000’

JOE Bradley's booming voice was just one among dozens at the regular meetings of Dayboro dairy farmers around the turn of the century.

Today, his is the last remaining voice coming from the historic dairy farming community just 45km north of Brisbane.

Over the past two decades, each of the other 25 dairy farmers who worked the hills and valleys of Dayboro reached a point where the financial burden of selling milk below the cost of production forced them off the land.

It's a point hundreds of other Queensland dairy farmers have reached since 2000, when the farmgate prices plummeted under the hammer blow of deregulation.

That was followed by droughts and floods, retailers introducing $1-a-litre milk in 2011 and the 2016 shock of processors Murray Goulburn and Fonterra retrospectively reducing their prices.

Over three-quarters of the state's dairy farmers have left the industry since 2000.

"It's bloody awful," says Bradley.

"You lose all those support services, the local town suffers because everyone used to shop locally, it's tragic."

Now the future of Dayboro's dairy industry, which once included a thriving butter factory, hangs on Bradley's ability to turn a profit selling a product that is worth less to him today than it was 20 years ago.

"I know I'm never going to be rich being a dairy farmer, I got into this knowing that," he says.

"But all I want to be able to do is feed my cows how they should be fed and, if machinery breaks down, to be able to replace it and, maybe, just maybe, get a day off every now and then.

"That would be lovely, but we can't even get a fair price for our milk.

"How's it fair that I'm getting less for my milk now than I did in 2000?"

 

Dairy farmer Joe Bradley (centre) with Member for Dickson Peter Dutton and federal Agriculture Minister Bridget McKenzie
Dairy farmer Joe Bradley (centre) with Member for Dickson Peter Dutton and federal Agriculture Minister Bridget McKenzie

 

As Bradley and the 300-odd dairy farmers still left in Queensland woke in the pre-dawn of New Year's Day they started 2020 with as much hope of getting a fair price for their milk as at any point in the past two decades.

Hours earlier a mandatory code of conduct had kicked into gear, shining a light on the byzantine contract process between farmers and processors. The code was the Morrison Government's opening salvo in the battle to smash bargaining power imbalances along the supply chain that favour processors over farmers and supermarkets over processors.

Processors will be forced to publicly release their standard contracts on June 1 each year so all farmers can see what is happening in the industry.

They will also be prohibited from retrospective price stepdowns.

"The code's brilliant," says Bradley. "It won't put one extra cent into my pocket today but what it does do is make sure everything that went on a couple of years ago with Murray Goulburn and Fonterra can't happen again."

Queensland Dairyfarmers' Organisation president Brian Tessman says initial concerns the code would not go far enough to restore the power balance have mostly been overcome in the final version.

"We can say with confidence that the code as it stands has addressed most of the issues raised by QDO and that's a great win for our members," he said.

 

Thomas Brook on his drought-ravaged land at Boyland in the Scenic Rim
Thomas Brook on his drought-ravaged land at Boyland in the Scenic Rim

 

The code had been years in the making and followed a nearly two-year inquiry into the dairy supply chain that wrapped up in 2018.

The 240-page report highlighted the difficulty of regulating one of the most complex primary production markets in the country, which is split into eight distinct dairying regions.

The southern regions generally produce for exports such as cheese and milk powders, while most of the country's fresh drinking milk comes from the higher-cost northern regions, including Queensland, as well as Western Australia.

The ACCC found there was a massive market failure across the industry due to the huge bargaining power imbalances.

Speaking to The Courier-Mail from Bradley's farm, Agriculture Minister Bridget McKenzie says there are a "raft of problems" for the Government to tackle and while the code is a key pillar for getting fair price for farmers it is not a silver bullet.

"We've now got the mandatory code in place which will govern that end of the supply chain so that instead of the risk being pushed back onto the farmgate it's better spread," she says.

But she is determined to tackle the more complicated end of the chain, where processors and supermarkets meet.

That task is complicated by the fact that supermarkets are governed by a separate but voluntary retailers code of conduct.

And there's the elephant in the room of the discounted $1-a-litre milk that supermarkets introduced in 2011.

Most in the industry blame those price reductions for much of farmers' current plight but the ACCC found retail prices did not determine farmgate prices.

It also found farmers received the same amount at the farmgate whether their milk was used for cheap private-label milk or higher-priced branded products.

But the report noted that despite Coles claiming lower prices would "make the dairy industry stronger" there is no evidence they have had any "meaningful impact on total consumption".

"Consumption of drinking milk is largely insensitive to price changes," the report says.

 

Dairy farmers are doing it tougher than ever.
Dairy farmers are doing it tougher than ever.

 

McKenzie says she has recently met with the major supermarkets to "start a conversation" that Australians are prepared to pay more for milk so more money could flow to farmers.

"Australians want their kids and their grandkids to grow up eating and enjoying safe nutritious Australian dairy products and that's only going to happen if we have a sustainable industry and people can make a profit out of it," she says.

"That's what we want to see as a government and it's about time the supermarkets woke up to the fact that that's what Australians want to see and stop pocketing the extra money for themselves and pass it through the supply chain so farmers can stay on the land.

"You can't be the 'fresh food people', you can't be Coles running around saying they've got these great relationships with primary producers and then seek to do everything you can to put them out of business."

A Coles spokeswoman says the supermarkets have appeared before numerous inquiries and would continue working closely with government and industry to "improve the sustainability of the dairy sector".

"Our customers choose the milk they can afford and want to buy.

"Price increases for basic household staples like milk are tough for pensioners and low income households.

She says the farmgate component of the price Coles pays to processors is at its highest level in many years.

A Woolworths spokesman says the code is a "step forward" for the industry.

"We've been taking steps to support dairy farmers while government and industry work through the broader structural reform," he says.

He says Woolworths was the first supermarket to introduce a drought levy, which had delivered $32 million in relief to more than 450 Australian dairy farmers.

"On top of the levy, we have agreed to tens of millions in wholesale cost increases from milk processors across the dairy cabinet in response to rising farmgate prices," he says.

Joe Bradley at last year’s Brisbane Ekka
Joe Bradley at last year’s Brisbane Ekka

Sitting on his back deck overlooking his drought-parched paddocks, Bradley shakes his head as he reels off predictions that total Australian milk production could drop nearly a third this year to only 8 million litres.

"Australia will become a net importer of dairy products," he says.

"Now think about that, it is so stupid and dumb and it worries me."

Stripping Bradley's accounts back to their simplest form highlights the problem facing dairy farmers across the country.

It costs him about 80 cents to produce a litre of milk in the current drought conditions.

The processors pay him about 60 cents a litre.

When it rains again, his cost will likely drop about 10 cents a litre, still leaving him 10 cents a litre short of breaking even from the 365-day-a-year toil of dairy farming.

"I've used up all my super, I've used up all the equity I've had on other things, everything's gone and we're going to have to make some hard decisions in the next little while," he says.

"We keep hoping that common sense has got to prevail."

"All the economists say market forces will look after itself, blah, blah, blah.

"Well milk's short and the milk price is not going up because supermarkets control it. We don't control it, processors don't control it."



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