Worries surround milk levy proposal

Worries surround milk levy proposal

Dairy
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While there has been a recent push to introduce a permanent retail levy on fresh milk, many concerns surround the feasibility of the idea, and whether or not a levy would be a true help to the dairy industry.

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FAIR GO: Bev and Chris Rowntree, Alta Vista, Myponga, did not favour a milk levy, but hoped the Coles deal would lead to increased processor competition for product.

FAIR GO: Bev and Chris Rowntree, Alta Vista, Myponga, did not favour a milk levy, but hoped the Coles deal would lead to increased processor competition for product.

While there has been a recent push to introduce a permanent retail levy on fresh milk, many concerns surround the feasibility of the idea, and whether or not a levy would be a true help to the dairy industry.

The push for the levy has come from Vic businessman John Dahlsen, a former Woolworths and ANZ board member, who wants to see 40 cents per litre added to the price of fresh milk in all supermarkets, with the funds distributed to all dairyfarmers, even if they only supply milk for cheese or powder production.

SA Dairyfarmers' Association president John Hunt did not believe a compulsory levy was the best option, with it having the potential to upset free trade agreements.

"Some would say that's denying farmers an extra 40c, but you have to be careful. If you get 40c on one hand, and 60c gets taken out of the other, because you've lost some trade deals, you really have to watch what you do," he said.

We tend to let the supermarkets have far too much say in what we do. - JOHN HUNT

"Our take on everything is that we just have to be paid the correct amount on what our milk is worth."

While federal Agriculture Minister David Littleproud supports a voluntary levy, Mr Hunt said taxing consumers was not the best answer.

"We tend to let the supermarkets have far too much say in what we do, and I think the processors need to be a bit smarter and charge the supermarkets for what they (the processors) think the product deserves," he said.

Mr Hunt was also concerned that a levy would hurt premium labels.

"If it's a levy on all milk, consumers who buy branded milk to support farmers are going to have to pay an extra 40c on an already higher price, and so we'd have to be careful that we don't force consumers into only buying house brand milk."

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In a bid to put pricing power back into the hands of farmers, Coles will expand its direct milk purchasing plans to SA, which will offer contracted producers guaranteed farmgate prices and will then rely on a toll processing agreement. Mr Hunt said the scheme was "something to be cautious of", but also had some positives.

"If the Coles deal puts more money in more farmers' pockets, I'm not going to be the one to say no, because it will drive competition and processors will have to pay more," he said.

"Farmers and retailers are doing the deal here. Usually farmers just deal with processors, and processors deal with retailers, but we have to get together as an industry and value our product more."

Price jump highlights red flags

Myponga dairyfarmers Chris and Bev Rowntree, Alta Vista, were not in favour of a compulsory milk levy, and said the dairy industry should be able to "stand on its own two feet" without it.

"If this happens in our industry, what happens for other industries, for example if there was a crisis in the pork industry, would pork products all of a sudden get a levy as well?" Mr Rowntree said.

He was skeptical that extra funds from a levy would be seen by dairyfarmers.

"When you bring in levies, you bring in bureaucracy, and a certain amount would be taken by those running the scheme, so I'm not sure we as farmers would see the benefits," he said.

Chris thought it would be complicated to apply a levy to one section of what was a diverse industry, with so much production exported, and different producers focused on different sectors.

"Once you get to Vic you've got leaders of milk making product that goes overseas, about 50 per cent is export," he said.

Farmers usually don't like to change, but if the price is good enough, they do. - CHRIS ROWNTREE

With Coles looking to extend its direct milk purchasing plans to farmers in SA, Mr Rowntree was hopeful the supermarket giant's scheme would help retailers realise that if they wanted a continuing supply, farmers would need better price returns.

"The workload in dairy is not necessarily intense, but it's constant. If we're only getting paid an average price, only a couple of dairies are going to carry onto the next generation," he said.

"We need a fair and decent price, and be paid for what our product is worth."

He was pleased that the Coles scheme would mean there would be extra competition for product, hopefully leading to better prices for farmers.

"Coles are going to have to put out a price to get farmers to change, otherwise farmers will stick with Bestons, or Parmalat, or whoever they're with," he said.

"Farmers usually don't like to change, but if the price is good enough, they do."

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