CANBERRA—Government must look at curbing the profits supermarkets make out of milk at the expense of dairy farmers, a parliamentary committee has heard.
Australia's dairy industry will shrink and milk quality will fall if the price offered continues to be below the cost of production, NSW dairy farmer Sid Clarke told the Senate's select committee on agricultural and related industries in Canberra on Monday.
Mr Clarke, from Ladysmith near Wagga Wagga, who sells his product to Fonterra, says issues such as milk quality and shrinkage of the market will ruin the industry unless problems with pricing are dealt with.
He said farmers in his industry were not "whinging cockies" that thumped their chests constantly to demand better prices.
"Government's got to curb the amount of profits that supermarkets drain out of the system," Mr Clarke said.
Farmers weren't in a cooperative situation to demand suppliers pay them higher prices for the milk they produce and couldn't demand a fairer share of the "housewife's dollar".
"But I think somehow or other the supermarkets have just gone to a power in themselves," he said.
"So we need to try to get government intervention ... there should be some sort of recognition of the effort farmers put into producing a product. And certainly the price shouldn't be below the cost of production."
Otherwise those left in the industry wouldn't care about any standards.
"They're just going to milk the cows," he said.
Mr Clarke also told the hearing he washed every cow prior to it being milked, but with low milk prices others might not care.
"If I don't like to drink the milk with cow manure dripping off the cow's tit, I shouldn't think the customer would like to drink it as well," he said.
Tasmanian milk supplier Symon Jones said he currently sold his milk to New Zealand dairy giant Fonterra for $3.67 a kilo of milk solids.
Mr Jones said Fonterra has been paying 40 to 50 per cent less for milk this year.
"We've almost turned the tables back five to six years," he told the hearing, saying that in 2002-03 they were offered $3.46 per kilo of milk solids.
"Our business stands to lose 121,000 (dollars) this year," he said.
If the price was increased to $5 per kilo, then Mr Jones said his business would make a profit of $40,000 this year.
"For us to survive on a year-in, year-out basis, with a product that's anything less than $5, we will just continually erode our equity."
