IF YOU AGREE: PLEASE COPY, PASTE, PERSONALISE AND MAIL TO SENATOR BARNABY JOYCE The Hon. Barnaby Joyce MP Minister for Agriculture P O Box 6022 House of Representatives Parliament House Canberra ACT 2600 Dear Senator Joyce, I am writing to you as an individual, but I speak on behalf of the dairy industry nation-wide. Following our brief discussion at the Royal Brisbane Show in August this year, and following your recent induction as Federal Minister for Agriculture, I would like to raise a few points pertinent to the viability of Australia’s Dairy Industry. I write to you in hope of some real answers and action. As you would be well aware, on Australia Day 2011, Coles Group started their “price war” on fresh white milk in their supermarket chain with their competitor Woolworths closely following suit. Since then there has been an alarming increase in the number of dairy farmers being forced out of the industry as they find the reduced farm gate prices and rising production costs are making it impossible to make ends meet. This “price war” has made apparent the power the Coles and Woolworths have over the dairy industry, abusing their duopolistic buying power to dictate the price at which independent dairy farmers are forced to supply processors, or be unable to supply at all. The problem being faced by many across Australia, in addition to the falling farm gate price as a direct result of the ‘price war’, is one where as farmers in a given area leave the industry, those that remain face the possibility of being told that it is no longer viable to collect milk from the area, and they are left with no choice at all. To illustrate this point, I use Biggenden as an example, where I am now one of eight local dairy farms, with two of those currently on the market; in contrast to two years ago when there where fourteen. We now face the possibility of our contract not being renewed by Pauls-Parmalat if the supply of milk in the area is further depleted. One of the major long term issues as I see it, is that the dairy industry is now in a position where very few in the next generation want to continue the lifestyle, because there is simply no money in it. The few that do wish to either start dairying, or expand their current regime are unable to borrow because the banks will not finance dairy enterprise. The only way to entice young people to enter or continue in the industry is by making it a feasible option financially; an industry where they know they can make a living, raise a family and not have to scrimp and save every penny just to get by. The only way that this can happen is for farm gate prices to be lifted to a fair and sustainable level. As little as a twenty cent-per-litre levy, which I believe can and should be passed onto the consumer, and working on an average of 1 litre of milk per household per day would equate to approximately $70.00 per family per year, or an additional $1.35 per week. That mere twenty cents would mean an increase of almost 40% to our operating margins and may just save an industry in despair. If consumers happily pay $2.50 or more for a 1.25L bottle of soft drink, $2.50 or more for a 600mL bottle of water or $25.00 a week for a packet of cigarettes, is it really too much to ask them to pay an extra $0.20 for a litre of fresh white milk? The Australian automotive industry is propped up by massive subsidies and bail-outs. Privately owned coal-fired power plants and electricity transmission lines are subsidized, whilst the solar industry is propped up by government feed-in tariffs. Where is the government support for the failing dairy industry? There is the price of labour, which is governed by minimum wage laws set down by the Federal Government. No employer has the power to tell an employee that they will come to work for a rate of $10 per hour, or they will not have job to come to. This is basically the position we have been forced into by Coles and Woolworths dictating the price of fresh milk. When is the government going to stand up for the man on the land? If large companies, such as Telstra, wish to change any pricing structure, it must be approved by the ACCC. The same organization seemingly sits on it’s hands and does nothing to stop the two major supermarkets flexing their muscle and abusing their market power against an already highly strained dairy industry. In figures readily available on the Dairy Australia website, it clearly indicates that since 1992 the farm gate price for fresh white milk in Australia has risen on average just 10 cents per litre. That is half a cent rise per litre per year. Using round figures, if I send 1 million litres of milk per year to the processor, the same as I did in 1992, it is worth $100,000 more to me now than it was then. However, when the cost of production is brought into the equation, that $100,000 doesn’t go very far. • Delivered grain was $185 per tonne in 1992; it is now $485 per tonne • Since 2001, Electricity has risen from $13 cents per kw to 32 cents per kw. That’s a rise of almost 140% • Round bale hay and silage was approximately $50 per bale in 1992, and is now closer to $140 • Diesel and petrol prices have trebled in the last 20 years These four items are the four biggest expenses incurred with running a dairy and have all risen well over 100% with some closer to 300%, whilst our farm gate price has only risen 30% over the same period. Our dairying counterparts in New Zealand are paid under a different scheme, when compared with our pricing structures, works out to be higher than anywhere in Australia. Dairy is respected and revered in New Zealand, as it used to be here, and makes up a large portion of their economy. The formula for working out how New Zealand dairy farmers are paid is as follows: the price of mik in cents per litre is derived by dividing the price per kilogram of milk solids by thirteen. The average price is around $8 per kilogram of milk solids, which equates to 61 cents per litre. There are no dairies here in Australia that get paid even close to that figure; in fact most get around half that amount. As you yourself were raised in the country, you are well aware of the long hours put in by the people who work the land. Many farmers, particularly dairy farmers, work themselves in excess of 100 hours per week, because employing staff has simply become unaffordable. With the minimum national wage being $16.37 per hour, for a working week of 38 normal working hours, the farmer would incur a cost of $622.20 for every employee. Bearing in mind that days start at 4am and often finish after 7pm, we would also incur penalty rates and split shift allowances. 100 working hours without any bonuses or penalty rates, comes to $1637 per week. After production costs, I personally can barely afford to pay myself $500 per week, which equates to $5.00 per hour. Most people wouldn’t get out of bed for that kind of money, and yet we as an entire industry, through low and unsustainable farm gate prices, are forced to survive on this or even less. This great country was built on the back of agriculture, dairy included, and it now seems that we are being forgotten and left to fend for ourselves. I implore you to not become like the Labor governments before you, and to make a stand for rural Australia. The day is coming, sooner than most may realize, where there will be no such thing as ‘fresh dairy produce’ in Australia and consumers will be forced into buying inferior imported products at premium prices, or have no dairy products available on supermarket shelves. With dairy being one of the five main food groups, and widely admired for its health benefits by health specialists world wide, I do not believe that the Australian Federal Government can afford to stand by and watch an industry that is already in crisis become extinct. Every year we are forced to undergo new training and achieve new certificates of competency for an array of farming activities that we have been undertaking our entire lives. Chainsaw operation, chemical application, tractor operation, cattle care certificates are just a few that we have to pay for and be retrained in, often by someone who has never actually worked the land themselves. No dairy farmers that I know are in this industry to get rich. We are all in it for the same reason, and that is because we love what we do. It would however be nice to be paid a reasonable sum for the lifetime investment that we, and our families put into supplying arguably the worlds best dairy products to the Australian public. There are a number of people, myself included, faced with the very real prospect of being forced out of an industry and generations of family tradition, and in many cases off farms that have been dairies for several generations. I appreciate that this letter is lengthy, however it is necessary to illustrate the multitude of problems we in the Australian dairy industry face on a daily, monthly and yearly basis, and I thank you for taking the time to consider my concerns. As a fourth generation dairy farmer with a young family showing interest in continuing this family tradition and business, I implore you as a Minister and representative of the Federal Government to step up and take positive action to support us and those in similar situations.
Posted on: Thu, 17 Oct 2013 00:15:04 +0000
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