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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2013-03-20 Daily Xml
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DAIRY INDUSTRY

Mr VENNING (Schubert) (15:32): I rise today to speak on an issue that I find extremely concerning; that is, the demise of the state's dairy industry. It is pleasing to see the past minister for agriculture here; he will understand.

It was with great sadness that last week we heard figures that highlighted the dramatic decrease in the number of operational dairy farms in the state, particularly in the Mid North and Barossa regions. Only 16 dairies remain in those regions; compare this to 450 30 years ago and you really have to question the viability of this industry. Statewide, dairy farmer numbers stand at 275 and they are declining, because the industry is no longer sustainable.

How are these families surviving? Well, the reality is that they are not surviving. According to the dairy industry, banks are foreclosing on up to one dairy farm per week; that is one a week. No wonder the positive outlook for many farmers is non-existent. As we know, dairy farmers are confronted by many challenges in their industry, including low milk prices, high fodder prices (that is, hay and grain), high water rates, high power prices and decreasing access to further funds from the financial sector to support their businesses. All these factors make survival in the industry extremely challenging, if not impossible.

Dairy farmers are being forced to sell their milk at under the cost of production, and you cannot tell me that that is a sustainable or viable method of farming. A dairy industry representative, who is also a dairy farmer in my electorate, confirmed today that many farmers are currently receiving about 38¢ a litre for their milk while production costs are between 40¢ to 45¢ per litre. That is a loss of 5¢ per litre. When you look at the bigger picture, the average dairy farmer produces 2 million litres of milk annually; if you do the sums, that means that most dairy farmers are losing up to $100,000 a year.

The South-East dairy farmers are doing it even tougher, because of even higher electricity prices. Some South-East dairy farmers are losing up to 9¢ a litre. Compare this to what we pay for milk at the consumer end. Someone is skimming large profits, but sadly it is not the dairy farmer, who works very hard—and, I remind members—seven days a week twice a day, in all weather.

It is not sustainable, fair or viable to remain as dairy farmers in the current climate. Banks are foreclosing on many family-run dairies; on-farm investment has stopped, which is most concerning; and farmers are simply trying to afford to feed their livestock, their number one asset, and their families, and have little left to reinvest in maintaining their farms, and the asset depreciates. Therefore, they are calling on support from other services; the flow-on effect is huge.

The dairy industry as a whole is now calling out for assistance from government, both state and federal, to nut out a pathway forward for the industry. We need to ask ourselves: do we want the luxury of being able to buy and drink fresh, quality Australian or South Australian milk? At the rate the industry is going, fresh Australian milk will be a thing of the past.

There is no doubt that consumers are confused when it comes to purchasing milk. They want to support local farmers but have no idea how to do so because the market is flooded. Fortunately, in my electorate we have Jersey Fresh milk, which is a family-owned business, so the profits support local producers. The brand itself has gained incredible backing and support from the local community.

People love to know that what they are buying is supporting local farmers. One well-known milk brand (which will remain nameless) is owned by a Japanese company, so all the profits from buying this particular milk go offshore. Perhaps we need to consider declaring on labels not only the origin of the product but also the origin and history of the company.

This is a most concerning issue and one that will not be resolved immediately. I urge everyone to support this vital industry and, hopefully, a long-term solution can be implemented. It is about the enormous marketing power particularly of our two very large supermarkets and how they manipulate the market. Their buying power is huge. We really have to look at this issue very carefully, not only in the milk industry but also everywhere else. If we want to have a South Australian or Australian dairy industry supplying clean, fresh milk, we have to do something about it.

Our dairy milk industry has done our state proud in the past, with a reputation Australia-wide, especially South Australian iced coffee—of which I have drunk more than my share—which is as popular as Coca-Cola in South Australia. The industry now needs us to help it survive. I am happy to talk with the South Australian Dairyfarmers Association, particularly Mr Lyons, its CEO. It is a desperate call, and I think that, even though we might let market forces prevail, if we do not interfere here we will not have an industry.

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