The Great Dairy Debacle

They are selling the milk far too cheap!”
So blusters the ruddy-faced creep.
“And it isn’t our fault!”
‘It’s entirely yours, dolt!
As you sow, stupid, so shall you reap.’

There is a lot of misinformation (some of it well-intentioned) circulating in the media and on the net about the plight of the dairy industry. In the following article I will try to briefly explain the situation from an ex-dairyman’s (admittedly Queensland–centric) point of view in an attempt to clear up some misconceptions.
As an ex-dairy farmer who, with my wife and family, farmed from 1998 to 2005, and in particular through those extremely difficult post 2000, deregulated years, I feel it necessary to clarify the situation with regard to the present uproar about dairy prices and struggling farmers.

It must first be realized that the situation prior to 2000 was different in each state. There was market milk (drinking milk) regulation in Queensland and (as far as I know) New South Wales, under a quota system. There may have been regulation also in Western Australia but as far as I know there was little or no regulation in the other (high production) states.
Manufacturing milk for butter, cheese, powdered milk etc. was, like any commodity, subject to world prices, and always had been. This constituted the vast bulk of milk produced in Australia and as it was commodity, it fluctuated in price – this fluctuation, as with all agricultural commodities, had to be borne by farmers.
In the southern states, where farmers could produce milk at considerably lower costs than NSW and Queensland farmers (for various reasons which I won’t go into here) a deregulated industry worked but it was a different story in the north, hence the market milk quota systems.

Deregulation (abolition of the quota systems) occurred in 2000 against the wishes of most northern farmers, who collectively, generally agreed that in would be a disaster for dairying in these states. Despite protests, we were not listened to by the Howard / Truss government of the time which was hell bent on deregulation. I was a member of the rebel organization the Australian Milk Producer’s Association, (AMPA) and a local organizer. We picketed various supermarkets and politician’s offices (including Warren Truss) but were not supported by many of the farmers or by the official Queensland Dairy Farmers Organization (QDO). As a matter of fact the QDO and quite a few farmers (in particular the big ones) opposed our fight. Leaders of the dairy industry in Victoria, a very large producer, told us northern farmers to get out of the industry and grow pineapples – they had designs on snatching our market milk market.

Even locally the cry was “Get bigger or get out!” and we were continually told by industry bodies that dairying was a business – no longer a life style. It was also rumoured that some of the big Queensland producers welcomed deregulation as they envisaged the exit from the industry of the smaller producers. This would enable the big guys to make a move on their farms (much reduced in price) and their share of the market. I must admit I found these rumours entirely believable. The irony of course was that many of these “big guys” are now also out of the industry.

The quota system which we fought for had enabled Queensland dairying to survive and thrive for many years, but in 2000 it was abolished, and those farmers with large quotas were paid out to the tune (from memory) of around $320 a litre – those of us new to the industry and with small quotas were hung out to dry. We repeatedly warned the government, collectively and individually, that the industry in Queensland would collapse, but to no avail.

This is where I must mention the supermarkets. While we picketed and attacked the supermarkets, this was merely a means to an end. We knew that the public disliked big business in the time-honoured Australian way and putting the blame at least partly on them suited our (AMPA’s) purpose at the time. We knew however that the blame in truth lay squarely on the Federal Government’s decision to deregulate. (and still does)
The government of course loves to deflect blame for its bad policy onto big business, but in the case of the dairy industry woes, supermarkets are not the problem. They, like any business big or small, operate in a competitive market. Milk is now a commodity – all of it, and will be treated as such – the government has made it so.

Dairying is a very difficult job; it is the hardest rural occupation – perhaps the hardest of all occupations. It is a 365 day a year, twice a day grind, and that is just the milking side of it – then you start work. In short, at least in the northern states, it should never have been deregulated, but the answer is not to throw welfare money at the farmers as the government is now deciding to do. Who is next for welfare money when their industry turns sour? The small croppers? The beef industry – wool?

It is ironic that after 15 years of deregulation suddenly the dairy industry is the centre of attention. All of the tragedy (particularly in Queensland) that occurred post 2000 received little attention or publicity: farmers committing suicide, marriage breakups, farms lost, towns dependant on dairying – hit hard……the list goes on, but the answer is not (as Barnaby Joyce is presently doing) to threaten supermarkets with price control. The answer is to reinstate some form of market milk quota system in the high cost of production states – as far as the farmers in the southern states who laughed at the time at what they hoped was to be our swift demise? Well I think you may be able to guess my answer to that question.

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