Australia's dairy farmers face an escalating debt burden caused by a market monopoly forcing farms to sell milk at a loss, a Senate inquiry has been told.
A Sydney retailers association claims farmers are now paid less for milk than in 1990, while the retail price has ''skyrocketed 113.5per cent almost double the rate of inflation over the same period.
''As a nation, we should hang our heads in shame for allowing this to occur,'' the Southern Sydney Retailers Association said.
In a submission to the Senate inquiry into competition and pricing in the dairy industry, the association said Australian dairy farmers were the world's most efficient milk producers but market monopolies meant they received 30per cent less for milk than farmers in the United States.
Describing retail milk pricing as ''the largest robbery in Australian history,'' the association estimates Australian consumers spend $3.4billion a year on milk, with the gap between low farm gate prices and high retail prices ''robbing'' farmers and consumers of $868million a year.
Stephen and Fiona Waters, who operate a dairy farm at Deniliquin in the southern Riverina in NSW, told the inquiry they faced a $150,000 loss this year after milk processor Murray Goulburn ''almost cut our milk prices in half.'' from an average of around 45c a litre to 28c less than the cost of production, at around 30c a litre.
They told the inquiry the company offered ''no real explanation, apart from the global economic crisis'' and they had no choice other than to incur further debt ''as we would lose more money by getting out.''
The inquiry is investigating the economic effect on the dairy industry of variations in milk pricing, including the impact of concentration of ownership of milk processing facilities and supermarket supply contracts on market conditions.
It will also determine whether the Trade Practices Act should be reviewed, with regard to milk pricing and industry sector monopolies.
In their submission, the Waters family said the Federal Government ''should not sit idly by while milk companies with millions of dollars worth of profit, pay farmers not even enough to break even.''
''The social impacts to our industry, our towns and our people cannot be stressed enough. We are 34 and 35 years old. We face the stress of drought and low water allocations every day. The one thing we banked on when making our business decisions was our milk price.
''We purchased a new property, paid our parents out and helped them retire on December 11. On December 22, we were told those milk prices would be cut in half. Merry Christmas!''
Bega Valley dairy farmer Tom Darcy, also a board member of Bega Cheese told The Canberra Times the company owned by a collective of around 90 dairy farmers and worth $800million a year ''is lucky not to be tied to the vagaries of milk pricing and export markets.'' Mr Darcy said the company made an early decision to launch an aggressive national branding campaign to secure a sizeable slice of the domestic dairy market.
''Around 80per cent of our market is domestic and that market is not going down, so we're not affected by the global economic downturn.
''We're the No1 cheese in Australia, and the biggest cut and packaging plant for cheese in the southern hemisphere.''
The company also runs a program that advises farmers on minimising environmental impacts and adapting to climate change.
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