The Milk Rebellion

Photo: msecnd.net

In May this year two large companies said they were going to cut the milk prices paid to Australian dairy farmers by about 15%. This aroused a popular protest against the move, encouraging many shoppers to avoid supermarket labelled milk to “help the dairy farmers”.

One of the companies is Murray Goulburn, Australia's biggest dairy producer. The other is New Zealand company Fonterra, the world's largest dairy exporter.

How does this really affect dairy farmers? And can shoppers help the farmers by their choice of milk? Rachel Clemons, writing for the consumer magazine Choice, looked at this issue in great detail.

Australia is one of the world's biggest exporters of milk. This means our milk market is affected by the global market. Over the last two years, global dairy prices have fallen by about 60%. This no doubt influenced the decision by Murray Goulburn and Fonterra. Even so, the 15% cut is severe and sudden.
What can shoppers do to improve the the situation? Many people are being told to buy milk with private brands, not supermarket brands. Ms Clemons argues in her article that it is not as simple as that.

There are about 6100 dairy farmers in Australia. Of these, about 2600 sell milk to Murray Goulburn, and 1200 sell to Fonterra. That's about 60% of dairy farmers. Most of that milk is produced in Victoria and Tasmania.

Between 6-10% of this milk is sold as fresh milk or other dairy products, like butter and cheese. The rest is exported. This means that at least 90% of the milk bought from those dairy farmers is not sold in Australia. If so, then who supplies most of the milk for home use? The two largest companies which do this are both multinationals. One is Lion, owned by Japan, and sells the Pura and Dairy Farmers brands. The other is French company Parmalat, with the Pauls brand.

Murray Goulburn and Fonterra do supply milk for the supermarket's own brands. But from the above facts we can see that supermarket brand milk is only a small part of the milk that dairy farmers sell. If you refuse to buy the supermarket brands, it won't mean the farmers get more money. The only effect it might have is to make the supermarkets put pressure on Murray Goulburn and Fonterra.

The best way to support Australian dairy farmers is to buy Australian dairy products, whatever their brand. Farmers will be getting something for this. Buy branded milk if you don't mind the extra cost. According to Dairy Australia, the official body which looks after dairy farmers, this puts more money into the dairy economy, for processors as well as farmers. In such a case, processors might feel encouraged to pay more to farmers.

Look for businesses like Aussie Farmers Direct (www.aussiefarmers.com.au), which already tries to do this. Buy straight from a local dairy, or a farmer at your local farmers' market, if you can.

Span Hanna