Time to support WA dairy industry

The Australian Dairy Plan is a collective initiative of different industry groups, including the Australian Dairy Industry Council, Dairy Australia and Australian Dairy Farmers.

Its website touts the industry consultation process for the plan to dairy farmers as "your chance to shape the future of Australian Dairy".

That consultation process involved a series of workshops across the nation that would bring farmers together.

According to the website, 10 workshops have been held in Victoria, seven in New South Wales, three in Queensland, two each in South Australia and Tasmania and only one in WA.

Which means that if you couldn't be in Bunbury on May 30, as I was, you will have to rely on the internet to "contribute to the conversation online".

This low level of engagement with the WA dairy industry in nationwide planning is unfortunately indicative of where the WA industry sits in relation to our Eastern States' counterparts and having taken the time to sit through the entire workshop in Bunbury I was left with a rather pessimistic view on whether this would get any better.

The WA dairy industry is a small player on the national stage and it has been too easy to overlook in the past.

But the time is coming for us as a State to decide whether we want to have a dairy industry here at all, because there appears to be little hope that a national dairy plan will have much WA focus.

Dairy farmers in WA have struggled since their industry was deregulated in 2000 and while that deregulation was no doubt inevitable, the outcomes derived from the process have been devastating for individual dairy farmers, who for many years saw the price they received for their milk drop below the cost of production.

More recently, just when prices started to improve, they were hit with the dollar a litre milk campaigns in supermarket chains, which again drove down prices received at the farmgate.

While the major chains have removed the campaigns and raised prices to dairy farmers, which is to be applauded, this has not had those farmers rolling in clover.

Many are now getting just over 50 cents a litre, which gives them a two or three cent margin.

This means that if they produce a million litres of milk a year (somewhere near average), they can rightfully expect to make $20,000 or $30,000 of profit for their efforts.

That would see them making about the same income as a family on welfare benefits, assuming of course, the grain prices don't stay as high as they currently are.

A small number are getting a slightly better deal by signing direct supply contracts with chain brand suppliers, but this does not help the rest of the industry, especially when the majority of those special deals are with large, Eastern States producers.

WA needs special attention in any national plan, because of its isolation and the size of our industry.

The single day of consultation, and the way those consultations occurred, don't fill me with confidence that this is on the minds of those constructing the Australian Dairy Plan.

We are not, nor will we be any time soon, a producers of bulk dairy commodities or a bulk exporter in the way the Eastern States and New Zealand are.

In fact, WA imports dairy products at a significant level, especially things like butter and cheese.

So the immediate future for dairy farmers in WA will remain based on supplying the local white milk market, which absorbs about 300 million litres of our annual production of about 380mL and then trying to find diverse homes for the rest.

Flavoured milk is perhaps the most obvious and profitable, but diversity will be key going forward.

Finding a home for the last 80mL of milk has always been the greatest hurdle for the WA industry and because of our size this will have to be in small, niche products that can find a market here, interstate and overseas.

This is still our Achilles' heel.

But a plan for the WA dairy industry can't be a plan for the status quo.

In the mid-2000s I travelled to South Australia to be briefed on the State's newly released dairy plan, which was signed off by both the State and Federal governments.

This wonderful glossy brochure outlined a bold ambition to take the South Australian industry from 369 farmers producing about 652mL of milk annually to production of well over a billion litres a year.

According to Dairy Australia's 2016-17 numbers, a decade after the plan for growth was released, instead of a doubling of production as planned, SA's remaining 260 or so dairy farmers produced about 486mL.

The industry lost 100 dairy farmers and 166mL of milk production capacity.

If a plan for growth sees an industry go backwards, where would a plan for status quo get us?

Especially a plan run from NSW and Victoria.

There needs to be a firm commitment from the State Labor and Federal coalition governments that they do indeed want a dairy industry to remain in WA and this commitment needs to backed up with action.

We need the Commonwealth to help the WA dairy industry to expand into niche, high value market places, especially outside our State.

And we need the State government to make sure that the industry here has the infrastructure it needs to meet those markets by encouraging and supporting investment.

There is also a place for both levels of government to promote milk and milk products more.

Only by expanding into new, albeit small and targeted, markets can milk prices rise for producers.

But will an industry focused on the east be able to address price issues in the west?

Not if the one day of consultation in Bunbury is anything to go by.

The workshop was told firmly that we were not there to discuss price.

On that basis alone, it is time for the State and Commonwealth to make that key decision - does anyone want an ongoing diary industry in WA?

If so, the time for action is upon us.

This story first appeared on Farm Weekly

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