The Australian dairy industry is facing a severe crisis, with farmers struggling to survive amid drought and low milk prices. Some farmers are selling up or cutting herds, while others are taking significant financial hits. One farmer, Shane Hickey, reported earning just $2.46 an hour last year, sparking outrage and sympathy from consumers.
Drought has hit key production regions in Victoria and New South Wales since 2018, exacerbating the crisis. A dairy farm requires 1,000 litres of water to produce one litre of milk, and water is scarce. The number of dairy farms in Australia has fallen from 7,511 in 2010 to just 5,669.
The problems trace back to 2014, when global milk solid prices dropped due to oversupply. Supermarkets Coles and Woolworths took advantage, selling own-brand milk for $1 a litre. In 2016, processors Murray Goulburn and Fonterra slashed farm-gate prices retrospectively, causing cashflow issues and pushing some farms out of business.
Farmers have been advised to invest more to improve efficiency, but dairy farmer Phil Ryan said this increased costs and risk. A report by the Australian Competition Consumer Commission found power imbalances between supermarkets and processors but did not directly link $1 milk to farm-gate prices.
On Monday, Woolworths announced a 10c per litre increase on own-brand milk, to be passed on to about 450 farmers. The agriculture minister welcomed the move and urged other supermarkets to follow. However, many farmers recall Prime Minister Scott Morrison's reluctance to raise prices at the cost of households.
