$1 litre milk expanded yet Gillard Government continues to “cowtow” to Supermarkets
25-January-2013
Opinion piece written by John Cobb MP -
While Australians laugh at this season’s Lambnesia Ads for Australia Day the Dairy industry alarm increases with the Government continuing to “Cowtow” to the supermarkets.
Australia Day marks the second anniversary of the supermarkets $1 a
litre milk campaign and while supermarkets deserve their share of the blame the saddest part of this campaign is the Labor Government’s complicity in the Industry’s demise.
The supermarkets are marking the anniversary by extending the $1 per
litre milk to their service stations to take market share from the beleaguered corner store and will further erode industry sustainability
This is a blatant attempt by the Coles executive to secure their executive bonuses at the expense of industry and at the same time finishing off the corner stores.
We all know that once the supermarkets have eliminated the competition the prices will go up, supermarket profits will go up and farmers will still get less. This campaign continues to drive more dairy farmers out of the industry.
For the Government it is business as usual as they continue to ignore the Industry and dismiss the unsustainable supermarket practices. From the start of the $1
litre milk campaign Minister Ludwig and his predecessor came out in support of Coles claiming that it was ‘good news for milk drinkers’ before even speaking to the Industry to understand the impacts.
It’s not just Labor’s inaction; Labor’s policies have also been actively adding to
farmer’s pain and accelerating the Industry’s contraction.
There is an old saying, “if you look after the pennies the pounds look after themselves”.
However the Gillard Government has quite the opposite philosophy; a few extra costs here, a bit more regulation there, won’t matter..
The dairy crisis meeting last week at the Kolora-Noorat Football Club, near Warrnambool, confirms what most of the public in the real world already know… small business cannot continue to absorb extra and growing costs.
Warrnambool dairy consultant Mike Hamblin’s carbon tax assessment that the average Australian dairy farmer will pay an extra $7500 a year in increased energy and processing costs is a conservative estimate. In fact many larger farmers will end up paying around $20,000; figures the Government is unable to disprove.
Instead, both Julia Gillard and her Climate Change Minister Greg Combet are on the record saying farmers can just pass these costs on to consumers. That is despite supporting the $1 per litre milk and knowing farmers and processors can’t pass on the costs. In fact the supermarkets have refused attempts by processors to pass on costs despite knowing the industry is against the wall.
And for our large dairy export industry - at around $2.8 billion a year farmers still can’t pass these costs on. Most of our competitors in international markets don’t pay the carbon tax or in the case of the EU are heavily subsidised to offset these costs.
The reality is that as price takers, farmers get lumped with those costs and they come straight out of farm profits – if there are any!
If we look at Murray Goulburn, it has a carbon cost of around $14 million a year that it cannot pass on internationally or domestically and whatever cost it does not pass back to the farmers is still worn by the farmer as a member of the cooperative.
It has been calculated that many dairy farmers will now milk for about a week for no pay whatsoever as a result of the carbon tax.
Oh, and don’t forget the carbon tax is going up in July this year and will go up again next year, so those costs and losses are only set to get worse under Labor!
The carbon tax is just the tip of the iceberg; Labor has had the four largest budget deficits in history. This has put upwards pressure on interest rates which has kept Australia’s rates higher compared to the rest of the world.
Dairy farmers have lost workplace flexibility to employ people on shifts of less than three hours and the government has been asleep at the wheel getting improved access to overseas markets. New Zealand now has up to a 20% tariff advantage over Australia into China for some dairy products.
Labor’s blasé and dismissive attitude towards the farm sector’s spiralling costs exposes everything people dislike about politicians; People with no practical understanding who use spin and twist statistics to scoff and demean practical working peoples’ real concerns about government’s imposition on their lives.
For Joe Ludwig his inability to stick up for his portfolio industries is symptomatic of his failure as Minister, whether it is the dairy industry, live exporters, apple or potato growers.
The Coalition, if elected will scrap the carbon tax and review the Competition and Consumer Act to assess supermarket powers and push for arrangements that ensure the long term viability of the dairy Industry.