![]() ![]() So while the sentiment behind consumers switching to branded drinking milk to support dairy farmers might be appreciated, this action won't automatically result in farmers receiving higher premiums, although it may help them indirectly. According to Dairy Australia spokesperson, "Branded milk puts more money into the supply chain. But with the majority of dairy farmers supplying to Murray Goulburn and Fonterra, and the bulk of these companies' operations being focused on milk commodities for export, fresh drinking milk is a very small part of the picture for most dairy farmers. Murray Goulburn and Fonterra also have a strong presence in the milk market, with contracts for the supply of supermarket private label milks. In the Australian drinking milk market the two major players are multinationals, Japanese-owned Lion (with the Pura and Dairy Farmers brands) and French-owned Parmalat (with the Pauls brand). Additionally, milk that's used for fresh milk (and its products like butter or cheese) attracts a marginally higher premium than the milk being used for commodity products like milk powder. On top of the base price, there are also seasonal prices – winter incentives, for example. The protein component is worth more than the fat, but the composition of milk – the fat:protein ratio – can vary depending on breed of cow, seasonality and geography, among other things. Farmers are paid per kilogram of milk solids – the fat and protein – they produce. The payment structure for milk is also very complex. It's a different and much smaller industry in the northern states such as Western Australia and Queensland, where very few farmers supply to Murray Goulburn and Fonterra, and most of the fresh milk produced is sold to the domestic market as drinking milk or butter and cheese. The rest is exported, mainly in the form of commodity products like milk powder and cheese. Somewhere between 6-10% of milk supplied to Murray Goulburn and Fonterra goes into domestic fresh milk (for drinking milk – both supermarket private label and branded milks - and products like butter and cheese). ![]() The majority of milk supplied to those companies comes from dairy farms in the southern states, particularly Victoria and Tasmania. Roughly 2600 supply Murray Goulburn and 1200 supply Fonterra - about 60% of all dairy farmers in total. $2 milk – to buy or not to buy?Īccording to Dairy Australia, the national service body of the dairy industry, there are about 6100 dairy farmers in Australia. So is changing from buying supermarket private label milk to buying branded milk the answer? Unfortunately it's not that simple. Many consumers are eager to show their support for dairy farmers, and buy milk that's going to ensure farmers receive a better premium. The ACCC is now investigating Murray Goulburn and Fonterra over their cuts to the milk price paid to farmers, specifically the timing and notice of the cuts. Global dairy prices have fallen around 60% since early 2014, but the severity and unexpected nature of the recent slashes to milk prices were unprecedented. How you can help dairy farmersīeing one of the world's largest exporters of milk, Australian milk prices are heavily influenced by the global market. Where farm gate prices traditionally are set conservatively low, and rise as the season progresses with step ups paid to farmers as the budget is refined based on actual sales, dairy farmers that supply these companies are now facing the prospect of retrospectively paying back 10 months of "overpaid" milk. In May 2017 Australia's biggest dairy producer, Murray Goulburn, and the world's largest dairy exporter, New Zealand-owned Fonterra, announced they were cutting the milk prices being paid to Australian dairy farmers by about 15% – just two months before the end of the financial year. ![]()
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