Farmgate Milk Prices Drop Shows Cracks in Globalism

The two biggest players in the Australian/New Zealand dairy industries co-op giants Murry Goulburn and Fonterra recently decided to drop farmgate milk prices by almost a dollar per kg.

This price drop comes as a consequence of weak dairy prices worldwide due to an oversupply in the market either due to stockpiling and/or over production.

Many market analysts dismiss the drop as "normal capitalism at work" and compare it to other commodities such as oil, etc where the price fluctuates according to demand or other situations affecting the market. However, I think this comparison is manifestly unfair, overly simplistic, and I worry about the implications if our local farmers start to get priced out of the dairy industry altogether.

Fresh local milk is hard to beat (image above)

Now, I must confess to being largely ignorant when it comes to how the milk co-ops work, how farmers get paid, what compensation, benefits, or incentives they get from belonging to these organisations so I'll try not to voice my opinion too much in areas that I don't know about. Suffices to say, many dairy farmers across Australia are crying out for help at this latest price cut saying they will go under and can't survive in the industry any longer; therefore, I'm willing to take their outcry on face value alone enough to worry me personally that the future of our dairy industry (as we know it) could be at risk. This is serious, as it could mean a future whereby our dairy produce is no longer local but, imported, inferior quality, and more expensive.  

All us "fresh foodies" know that local produce is the best because it travels less distance from the farm to the consumer making it fresher, it's made or grown by people we know and trust, there's better quality control, more choice, buying local helps finance our local community, and there's many other benefits/reasons why having a local dairy farmer nearby is good.  

Globalisation is fine if people around the country or indeed the world want to buy our local produce because they don't have access to such products for whatever reason, but when globalisation aids in the demise of our own local producers thus forcing us to purchase our goods (that we used to make locally) from elsewhere I see it as a huge negative!      

Capitalism is good too – don't get me wrong – however, it's not perfect and this is a prime example whereby smaller producers are getting screwed by the market price and it's not just hurting them it's hurting all of us in the long run.

According to the statistics posted on Dairy Australia's Website overall milk prices (at the farmgate) in Australia went up a measly 6 cents per ltr between 2008 and 2015 – that's awful! Over the same period, a kilo of milk solids increased by just 83 cents… Little wonder some farmers are struggling to pay the bills because as we know the cost of living has risen sharply over the past decade and mathematically speaking if a business is not keeping up with inflation then it can't make a profit.     

How can we fix this? Should government subsidise dairy farmers? If yes, where do we draw the line and say NO to other industries that are in trouble? Maybe the government should regulate milk prices? But then, that's not a free market and would cause all sorts of other non-intended consequences… wouldn't it? Probably.  

Some farmers are going it alone and making a success through processing and marketing their own dairy products without belonging to a huge co-op. That's great, for them, but not everyone can afford to do this either, in fact, most can't…  

So it comes down to this (in my mind) and that is: SUPPORT OUR LOCAL DAIRY FARMERS by buying local dairy goods from them, selecting the branded milk even if it is more expensive, voice our support, and encourage others to embrace local produce. These efforts may not bring about change immediately but over time if there's enough local support it may put pressure on the big companies to pay better farmgate prices and/or empower more farmers with the courage to start their own production businesses.

As the famous celebrity chef Rick Stein would say, "You can't get better than local produce" and I totally agree with this statement because it makes sense on so many levels not just economically.

Small to medium scale dairy farming has always been a tough job – although these farmers would call it a love and lifestyle – my family has a deep history of dairy farming my mother grew up on a dairy farm and as a kid my school holidays would regularly be used to "work" on my uncle's dairy farm helping to milk the cows.

Farming is a hard but rewarding life that's extremely community based and driven. Farmers generally want enough money for their work/produce to be comfortable not necessarily rich (in a monetary sense) so it would be a travesty if our small local farmers were forced off their land just because they weren't getting paid a fair quid.  

One thing is for sure, we do NOT want to live in a world where all our milk and other dairy products can only be sourced from overseas! If that day ever came I for one will be getting a cow of my own – the only problem with that would be on my smallish three acre block where would I put it?            


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