Michael and Aaron Clews, from Slatewood dairy farm in Rossmoya, discuss the impact of supermarket milk wars on Central Queensland farmers and economy.
Michael and Aaron Clews, from Slatewood dairy farm in Rossmoya, discuss the impact of supermarket milk wars on Central Queensland farmers and economy. Rachael Conaghan

Coles and Woolworths' dairy war hurts CQ farmers

IT'S a battle Australian dairy farmers have been fighting for five years and with little sign of relief ahead, Aaron Clews says it's time to take action.

The farmer from Slatewood dairy farm in Rossmoya, 45km north of Rockhampton, knows all too well the struggles of the $1 per litre milk price wars.

With the clawback situation in Victoria coming to light after farmers were asked to repay $120,000, Aaron says the situation proves we need to have a good look at the system.

While his family farm is safe from price wars at the moment, there is concern that by the new year price cuts will hit hard.

"Currently we are on a contract however our contract runs out at the end of the year around the December/ January period," Aaron said.

"When that runs out our bargaining group go and talk to our processor and negotiate a new price and contract so there is potential with all of what's happening in Victoria from there to flow on further north."

Seemingly, struggles for Aussie dairy farmers began when supermarkets announced the $1 litre milk price.

"It's an unsustainable retail price that the supermarkets can do it because they offset what they potentially lose onto other products and make it up eventually," Aaron said.

"We supply the milk, we supply Parmalat in Rocky and then they on-sell the milk in the supermarkets and the like.

"So with that $1 a litre milk retail price in a normal supply and demand situation, if a product is short you can put the price up to flow on further down the chain to generate more supply, or if there's too much product the price can lower and vice versa.

"But at the moment with the $1 a litre milk set permanently at $1 there's no linkage in what should be a normal market economy for milk processors to put the market up to generate more supply. So the supermarkets have more or less effectively flatlined the milk market at a $1 a litre."

Aaron said the dairy industry, which injects $70 million into the local economy, would also eventually suffer from flatlining prices as well.

"Not many people realise there's a factory in Rocky now that directly or indirectly employs 60 to 70 people between the people that work at the factory, the truck drivers, the farmers and other associated people that's involved in it.

"It's not massive but it's another 60 or 70 jobs, it's another $60 to $70 million in the CQ economy because of the milk industry and that $1 a litre milk directly puts that at risk because we are dropping supplies.

"We have dropped quite a number of suppliers in the last five years since the $1 litre stuff.

"If the consumer would like to help they can buy branded products because that represents the actual true cost of what something should be and it flows back to us eventually."

What's happening in the industry?

In 2016 Qld is 170 million litres short of what the consumer uses.

$1 litre milk takes $200 million a year out of the milk supply industry nationwide.

Since the milk price war started Qld has lost 170 farmers.

CQ has gone from having 45 farmers to 29.

The Rockhampton Parmalat Factory is worth $70 million to the local economy.

There are 60 employees spread between factory, distribution and milk collection while at farm level the figure is about 100 people employed, split between family members and employees.