The Australian Bureau of Agricultural Resource Economics (ABARE) released its report on the outcome of dairy deregulation on January 30. It confirmed that in the six months since the final stage of dairy deregulation was implemented on July 1, 200 dairy farmers have left the industry in New South Wales and 110 have sold up in Queensland.
In contrast, only 46 dairy farmers in NSW and 44 dairy farmers in Queensland were forced out of the industry in the previous 12 months. ABARE also quoted a survey of farmer intentions, which found that 30% did not expect to be in the industry in five years time.
Dairy farmers in four states will suffer a loss of income this financial year, says the ABARE report. In Western Australia there was a 30% cut in farm-gate milk prices, followed by NSW with a 29% reduction, then Queensland with a 24% cut and South Australia with a 14% cut. The price paid to farmers for milk in NSW has dropped from 36 cents to 25.4 cents a litre, a cut of 29%.
Based on a sample of dairy farms, the ABARE report forecast that a NSW dairy farmer faced a $9449 loss this year compared with a $43,613 profit last year. The estimated adjustment payment of $20,000 would not compensate for the impact of lower prices.
These figures reveal the devastation of an industry. But even more shocking is the fact the state-based dairy farmer organisations and the national Australian Dairy Industry Council (ADIC) stitched up the deregulation deal with the federal government with the intention of depriving small dairy farmers of their livelihood by driving them out of the industry.
While small dairy farmers are being driven out of the industry, a tiny minority of wealthy dairy farmers — who control the AIDC — will profit from deregulation. They'll be able to expand their farms by buying up small dairy farms and dairy cows dirt cheap.
There are other beneficiaries of dairy deregulation. The big milk processing companies and the three giant supermarket chains have been creaming off increased profits as a result of dairy industry deregulation.
In order to reduce the political fallout from dairy industry deregulation, the Howard government and the industry bodies tried to prevent small dairy farmers from receiving public support for their campaign against deregulation by claiming that deregulation would lead to cheaper milk for consumers.
The price that dairy farmers in NSW receive for milk a litre has dropped from 36 cents to 25.4 cents, but the price of milk sold in supermarkets has only been reduced by a miserly five cents a litre. Someone is obviously pocketing the difference, and it certainly isn't dairy farmers.
Currently, the federal government and the state governments are each blaming the other for the plight of dairy farmers, saying that the farmers need more financial assistance in the form of loans. But neither the commonwealth nor the states will do what is required to save small dairy farmers.
At a minimum, small dairy farmers need the industry to be re-regulated in order to guarantee them a minimum income. But they need more than this.
The only way of undercutting the blatant profiteering of the milk processing companies and the supermarket chains, is the establishment of a publicly owned, publicly controlled milk processing entity for farmers to sell their milk to.
Dairy farmers also need access to a publicly owned, publicly controlled bank which can give them cheap loans. And they need to democratise dairy farmer organisations in order to remove the ability of wealthy farmers to dictate schemes, such as dairy deregulation, which are designed to bring disaster onto the heads of small farmers.
Of course, small dairy farmers on their own do not have the social weight to force through such anti-capitalist measures. Only an alliance between small dairy farmers and the big majority of ordinary consumers — the urban working class — would have the social weight to counter the domination of industry policy by the big corporations.
Such an alliance will not be possible as long as the trade unions, the only existing mass organisations of the working class, remain tied to and politically subordinate to the pro-capitalist Labor Party politicians and union officials.