Lets Talk about Milk

Cow’s milk. It’s something most of us would purchase on a weekly basis. But have you ever thought about how the brand of milk you purchase could influence our farmers?

Milk prices have long been hotly contested by producers. It’s a commodity that varies greatly in price and some stakeholders have a stronghold over the market. As a dairy farmer’s granddaughter, it has been drilled into me for a long time about how the brand of milk you purchase matters.

Throughout this article I’m going to investigate a number of different factors that should influence which milk we choose. I’m not going to try to convince you to purchase a certain brand of milk, because by simply buying cow’s milk you’re supporting our farmers, I just want to educate you on a few things I’ve learnt and (hopefully) help you make more informed decisions.

Disclaimer: this article in no way intends to favour a particular brand of milk or company.

Source: https://www.dairyaustralia.com.au/industry/farm-facts/dairy-at-a-glance. Retrieved on: 5th July, 2020

Quick Facts:

The Australian dairy industry produces approximately 9.3 billion litres of milk annually.
About 1/3 of Australia’s milk production are exported.
The Australian dairy industry employs 42,600 people
The majority of milk production occurs in the south-east seaboard in Victoria, New South Wales and Tasmania.
(Australian Government, 2019).

Farmgate Prices

‘Farmgate price’ is the price that farmers receive from the processors for the milk they produce. They are based on the milkfat and protein content of the milk produced on the farm.

Figure 1: Typical Factory Paid Prices

Source: https://www.dairyaustralia.com.au/industry/prices. Retrieved on: 16^th June, 2020

Take a close look at Figure 1. Over the last 5 years, there has been a fluctuation in the cost of milk. For example, within one financial year, South Australia saw a nearly 7 cent decrease in their cents/litre. While current farmgate prices are the highest they have ever been, a measly 49.7 cents/litre isn’t sustainable. The mass scale that farmers would need to be producing milk to cultivate a profit isn’t achievable. Drought, high input costs and limited feed availability exacerbate the problem and it quickly becomes glaringly obvious that the dairy industry is not well enough supported.

A Monopoly on the Market

In Australia, there is no legislative control over the price milk companies pay farmers for their milk and it is largely driven by large distributors and market forces. Australian owned company Murray Goulburn have a stronghold over the market and at numerous times since cuts in 2016, they have charged as little as 10cents/litre (Wahlquist, 2019). While there is a push for a benchmark milk price to be established, this initiative is still only in the planning stages and it will be some time before this effort comes to fruition (Wahlquist, 2019).

Woolworths recent decision to increase milk from $1.00/litre to $1.10/litre may not seem large, but it is the first time in 8 years that home brand milk costs more than a dollar (Australian Dairy Farmers, 2019). NSW Farmers’ dairy chair Robert McIntosh highlights that $1/litre milk was never intended to be the benchmark price:

‘$1milk is the lowest common denominator, far less than we ever thought and now it’s a base price consumers expect rather than a temporary market solution to get people in the door… when a bottle of water costs more than milk you know something is wrong.’ (Townsend, 2016).

Who owns what?

Half of the major milk brands are owned by overseas companies.
Woolworths Own milk, as well as Pauls and Farmhouse Gold are owned by Italian company Parmalat.
Dairy Farmers and Dairy Choice are both owned by Japanese company Lion.
A2 milk is owned by Australian and International shareholders.
Devondale and Liddells are owned by Australian company Murray Goulburn.
Norco is one of the last 100% Australian farmer owned dairy co-operatives.

(Townsend, 2016)

While foreign ownership of dairy companies in Australia may sound like a threatening prospect, many farmers are not concerned about it, as it cannot be worse than Murray Goulburn’s pitiful farmgate prices (Wahlquist, 2019).

Furthermore; paying more for your milk also doesn’t mean that money is going back to the farmers.

A Complex Problem

Deciding which milk to purchase is a complex thing. If we choose to support Australian owned companies, sometimes that means we’re paying companies that are ripping off our farmers. Then, on the other hand, if we choose to support brands that give more to farmers, in some cases, we’re supporting multinationals.

What can we do?

There’s definitely no ‘right’ or ‘wrong’ action here. Any size step in supporting our dairy farmers is a step in the right direction. Yes, some of the ideas listed below may contradict each other, but this list of suggestions is just a few ways that we, as the general public, can help.

Buy through farmers markets and bypass the middleman
Shop at independent grocers (like IGA). This means less money is going back to large corporations.
Buy milk that is produced by the farmer (Norco, Maleny Dairies, Barambah organics, etc).
Buy milk that allows farmers to have shares.
- Japanese company Lion are a farmer-controlled cooperative (Clemons, 2017).
Buy Australian made dairy products such as cheese and yogurt.

I also think there is value in purchasing locally produced milk to reduce food miles. Here’s a few examples of locally produced milk which may be close to you: