Dairy industry being squeezed by multiple factors

Dairy producers are under pressure from low global milk prices, the high Australian dollar and supermarket price wars.

ABC’s The Business reported last night that the industry was being squeezed by a “triple whammy”, with farmers claiming they are near breaking point.

“Farmers are losing money, service providers aren't getting paid, land prices are depreciating,” Jock O’Keefe, a dairy producer, told The Business.

“It's all getting to a very critical point, I think, yeah.”

A glut in global supply is also being blamed for producers’ woes.

“The world just became aflush with dairy products,” said Ian Halliday, the managing director of Dairy Australia, the national services body for the industry.

“And so, as a result, that has put some downward pressure on price for this current 12 months.”

Last week saw Wesfarmers (owners of Coles) and dairy farmers in WA argue over the reason for low farm gate prices, with farmers blaming milk price wars between Coles and Woolworths, and Wesfarmers claiming that oversupply was responsible.

"We've seen the one dollar milk strip the value out of dairy products to the tune of $25 million a year, and that's come out of the supply chain, and obviously that just puts far too much pressure on processors and producers, or farmers," Phil Depiazzi of the WA Farmers Federation told the ABC.

Dairy farmers and manufacturers have recently been reported as being both under strain and potential beneficiaries of the Asian Century.

Last year, for example, there were stories about big rises in Chinese demand for dairy and investors in that country buying into Australian producers.