PRICE WAR: Farm gate prices have to increase to ensure the sustainability of the industry, farmer says. Picture: Sarah Reed Source: The Advertiser
WA DAIRY farmers are being paid so little for their milk that the industry will struggle to survive, a new report has found.
A report prepared for the dairy section of the WA Farmers Federation has found that farm returns in the 2012 financial year were "inadequate to sustain the industry" because the farm gate milk price was between 40 and 42.5 cents a litre.
Though the report did not recommend an acceptable return for the industry, it did suggest farmers needed between 45 and 65 cents a litre for their milk.
To maintain cash flow throughout the 2012 financial year, the report found a "typical" family operate dairy farm did three things:
* Reduce personal remuneration or cut back on paid labour
* Allow assets to depreciate without replacement
* Sold assets such as replacement heifers to fund working capital.
"All three strategies create problems in the future – health/life balance issues, rundown equipment and reduced herd numbers," it said.
"These problems in turn create an inability to respond positively to improved milk prices and the businesses become self limiting."
WA Farmers dairy section president Phil Depiazzi said the report confirmed what farmers already knew and proved that farm gate prices had to be increase to ensure the sustainability of the industry.
He said he would be take the report to the major processors – Brownes, Harvey Fresh and Lion – as well as the major supermarkets.
"We will seek meetings with these companies to ensure they are fully aware of the effect their policies and strategies are having on the farm," he said.
"I ask Western Australian consumers to support local farmers by purchasing WA-based processor-branded dairy products," Mr Depiazzi concluded.
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