bad times on the farm?

Hi mike. Well the retail for consumers is $1/litre but how much less per litre are dairy farmers receiving now compared to 2 years ago? For all I know they could be getting more and the big supermarkets have cut their take. Lets have some proof from someone in the dairy business.... W

In think we all know the supermarkets do not take price cuts. They are a business and have just made record profits.
I think it was on Landline or state to state recently that many dairy farmers are now getting less per litre then what it costs them to produce it and that is why so many are getting out of the business. Especially in NSW at the moment. The show also warned in a few years we may have to start importing milk from overseas. How sad is that!
Coles and Woolworths said they do not apply any pressure to the farm, so it is not their fault. The middle guys who collect and process the milk said they are told by the big supermarket chains what they will pay, and therefore they have to pass that on to the farmers. So the big supermarkets are passing the buck and taking no blame. They also said the consumers are the winners. Therefore it goes to show we are all at fault.
Where we live in Qld there use to be dairy farms all around us, now there is only one left in the district and they process their own milk.
So the lesson here is that all of the people who line up for so called cheap fuel, buy cheap milk, bread etc, will pay for it down the track. The big question is what can we do about it? Do not expect our political leaders to do much.
Kevin

Hi in today's I live in Broken Hill and in to days local newspaper a local shop that is just across the road from Broken Hill base hospital has just closed its doors as they cannot sell it as a viable business they said costs such as electric and the local garages and the big two coles and woolie s have made it a unviable business I have been here for 7 years now so far we have lost 4 or 5 petrol stations and a number of pubs and the main street is still going but there are a number of empty shops. Tourist numbers are down .I do really feel for the people who who there own business they deserve better. when we go to mildura and Adelaide by road we see so many shops closed scarry when will it stop?

I got out of farming while I still had some equity. Until such time as the importer of produce into Australia does not have to adhere to the same health standards as the Aussie farmer our agriculture will continue to decline and move to overseas ownership. Currently us, as tax payers, pay for the inspection of imported produce and the farmer pays for Australian grown. I can never see why a government cannot take this on unless they are preferring not to take on the super markets.
I was manufacturing garments totally in Australia (from sheep to retailer) and sell viably into SE Asia. That was until the government imposed an risk levy which accounted for 75% of the processors cost. There was no levy on the garment manufacturers so the Gov. claimed innocence but because 2 processing stages pulled out of Australia the whole industry fell over.
I could go on but I am too busy enjoying travelling Australia now and helping out where I can

Neil.

One of the features of a modern and progressive economy is the increasing size of the business unit. In a highly competitive economic system economies of scale reduce prices for the end consumer. In its purest form “Laissez-faire” is an economic environment in which transactions between private parties are free from tariffs, Government subsidies and enforced monopolies with only adequate government regulations sufficient to protect property rights against theft and aggression. Such a system will encourage capital to be invested where returns are the greatest thus maximising profits to investors leading to raising living standards.
In Australia we have in essence a capitalist economy where owners of capital are free to invest where they will receive the highest return. Market failure (e.g. closure of a small shop or garage) is not a justifiable reason for Government intervention.
But Government intervention is justifiable in some areas : Misuse of market power - some firms will develop economic power that will allow them to over ride the free market and manipulate the price. Examples include monopolies, oligopolies and duopolies; Public goods and services - some things will not be produced by the free market, even though they are essential e.g. Police, defence, border protection. Health and education etc; Externalities - some forms of production lead to side effects which are not controlled by the market. They can be either positive or negative e.g pollution.
The Australian government has an obligation to guarantee economic stability and allocation and distribution efficiences of goods and services to the benefit of all Australians regardless of their economic status.
Whenever Government intervention occurs in a free market it will always lead to a misallocation of scarce resources. As a highly developed economy we can justify and accept some intervention so that all Australians have a minimum and acceptable living standard. While the capitalism is not a perfect system it has worked to raise the standard of living of all Australians….just look outside your front door and observe how many motor vehicles, caravans, boats exits in your street compared with your grandparents era.
If as a community we don’t want our farms to close, corner stores to shut, independent services stations to go out of business etc etc….that’s fine. That can be achieved by greater Government intervention in the free market. But as a consequence we must also be prepared to accept a lower standard of living due to the misallocation of scarce resources that that would entail.

Cheers

I know it probably doesnt make much of a difference but when my partner and I go shopping we always check the back of the labels and will choose the australian made or products made from australian ingredients, regardless if it is more expensive or not. Worst case if there is no aussie option we buy a product that is made from part aussie ingredients at least. I always buy local produce from the farm gate as much as i can too!

Gday,
At the rate farms are being sold to Asian consortiums you will need Yen to buy milk soon, not $.

While I concur with most of whats been said, as a farmer all my life the equation of
equity is the biggest issue. Input costs continue to rise, some at huge rates, eg fertiliser & chemicals, but returns continue to decline in real terms. Farms in my area
are now being sold, as the family succession is no longer viable...to the son, who is
already working off farm..& to the father, who wasnt able to build Super reserves, &
now has to wait 5 years before the asset is removed from pension liability after
selling it. Those in debt are paying close to 10% & returns rarely exceed that so
the equity imbalance continues to erode the farmers assets. Economies of Scale are
playing a part, with some local farms going to larger landholders.
No economic adviser is going to suggest a cashed up city chap buy a farm..better
return from real estate,shares, or even interest.
I do not agree with the anti foreign ownership doomsdayers. These people have $$
to invest, still need to buy inputs, source labour, & sell their product according to
Australian laws & pay their taxes.
Australian farmers have always been under pressure, it is a risky business, & under
current conditions only the efficient will survive.
By all means buy from the farm gate if you can, but in reality most of our production
does not pass through such simple market mechanisms.
Farmers dont want your sympathy or handouts, but will welcome your understanding.
cheers....oldbaz.

Background Briefing this morning on Radio National addressed the question that Coles Woolworths and, to a lesser extent Aldi, are having on the market.

Whilst I generally agree that government intervention is undesirable, and that a free market provides prosperity etc, we are at the mercy of a duopoly (nearly 80% of the food market). The power of the duopoly is not far behind that of government. In this matter, I would like to be able to take some collective action to rein in the power of the duopoly. As a representative of consumers and suppliers, the government is the obvious player to fulfill that role.

Asking battling consumers to take the initiative by boycotting Coles/Ww, or their plain label brands won't happen. However, when the free market has disappeared (only plain label products from China on the shelves of the only two supermarkets) it will be the consumer who suffers. Cheap fuel and 1$ a litre milk will be a distant memory.

If you listen to Background Briefing you will hear how the current "free" market is operating.

Meanwhile I will continue to consume Jonesies Milk, Rod's Meats, go to the local green grocer and buy fuel from unaffiliated servos. However, my cats like the plain label tuna from Coles (its cheaper than their cat food).

Bob

Hear hear Mike,

We all should abandon the Coles/Woolies/ Aldi's of the world as a sign that we support the farmers in this country. They should be ashamed of themselves promoting themselves as cutting prices at the expense of our farmers.

Cheers Wilko