Australian Dairy Farmers Demand Price Increase Amidst Inflation Disparity
Australian dairy farmers are raising concerns over a significant financial gap between current milk prices and inflation, resulting fr om a prolonged supermarket price war. Presently, milk prices are approximately $1.50 below natural inflation levels, attributed to the 'dollar-a-litre' strategy initiated by retailers Aldi, Coles, and Woolworths 15 years ago. This strategy continues to affect pricing expectations.
Historical data indicates that if milk prices had tracked inflation since the 1970s, they would now exceed $3.50 per litre. Adjustments for mechanization efficiencies suggest that a realistic price should be between $2.56 and $2.95 per litre, had the promotion not been implemented.
Chris Griffin, a Gippsland farmer and former president of the Australian Dairy Farmers group, emphasizes that a sustainable price point is necessary to secure profit for all supply chain participants. Despite slight increases since 2019, domestic prices remain unprecedentedly low compared to international markets, with Australia being the only industrialized nation wh ere milk costs less than $A2 per litre.
Joe Bradley, president of eastAUSmilk, stresses the need for supermarkets to increase prices above $2 per litre and to ensure these price hikes benefit farmers. He criticizes the price war for economically hindering dairy farming, pointing out the inconsistency with other supermarket items that have risen with inflation.
