Agriculture

WA dairy farmers ‘not affected’ by wholesale price reduction

The WAFarmers Federation is optimistic about the future of dairy farming in Western Australia, despite a recent reduction in wholesale milk prices in the Eastern States.

Last month, Australia’s biggest dairy companies Murray Goulburn and Fonterra slashed their farm-gate milk prices by 15 per cent to less than 35 cents a litre

WAFarmers Dairy Council president Phil Depiazzi said most WA dairy farmers would not be affected by the price reduction until their contracts were re-negotiated in mid-2017.

“Most of the WA dairy farmers are in contract with their processors and so they already have a minimum price built into those contracts and I don’t expect that to change,” he said.

“We are working in a different market place, too, so the majority of our milk in West Australia is sold domestically.”

Mr Depiazzi said the Eastern States had a poor start to the dairy farming season, but WA had not faced the same problems.

“We’ve grown this year as a result of two of the processors paying sustainable prices, and farmers have been prepared to invest in their business, because the signals from processors was that they wanted more milk,” he said.

“[We] act a bit independently to the other side of the country so I don’t think it should worry us.”

Dardanup dairy farmer Kevin Depiazzi said the price change had not had any effect on South-West farmers, but could be an issue in the future.

“Our market is mostly Perth based or WA-based,” he said.

“We are still affected by the world price because if it gets too much difference between here and the Eastern States then milk will come from there so that’s put pressure on our price.”

Mr Depiazzi said his contract did not expire until July next year.

“Our prices are locked in until then but we expect that because the prices are down elsewhere we will be offered a lower price the next contract,” he said.

Western Dairy regional manager Esther Jones said WA farmers did not supply milk to Murray Goulburn or Fonterra.

“Our farmers supply processers that essentially we are a domestic market in W.A, we have a small export capacity. Farmers that supply Harvey Fresh have every reason to feel confident about their future,” she said.

But Ms Jones said international markets would eventually effect WA prices. “We are to some degree isolated from what’s going on, but you need to acknowledge that world prices ultimately affect our pricing,” she said.

Earlier this month, Brownes Dairy confirmed it would not be renewing four farmers’ contracts in the Harvey region, putting them out of business.

Brownes was contacted but declined to comment on the matter.

Kevin Depiazzi said consumers should buy locally sourced dairy products.

“I would encourage people to not buy the cheaper house brand,” he said.

“If they can afford to buy the others, they should seriously think about what the ramifications are if they buy the cheap milk.”