Sunday, June 2, 2019

More Dairy Industry Turmoil

Duncan B.

Turmoil continues in Australia’s dairy Industry.  French –owned dairy giant Parmalat has cut back production at its plant in Longwarry in eastern Victoria, with full-time jobs being reduced from 36 to nine. A shortage of milk is blamed for the closure of the cream cheese line and the milk powder evaporator.

New Zealand-owned dairy processor Fonterra has also announced that it is closing its dairy plant at Dennington, near Warrnambool in south-western Victoria (see photo above). 100 workers will lose their jobs when the plant closes at the end of November. 

The company blames the drought and changes in the structure of the industry leading to under-utilisation of manufacturing assets. The company lost many of its farmer suppliers in 2016 when it implemented a “clawback” scheme to recover money already paid to farmers. Dairy farmers and Fonterra workers are claiming that this is a major cause of the shut-down. Fonterra has indicated that it is not willing to sell the factory to another dairy company.

Many dairy farmers are leaving the industry, with many more thinking of quitting. A recent national survey of 800 dairy farmers found that less than half of them felt confident about the future of the industry, down from 75% four years ago. One quarter of those surveyed are planning to leave dairying. Farmers with less than 150 cows are most likely to be winding down. 

Milk production in Victoria has dropped dramatically in recent years. Northern Victorian production has dropped from 3.3 billion litres in 2001-02 to 1.5 billion litres in 2018-19. Western Victorian production was 2.2 billion litres in 2001-02, but is estimated to be under 2 million litres for 2018-19. 

Many dairy farmers in NSW who supply Bega and Norco dairy companies are complaining about low farm-gate prices being offered by these companies. Faced with struggling to survive with milk prices below the cost of production, many of them are also leaving dairying.

Suppliers of farm equipment and other inputs, tradesmen and shopkeepers in country towns are also affected by the dairy industry crisis. The Moyne Shire Council in Western Victoria has tried to put a price on the costs to the Shire of the downturn in dairying. The council estimates that the cost to the Shire of the lower farm-gate prices offered to farmers this year by Murray Goulburn and Fonterra will be about $67 million.

Australia has gone from being the third biggest dairy exporter in the world in 2000 to being a minor player today. In the 1990’s Australia had a 16% share of the dairy export trade. Last year Australia had only a 6% share. In 2000 Australia exported 52% of its dairy production. That dropped to 29% last year, while imports of dairy products are increasing from 8.4% of national consumption to 17.8% over the same period.

The crisis in dairy farming and other agricultural industries highlights the total irrationality of the capitalist system. Production is for profit not to suit the needs of the people. There is no regard for the welfare of the farmers or workers in agriculture-based industries or for the environment, as shown by the Murray-Darling river shambles.

Rural workers and farmers are both oppressed by the same enemies in the shape of the mainly foreign-owned agribusiness companies. There is a strong basis for unity in country areas between workers, farmers and all others affected by the crisis in capitalist agriculture.

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