Australia heads for dairy deregulation

By Boyd Champness

VICTORIAN dairy farmers have voted overwhelmingly in favour of deregulation – a move that is certain to force the rest of Australia to follow suit.

The Victorian Government will now move to deregulate its drinking milk market after 89% of the states dairy farmers – about 7000 of the 7861 who voted – supported deregulation in the December postal ballot.

Victoria is expected to introduce deregulation on 30 June, 2000, the date the Federal Governments Domestic Market Support Scheme sunsets.

Interstate farmers must now agree to dismantle their own regulated drinking milk pricing systems or face a flood of unregulated, low-priced Victorian milk entering their premium drinking milk markets.

With 62% of Australias milk production in Victoria, the decision puts a lot of pressure on the other states.

But because farmers in other states receive as much as 85% of their total income from premium drinking milk markets, compared to 7% for Victorian farmers, they have more to lose.

If all states agree to deregulate, dairy farmers will have access to a national A$1.7 billion (680m) assistance package, funded from an 11¢ impost on each litre of milk for the next eight years.

However, the Federal Government has threatened to withdraw the package unless all states agree to deregulate.

Under deregulation, Victorian farmers will lose their 44¢ a litre (18p) premium on the 7% of their milk sold to the drinking market. In return, they will receive a one-off payment of A$72,000 (29,000).

Farmers in other states who are more reliant on the premium drinking milk markets will receive a bigger cut of the package.

For example, farmers in New South Wales can expect $142,000 each, Queensland $103,000, South Australia $133,000 and Western Australia $186,000 if they agree to deregulate.

Any farmer wishing to leave the industry will also receive an additional $45,000 to do so.

Victorian Premier Steve Bracks told The Age newspaper that he was thrilled with the 84% voter turnout and the end result.

“The dairy industry is actually our (Victorias) biggest manufacturing industry, so Im not surprised that the stakeholders, the dairy farmers, want to see their industry grow in the future, and I really support their wishes for that,” he said.