While the impact of prices offered to dairy farmers by big companies such as Murray-Goulburn and Fonterra is limited in this area, local producers are still calling on the Federal Government to bring in regulation governing milk supply to the major supermarkets.

Milk producers north of Bodalla have contracts with Murray-Goulburn, while producers south of Bodalla have contracts with Bega Cheese.

While Murray-Goulburn has dropped its prices for the current contract period placing its producers under financial pressure, Bega Cheese is currently holding its prices for contract period. 

Fonterra did have a minor stake in Bega Cheese until last year when it sold off those interests.

Tilba dairy farmer Nic Dibden, who together with his wife Erica have started their own milk producing company, said the root of the problem laid with the domination of the major supermarkets.

“Every bottle of $1 milk you buy from the supermarkets, you are putting another nail in the coffin of dairy farmers,” Mr Dibden said.

He explained it all started when Coles decided to drop the price of milk to $1, regardless of the market situation. This he said was to increase its market share and to take on Woolworths, which now had followed suit, thereby placing great pressure on milk companies who were not passing on those low prices to the farmers.

He recently saw a 1kg block of cheese being offered in a supermarket for $4.99, which was shocking as it took 13 litres of milk and a year in a cool room to produce, meaning the cheese was being sold for less than half of what it cost to produce.

“Farmers have little or no market power and all the market power lies with the supermarkets,” Mr Dibden said. “There has to be some form of government regulation to control the supermarkets and make them more accountable to market conditions.”

Coles and Woolworths had 80 per cent of the market share and if the situation did not change with the milk shelf price, his view was that all Far South Coast dairy farmers would eventually be impacted on and we could see more leaving the industry.

He said offers of low-interest loans by the Federal Government to dairy farmers caught out in contracts would only perpetuate the problem and what was needed was real reform.

Offering a different perspective is dairy farmer Peter Motbey at Tyrone Farm, just west of Bodalla, who sells his milk to Murray-Goulburn.

“We are now part of the global economy and as such we have to accept market forces, as much as I would prefer it to be different," Mr Motbey said.

He thanked Murray-Goulburn for their support of his farm at this difficult time. It was that company that came to his rescue after Coles cut the contract to the company he previously supplied. 

Dairy Australia reports national milk production is expected to be down about 2 per cent for the 2015/16 season to between 9.55 and 9.65 billion litres. The outlook for 2016/17 is heavily dependent on seasonal conditions, but a further 2-5 per cent fall in production is anticipated.

Confidence among Australian farmers measured by the National Dairy Farmer Survey (NDFS), conducted in February and March, showed a decline in the proportion of farmers feeling positive about the future of the industry from 74 per cent to 67 per cent.

Lifeline Australia last month launched an emergency appeal calling on Australians to help ensure thousands of dairy farm workers and their families have access to 24/7 crisis support.

CEO Pete Shmigel said the national charity’s Dairy Crisis Appeal comes after urgent requests for assistance from the industry, with a number of organisations receiving calls from desperate farmers thinking about taking their own lives.

“The dairy crisis is having a significant and even heartbreaking impact in farming communities across the country and Lifeline needs the public’s support to be able to answer every call to our 13 11 14 helpline,” Mr Shmigel said.

Candidates vying for the seat of Eden-Monaro were asked what they would do improve the situation for local dairy producers.

Labor candidate and former MP Mike Kelly said it was fortunate that local dairy farmers had Bega Cheese to deal with as they had shown compassion and moral fortitude in not cutting forward contracts. “There is a problem with the market when dairy farmers are getting less for their milk than what it costs to produce,” Dr Kelly said. 

He said perhaps what needed to happen was the farmers working together cooperatively to get the best prices and increase their bargaining power. 

Liberal candidate Peter Hendy said he understood that the many Bega Valley dairy farmers were currently unaffected by the pricing concerns in other sectors of the industry; in time however, a sustained low international price for milk would have ramifications for local producers.

He also understood that dairy farmers in the Tumut region are affected by the retrospective terms of their contracts for supply.

“The Turnbull Coalition Government has listened to dairy farmers and it is clear the actions of Murray-Goulburn and Fonterra have delivered a huge shock to the industry,” Dr Hendy said. “The Government has complete confidence in the Australian dairy industry and wants to support our farmers while the industry recovers from lower global dairy commodity prices.

“The Turnbull Coalition Government will deliver a $579 million package to support dairy farmers who have had their incomes retrospectively cut by dairy processors Murray-Goulburn and Fonterra.”