Milk’s historic price plunge

Deflating today’s $1-a-litre milk to 2000 prices means millennial consumers would have paid just 65 cents for a litre of milk. At the time they were actually paying $1.40/litre.

Australian Bureau of Statistics analysis and State Library of Victoria records show deregulation and supermarket discounting have shattered a century of stable milk pricing.

In 1901, consumers were paying the decimal equivalent of 3 cents a litre for milk, which equates to $1.50 in 2000 pricing.

Since 2000, deregulation, followed by supermarket discounting that capped milk prices at $1 a litre, have slashed domestic milk premiums.

“There’s no such thing as a domestic premium any more,” United Dairyfarmers of Victoria councillor Daryl Hoey said. “It’s been eroded by supermarkets.

“I still think the argument is we need more competition at the supermarket level to drive up prices.”

Across the Tasman Sea, Kiwi consumers are paying $NZ1.72 for their supermarkets’ house brand milk, which equates to $1.38 Australian once New Zealand’s 15 per cent GST is removed.

In NZ, dairy giant Fonterra sets the wholesale milk price, based on what it can extract from the same litre of milk if it was sold on world market. The process is independently ­audited, with government oversight of the methodology.

Applying current Global Dairy Trade auction prices to Dairy Australia’s product yield, shows local processors are earning about 60-63c a litre on milk delivered to the dock for export.

Dairy Australia data reinforces the argument that local milk processors are struggling to squeeze any value add out of the domestic market.

Source: The Weekly Times

Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/milks-historic-price-plunge/news-story/0f8b188d4e7bbd8c702a76d5f2a062d2

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