Issue link: http://viewer.e-digitaleditions.com/i/131994
industryfocus Fast Fact About 40,000 people are directly employed on dairy farms and manufacturing plants. Many of these farm employees are working for the family business. In past months, farmers have also been hit by the carbon tax. Under the tax, Australia's 7,000 dairy farmers will pay higher prices for the electricity used in milking sheds to run machines and vats, and the companies taxed under the scheme will pass on the expense to customers. Production costs for the dairy industry will rise by $170 million in 2012/13 and almost $200 million the following year, according to an IBISWorld study. Coles and Woolworths have remained quiet about the milk wars, other than saying they believe selling more discounted milk is good for consumers and good for farmers. The supermarket giants are using milk to get people into their stores to buy other products. Minor supermarket chains, such as Aldi, have also reduced their milk prices. At the same time, supermarkets have extended their private label ranges, often at the expense of primary producers from regional Australia. Olives, bread, pork, lamb and cheeses have all been discounted heavily as the big supermarkets go head to head for the consumer dollar. Milk remains the focal point, though. The Australian Dairy Industry Council (ADIC) suggested to a Senate inquiry into milk discounting and its impact on the industry that $70 million would be stripped annually in supermarket margins by the discounting – less than half of that by Coles – and the impact along the supply chain could be hundreds of millions of dollars per year. About 25 per cent of Australian milk produced is sold as fresh milk, with nine billion litres produced in 2011. This is well down on the national production of 11 billion litres in 2004, when there were more farms and farming families in the industry. Currently, consumers are collectively saving about $1 million per week in milk discounts. Each Australian consumes an average of 102 litres of milk per year. Outspoken Independent South Australian Senator Nick Xenophon is also backing dairy farmers, saying the government is not doing enough to support them. Senator Xenophon believes a supermarket ombudsman should be put in place to help dairy farmers deal with milk processors and milk processors negotiate with retailers. Little has changed since the Senate probe. Terry Toohey, NSW Farmers dairy committee chairman, describes the supermarkets' behaviour as reckless and believes the federal government must step in "Consumers are collectively saving about $1 million per week in milk discounts. Each Australian consumes an average of 102 litres of milk per year." 71