WA dairy farmers have acknowledged a milk production incentive program as a step in the right direction but believe more needs to be done to boost an ailing industry.
Last week Harvey Fresh announced that it would begin a production incentive program for its 70-plus milk suppliers in a bid to increase fresh milk supplies to the company's dairy.
The incentive program would reward Harvey Fresh suppliers with an additional three to five cents a litre for milk production in excess of each farm supplier's monthly production in 2011.
The program commences immediately and will run until December 2013.
The maximum price incentive will be paid in summer months which are traditionally low supply periods.
Harvey Fresh sales marketing and export director Kevin Sorgiovanni said he believed it was the first time a year-round production incentive had been paid to farmers to increase milk supply which included the spring peak production months.
"Incentives to overcome production shortages are not new, but the recent decline in milk production in WA, together with the growth in export and domestic demand for Harvey Fresh dairy products means we require extra milk supply all year round," Mr Sorgiovanni said in a statement last week.
However WAFarmers dairy president Peter Evans said the incentive wasn't enough to stop the drain of milk producers out of the industry.
"When you extend the increased price over an existing farmer's total production it works out to be a very small increase," Mr Evans said.
"Three to five cents over the whole production would be better.
"You have to realise that processors want a milk supply throughout the whole year but it costs farmers extra to do this.
"In WA we are getting the lowest prices in Australia and this increase, although welcome, is insignificant in the total picture.
"It needs to be between 45 to 50 cents a litre across all production in WA if Harvey Fresh want to arrest the decline of milk production in WA."
Harvey dairy farmer Dale Hanks agreed with Peter Evans and said the incentive should be applied to all milk production, not just new milk.
"At the end of the day it will not change our strategy on farm, we will continue to do what we do and the State will continue to be short of milk," he said.
"Harvey Fresh should be driving the price up for all milk and not just new milk production."
Harvey Fresh supplier Darren Merritt said he was worried about the longevity of the industry in WA because dairy farming was an ageing industry and many farms had ageing infrastructure.
"You can't encourage young people to come home, because you can't expect them to work on farms with broken down infrastructure," he said
"Long term you lose that next generation because they go elsewhere for work and that means you lose that farming enterprise."
Benger dairy farmer Todd Naughton said with export prices so high, he had considered the opportunity of exporting cattle rather than keeping them for milk production given the price of milk is so low.
"That's just the way corporates work these days," he said
"They just keep lowering the price and if they have to pay they pay, they don't have to operate on anything more than a six to 12-month basis.
"If they have to pay a dollar to get milk next month they will and if they have to pay two dollars they pay two.
"They wind the price down until they hit the wall and then they start winding it up, unfortunately they operate on a short-term basis but we're unable to operate like that.
"The only way these people understand things is when they can't get any money or milk to run their business.
"Once you drive the price down, you lose economies of scale, this is what will happen in the milk industry.
"All you have to do is go to a Harvey Fresh meeting and look at the age of producers there - I'm one of the youngest at 45."
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