The government and opposition are at odds over the dairy industry's campaign for a levy on milk, with the government keeping its options open while Labor opposes.
Dairy farmers have proposed the 50¢ levy on fresh milk sales after two of the country's main dairy processors –Murray Goulburn and Fonterra – slashed the average farm gate price from $5.60 a kilogram of milk solid to as low as $4.75 a kilo.
Farmer lobby group Australian Dairy Farmers (ADF) and dairy analysts estimate the break-even price for the average farmer is about $5.50 a kilo.
The corporate regulator, the competition regulator and law firm Slater & Gordon are each investigating the processors over their behaviour.
Deputy Prime Minister and Agriculture Minister Barnaby Joyce said he would have a "strong yarn to the retailers" about increasing milk prices. Woolworths and Coles have angered dairy farmers by selling milk for $1 a litre since 2011.
"[I will] basically ask them if they want to fix it, that would be great," Senator Joyce told Channel Nine on Sunday. "If they don't ask the government to fix it, which they always complain about, but that's an option that we can always keep up our sleeve."
Asked whether he would support the proposed levy, he said: "I'll make sure we have a yarn to the retailers first before we suggest anything first".
No levy
However shadow agriculture minister Joel Fitzgibbon said Labor did not support a levy on fresh milk.
"I don't believe imposing a levy on consumers is the right response to any fall in commodity prices," Mr Fitzgibbon told Fairfax Media.
Chris Gleeson, president of dairy farming group Farmer Power, said people were willing to pay a levy "as long as it goes straight to the farmers".
"These politicians need to get off their arses," Mr Gleeson said. He said Australia's 6,000-odd dairy farmers lost an average $15,000 last year, and this would soar to as much as $200,000 next year due to the processors' price cuts and dry conditions.
The major supermarkets will also be warned this week by the ADF not to make "opportunistic cuts" to the price of fresh milk while dairy farmers are struggling.
President Simone Jolliffe said: "We can't comment on what prices we will see at supermarkets.
"But what we don't want is the retailers to see the recent decisions from the major milk processors as a way to put downward pressure on the milk price," she said.
"That would be opportunistic and clearly unacceptable when the industry is feeling such pain."
Coles declined to comment on any speculation to milk price changes and Woolworths said its current supply agreements were not affected by this market price change.
- with Jared Lynch, Catie Low
