Victorian businessman John Dahlsen is calling for a supermarket levy supervised by the Australian Competition and Consumer Commission so dairy farmers get a greater slice of the returns on milk sold in supermarkets.
Mr Dahlsen, who is a former Woolworths chairman and ANZ bank director and now owner of JC Dahlsen Group, said the market had failed — and believes the levy would mean more money for farmers at the farm gate.
“The analysis on the dairy industry outlines the huge power imbalance between the retailers and processors and the processor and the farmer,” he said in a paper to the Federal Government.
“It is as much about structure as it is about behaviour.
“The market has failed, and no code of conduct or government jawboning will work.
“With drinkable milk, the problem can only be solved by price regulation.
“The market has failed, and market intervention is required.”
In his paper, Mr Dahlsen said a 40-cent levy would bring a smile to every dairy farmer's face.
“This should go straight to the farmer without deduction by the processor,” he said.
“For the farmer, it does not matter what the retail price is, the farmer requires a lift of 40 cents.
“The retailers should be precluded from extracting any of that price increase out of the processor.
“A recent repeat of the situation with Coles and Lactalis should be avoided.”
Mr Dahlsen also believed the 40-cent levy would attract more people to take up dairy farming.
“An increase of 40 cents to the retail price of milk will only give farmers a 13.3 cent increase on the average litre price at the farm gate,” he said.
“Whilst this is attractive, we must recognise that dairy farmers have been disadvantaged for years.
“They now have drought and bushfires (to deal with).
“They do not receive government subsidies as most overseas countries do (but) this increase will attract more dairy farmers, grow the sector and improve exports.”