August 26, 2011

Carbon tax will cut income of Australian dairy suppliers

Australia's milk suppliers in Victoria face a cut in annual income by an average of AU$5,687(US$5,958) from July 1 amid rising carbon tax. 

The startlingly high cost was part of a Department of Primary Industries analysis of the carbon tax's impact released by Victorian Agriculture Minister Peter Walsh last week.

Walsh said dairy giants Murray Goulburn and Fonterra were among the top 500 companies that would be forced to pay the AU$23 (US$24) a tonne carbon tax.

"They will be hit not only by the carbon tax but also by the increased energy costs that they will have in processing milk," he said. "The cost of processing milk will go up by approximately half a cent per litre. We produce six billion litres of milk in Victoria, so if we are going up by half a cent a litre, that is an AU$30 million (US$32) hit that the industry will pay in the cost of processing milk here."

He said dairy processors would have no choice but to pass the higher costs back to farmers, given they could not pass the cost on to export markets.

The DPI analysis also showed farmers faced greater on-farm costs, varying from AU$997(US$1,045) on a small northern irrigated dairy farm to AU$4500 (US$4,718) on a medium-size Gippsland farm.