Steven Downes is a fourth generation dairy producer and is one of the director’s of the Dairy Farmers Milk Co-operative. He says the latest industry crisis “stinks”.

The nation’s two biggest dairy companies, Murray Goulburn and Fonterra, have retrospectively slashed farm gate milk prices, because they felt they’d been paying farmers too much.

It means farmers will run at a massive loss for the next two months, being paid a third of what it costs to produce milk.

While Mr Downes doesn’t sell his produce to the nation’s two biggest milk manufacturers, he said his business was at a crossroads.

The 35-year-old and his wife were ready to expand but don’t know how bad they’ll be hit in the wake of the cuts.

“Murray Goulburn controls 400 billion litres of milk … if they flatten the value of milk, everyone gets used to paying nothing for it,” Mr Downes said.

“They are still making money … but they’re trying to appease investors by smashing their own farmers.

“Say you make $70,000 a year, and the Mercury said given we haven’t made much money this year we’d have preferred to have paid you $50,000 all along. So next year we’ll pay $30,000 and it will even it all out … more people would say ‘see you later’.”

A petition on www.change.org is calling on the federal government to introduce a 50 cent a litre milk tax, while supermarket giant Coles has announced they’ll develop a new brand which returns 20 cents a litre to a farmers fund.

But Mr Downes is skeptical of how much of that money will make it back to farmers. He would prefer people to buy anything other than the generic.

“The $1 milk war started a lot of this,” he said. “Processors make a better margin on branded products because they’re not screwed down … and they pass the margin onto us.”

In 2012 Mr Downes’ business was virtually wiped out by a two month price cut, which saw him paid 13 cents a litre when it cost him nearly three times as much.

He said at the time they were ready for expansion, though that extra capital was used to keep them from going bankrupt.

“We accept that there’s ups and downs and market volatility … but the supermarkets and the [milk] processors don’t and they don’t want to bear any of the risk.”

He said the industry was becoming unsustainable and driving farmers to sell.

“If there is an opportunity for better prices in two years, there won’t be the cows to produce it.”

NSW is the second largest producer of Australia’s dairy products, with 183 farms in the Southern dairy region which includes the Illawarra and South Coast.

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