Dairy braces for carbon hit

WA dairy farmers are bracing for yet another blow as figures reveal they will be the worst hit Australia-wide once a price on carbon is introduced.

The average WA dairy farmer is expected to be slugged to the tune of just over $8000 - nearly double the impact on Victorian farmers and 2.5 times that of Queensland dairies.

Despite agriculture being exempt from the tax, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) figures show milk producers will still pay an extra 0.37 cents per litre under the tax.

In WA, where the average dairy farm produces 2.2 million litres per annum, the impact of the carbon tax is expected to hurt.

The WA industry stands to lose $1.3 million in the first year alone, with losses of up to $6.5 million over the first five years.

Most of those costs will flow on from price hikes to refrigeration and transport thanks to a price on carbon, but the industry believes those are additional dollars farmers cannot afford.

WAFarmers dairy section president Peter Evans said the $8000 impost would cut directly into farm profits.

"In percentage terms, that's probably a fair percentage of the profit," he said.

"This year, (WA) processors are asking for the same amount of milk each month, which adds to the cost of production (during drier months).

"When you allow for that, this year we're actually getting less for our milk than anyone else in the country."

After a tumultuous decade, the WA industry has just 165 dairy farms left, but per farm still produces double the milk of both Victoria and New South Wales and triple that of Queensland.

Forrest MHR and dairy farmer Nola Marino said the tax was punishing WA producers for being more efficient.

"This unfair tax will fall most heavily on WA farmers who have already gone to great lengths to be as efficient as possible," she said.

"Our farmers have overcome isolation, great distance from markets and a harsh climate to become the most efficient in the nation, not to make more profit but to stay in business.

"These costs cannot be passed on to consumers like other industries affected by carbon pricing."

Graham Manning milks about 250 cows a day at his Harvey dairy, but is sceptical the WA industry will be able to find even more efficiencies to mollify the cost of the carbon tax.

"We're already the most efficient in Australia and it's cost us a lot of money to get here," he said.

"There might be some efficiencies we can find down the line, like with new research … but the problem is no-one is prepared to pay us for it."

Four years ago, Graham was getting about 48 cents a litre for his milk. This year, the price will be just under 41 cents.

In the meantime, the costs of production have continued to climb.

Graham said the impact of a price of carbon would be passed onto dairy farmers by other companies through price increases on fertiliser, pelletised feed and transport, but dairy farmers would simply have to bear the cost.

"We're at the end of the line and at the mercy of the supermarkets," he said. "We can't just go to the market and say we want more money for our milk.

"It's already a tough game we're in…. the cost of water, the cost of electricity and price we're paid - it all adds up to a difficult income."

Mr Evans said the Government needed to recognise the dairy industry used more electricity than other agricultural sectors and compensate accordingly.

"On a national level we will be working with the Government on that," he said.

"It's not too late, but I don't hold high hopes."

The carbon scheme is expected to come into effect from July this year.