Interstate milk creams WA market

Fresh milk is being trucked from interstate as a chronic milk shortage grips WA.

Local dairy farmers claim the big retailers and processors have let the WA industry down, allowing it to contract to the point where South Australian milk is needed to meet demand.

Early this week, 150,000 litres of SA milk arrived by truck at Lion's Bentley processing plant after local milk production had continued to drop.

Production is down about 7 per cent on the same time last year and Lion's general manager of milk supply, Murray Jeffrey, has not ruled out bringing more interstate fresh milk across.

He said local supplies had been hindered by hot weather and the usual seasonal dip in production but dairy farmers said they would produce more milk if there was more return.

Dardanup dairy farmer and WAFarmers dairy section vice-president Phil Depiazzi said farmers were disappointed that it had come to the stage of running out of milk.

"It's something we suggested was going to happen, or looking pretty likely," he said.

"The biggest disappointment is we could see we were going to be short of milk this summer but the prices farmers are receiving are not reflecting that supply/demand situation in the market place.

"It's been going 12 months - you don't just turn on the tap and start producing more milk. Farmers have got to get the right signals.

"We certainly need to see an immediate lift in our price, probably 10 per cent, to actually stabilise milk production."

But the supermarkets' one dollar a litre milk campaign, which has seen $25 million taken out of the supply chain, means processors are between a rock and a hard place.

Mr Jeffrey said the unfortunate reality was that they could not pay farmers more for their milk.

"We'd pay an extra 10c if we had the ability to pass it on to the market place," he said.

"The reality is we don't have that ability to pass it on."

Mr Jeffrey said price constraints from the consumer end were a concern but in the long term Lion, which has Pura and Masters M among its brands, aimed to use all WA milk.

But Mr Depiazzi said milk production would continue to fall unless confidence and viable profits returned to the industry.

"If it doesn't change, these periods where we actually have to bring milk in are going to become longer as we really struggle to supply the local market," he said.

"We're a very efficient milk producing State and we're really well placed to grow this industry and yet for some reason we're unable to - we need to extract more from the domestic market to help processors develop these other export markets. Although the companies want extra milk, they're not in a position to pay farmers a higher price to attract that milk."