Dairy farmers are warning of potential shortages unless they can push the price of milk to $2 a litre to offset soaring diesel bills, as the fuel crisis threatens to cripple Australia’s food supply chain.
While unleaded petrol prices have fallen below $2 a litre at some Sydney service stations for the first time since Easter, diesel remains stubbornly high, causing severe pain for trucking companies and farmers.
WATCH THE VIDEO ABOVE: Petrol drops as diesel crisis threatens trucking industry
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The transport industry is facing a crisis, with an industry survey finding 70 per cent of truck operators expect to be out of business if the fuel crisis lasts six months.
Tony Alvaro, who runs a family haulage business, was told on Wednesday his company had lost another contractor.
“Coordinators come in to us and go, Tony, our drivers are parked up trucks. Why? It’s just cheaper to not run them,” he said.
“We had already seen hundreds of transport companies going under, so this is just unfortunately going to fast track the already diminishing industry,” Alvaro warned.
Alvaro’s haulage business has lost another contractor. Credit: 7NEWS
The crisis is particularly concerning given that between 60 and 70 per cent of freight in Australia is carried by smaller operators, National Road Transport Association’s Warren Clark said.
Dairy farmers are now calling for a 20 per cent increase in milk prices, which would take a litre of milk to almost $2. Staples like butter and cheese would also be impacted.
“It has the potential to be an absolute disaster. Every farmer I talk to at the moment is making a loss,” one dairy farmer said.
“We’re going to see a really steep increase in the cost of living,” Clark said.
A man takes a milk jerrycans at Coles supermarket. (Photo by Ye Myo Khant / SOPA Images/Sipa USA) Credit: Ye Myo Khant / SOPA Images/Ye Myo Khant / SOPA Images/Sipa USA
But manufacturers say they’re getting pushback from supermarkets, which are telling them that consumers are in no mood for price hikes in the current environment.
Coles and Woolworths both acknowledge the need to balance pressures on suppliers with those on customers already feeling the pinch from interest rates and inflation.
One proposed solution could see brands pull back on discounting, meaning shoppers would pay full price more often, with fewer specials on the shelves.
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