IT'S no secret that the dairy industry is in strife.
The reduced milk prices and lack of rain over the past 12 months have made it difficult for even the most positive dairy farmers to see beyond the rut that they are currently in.
The annual WAFarmers Dairy Conference in Busselton highlighted many of the issues farmers are dealing with including the dramatic drop in milk prices and the notably lower price one WA milk processing company is paying to its dairy farmers.
But despite the negative outlook, farmers are refusing to give up.
WAFarmers Dairy Section president Peter Evans said the past 12 months had proved difficult for many dairy producers as they coped with reduced milk prices caused mainly by a reduction in demand for processing.
He said many farmers were getting prices lower than the cost of production.
"Government policy has changed over this period and we are now facing reduced resources coming in to dairy as a result of a lack of size and changing priorities of government," Mr Evans said.
"From a dairy producer's perspective it is hard to accept that after being called upon to increase production there is suddenly a surplus of milk in the State again which is exerting downward pressure on farmgate prices.
"This becomes even more galling when we see milk on retailer's shelves at prices well below that which consumers are willing to pay."
National Food supplier Peter Giumelli, Ferguson Valley, said the entire dairy industry was affected by one company's extremely low prices.
"Challenge Dairy is the one offering very low prices," Mr Giumelli said.
"The industry has relied on Challenge Dairy and that is the one company that's struggling."
Mr Giumelli said the lack of water was another serious problem, and if it didn't rain in August it would be detrimental to the industry.
"We often have no sufficient water to carry us over to the next year and therefore have to cut back heavily on water allocation," he said.
"This year is 2006 revisited, with only 60 per cent of our allocation of water we can use from the dam - last year we could use 80 per cent.
"Sixty per cent is too low and it just means we have additional costs."
But Mr Giumelli was remaining positive and said he was determined to come out at the other end.
"The pricing is very cyclical and we have to be there in the bad times to get to the good times," he said.
Retired Boyanup dairy farmer Jack Kitchen also said it was the low prices that were having the biggest affect on the industry.
"The supermarkets have control of the industry and their objective is to keep prices down," Mr Kitchen said.
At the WAFarmers Dairy Section AGM, WAFarmers president Mike Norton said the dairy industry was in a position where it could lose another 45 growers due to Challenge Diary's low prices.
"There is a lot of concern," Mr Norton said.
"I don't think anybody envisioned the prices from Challenge Dairy would be as low as they are."
Mr Norton said it was time the growers worked together to develop a more even allocation of profitability within the dairy industry, where everybody got a realistic return on investment.
"I think it's in our collective interest to try and do something to ensure the process paid to those growers is higher than what it is," he said.