Historical dairy economics data underscores the extent of this market failure. If milk prices dating back to the 1970s had merely followed the natural inflation rate over the last half-century, consumers today would be paying upwards of $3.50 per litre. Even accounting for efficiency gains from mechanization in the 1990s and 2000s, inflation data suggests that generic milk should be priced realistically between $2.56 and $2.95 a litre if the dollar-a-litre promotion had never been implemented.

Gippsland farmer Chris Griffin, who was president of the Australian Dairy Farmers group at the time of the 2011 launch, confirms that the controversial promotion still severely distorts customer expectations. While the “big three” supermarkets have marginally increased prices from the $1 base since 2019, Griffin asserts that a true sustainable price must be above $2 a litre to ensure a profit margin for every link in the supply chain—from the raw producer to the processor and the retailer. This domestic crisis contrasts sharply with international markets, as Australia stands as the only nation in the industrialised world paying less than $A2 a litre for milk.

Industry leaders are demanding a rapid change in retail strategy. eastAUSmilk president Joe Bradley stressed the urgent need for all three major supermarkets to raise prices above the $2 threshold and commit to passing those gains onto farmers. Bradley argued that the promotion “has really set back dairy farming in this country,” pointing out the economic absurdity: “Every other item on the supermarket shelves has risen with inflation but milk is expected to magically appear in the fridge at stupidly low prices.”