Farmers across New South Wales are actively making plans to exit the dairy industry.
For many farmers, the last straw came as they received confirmation from processors this week that they could be facing another year producing milk below the cost of production.
“It’s quite disgusting actually, after the positive reports and Bega Cheese talking up a strong market at the moment,” said dairy farmer Michael Shipton.
Drought, rising input costs and fatigue are just some of the factors farmers say are undermining the viability of farms in traditional dairy regions.
The farm gate milk price was below expectations for many suppliers.
Bega Cheese suppliers ‘disgusted and disappointed’
Bega Cheese announced the 2018–19 opening milk price of $6.70 per kilogram of milk solids or 50 cents per litre for NSW producers — a 3 per cent increase on last year.
The ABC spoke to half a dozen Bega Cheese suppliers who all shared their dissatisfaction with the dairy processor describing the price as “very disappointing”.
Mr Shipton, who operates just outside of Bega, said he would have to reduce the number of cows and staff over the coming months.
“Input costs are up — grain prices, fuel, electricity, and on top of that wages go up on the first of July.”
Mr Shipton said he believed the dairy processor has abandoned their NSW suppliers.
“At the moment we’re producing milk at New South Wales cost with Victorian prices.
“And unfortunately with Bega Cheese they have a lot of Victorian suppliers and I think they seem to be focusing on them and have forgotten their home suppliers.”
Executive chairman of Bega Cheese, Barry Irvin, said that he recognised the challenges facing farmers but could not control high input prices.
“We can’t control power prices and fodder costs,” he said.
Mr Irvin rejected outright any suggestion that Bega Cheese had shifted its focus to securing supply in the competitive Victorian market at the expense of farmers in NSW.
Dairy farmers shutting the gate at Norco with 13 million litres of milk lost
Suppliers to Australia’s largest dairy co-operative Norco will not be receiving a lift in the milk price this season.
At an average of 58 cents per litre, its farmers in northern New South Wales and southern Queensland are some of the highest paid in the country.
However, even these producers are still doing it tough and some have not survived the increased costs of production.
Norco has lost four of its suppliers in the past few months alone and with that, 13 million litres of milk from its total annual volume of 222 million litres.
For Murray and Bronwyn Johnston, at Main Arm near Mullumbimby, dairy farming was no longer viable as they had not made a profit in four years.
They described their clearance sale in late April as “disastrous” with a number of dairy dispersal sales held weekend after weekend for a month.
Norco chairman Greg McNamara said the dairy co-operative was deeply concerned by the increase of costs and to lose farmers like the Johnston family from its member base.
“We haven’t seen costs move of this magnitude for things like grain, fertiliser, even wages, rates, everything’s gone through the roof,” he said.
Tuncester dairy farmer and Norco supplier Paul Weir estimated his costs have increased by 13 to 15 per cent on last year.
“The feed costs from the drought, everyone’s still recovering from the floods last year, on our farm we’re up to $200,000 now, it just keeps growing, the cost just from that two days of rain.”
But Norco’s Greg McNamara said they were unable to increase the farmgate price on last year.
“We’ve pretty much done that on the basis that through the ACCC and where the industry is at the moment there hasn’t been significant price changes in our part of the world,” he said.
“So we’re certainly trying to hold price at the moment and look at step-ups during the course of the year to actually support farmers.
“We’re building a model to actually look at what does that look like for every farm we have so that we can start to talk to the industry about what we think pricing needs to do to actually support farmers to keep them in the industry.”
Murray Johnston said that to survive in the industry, dairy farmers needed to be getting a base price of around 65 to 70 cents a litre from processors.
“That’s not going to happen,” he said.
“If you’re not working off farm to some degree you’re going to go backwards.”
Trend noticed around the country
A report from Dairy Australia showed that one in five farmers reported they are making plans to leave the industry.
According to Dr Neil Moss, senior consultant with Scibus Consulting, it is going to change the landscape for good.
“And what’s more concerning is that one in 10 are moving beyond thought to actual instigation on a number of farms,” he said.
Dr Moss said that there was a broader fatigue setting in among dairy farmers, who had gone through deregulation, the millennium drought, a crash in price during the GFC and the “dairy crisis”.