A lot of farmers are hurt and angry (and rightly so) and feeling undervalued in a number of agricultural industries in Australia at the moment and yes if you want change you have to participate. But let’s not forget it’s how you participate that counts.
I will shortly be launching my new project Farming ahead of the Curve.
This business recognises the pivotal need for farmers to come to the table with the solutions. It recognises we cannot survive and prosper in the farming sector in the 21st century unless we have a better a understanding of the supply chain and its constraints. This will require all of us thinking in different ways about food and fibre production and a reallocation of resources and responsibilities between stakeholders along the value chain.
We (farmers) must also rethink the way we engage with the policy makers and the politicians. Politics is the art of the possible and we must have a clear understanding of what our politicians and policy makers can achieve on our behalf and take the solutions to the table.
Like me the majority of farmers need to acquire those skills sets too. I will be working with the experts identifying the best and the brightest and most innovative to put in front of our farmers. I know how important these skills sets are and a lack of them has contributed to the crisis the dairy industry now finds itself in and we desperately need to get our dignity back . This is part of what drives me in my thirst for knowledge and I will be sitting beside the farmers and their supply chain partners in the sessions not in front of them.
For farmers it will mean working beyond traditional boundaries, and challenging the conventional thinking of primary industries and individuals.
For consumers it will mean reflecting on their definitions of value when thinking about Australian grown products. I am 100% confident if we work together, we can create sustainable food and fibre industries.
Here is a great example of leading the way by understanding the challenges and constraints, highlighting the problems, and most importantly putting forward the solutions.
The Land 04 Apr, 2013 04:18 PM
DR IAN LEAN ( reprinted with the permission of Dr Lean)
Picture Dairy Australia
DO WE WANT MILK?
THE Australian dairy industry is in crisis.
Dairy farmers are being squeezed by government policy and supermarket tactics.
Former Woolworths chief executive Roger Corbett estimated that dairy deregulation made supermarkets $670 million a year better off, at the expense of the dairy industry.
Then when Coles brought in their $1 a litre milk that cost farmers another estimated $700 million a year according to Dairy Australia.
While consumers pay less and supermarkets prosper, people who make the milk are as much as $1.5 billion a year worse off.
Deteriorating profit is part of a very long-term economic trend.
In the past 40 years dairy cattle productivity has increased three-fold.
As farmers have become more efficient, production goes up and prices come down.
Dairy producers get just 3 to 5 per cent return on their capital according to ABARES, and there is a limit to how far dairy farmers can be squeezed.
Since 1990 about 100,000 Australian farms, many of these dairy, have disappeared.
Often they’ve been consolidated into bigger operations.
But bigger isn’t necessarily better. Pasture-based dairy farms of over 800 cows aren’t as efficient as smaller enterprises.
The agricultural revolution may have been the most extraordinary achievement of the last century, as we managed to feed many more people on the planet with less starvation.
There’s still a massive challenge ahead meeting the food needs of 9 billion humans by 2050. Dairy products are nutrient-dense protein foodstuffs.
China’s emphasis on creating a dairy industry is one indication of how important these foods are for the future.
So what needs to be done?
Recognise and structurally reform for increased food prices.
Returns to farmers are not sustainable and a ‘business as usual’ model of poorer margins, producing greater efficiency is at an end.
Arable land is declining in Australia and world-wide.
Dairy farmers are less willing to risk adoption of innovation, because of the volatile pricing of milk and the lack of control they have over the pricing.
Just 5 to 10 cents a litre more for milk at the farm gate would make for a viable Australian industry.
Equal power of negotiation
This is a pivotal reform. The current process of producers negotiating a position in the market is unsustainable.
There is not a true market for milk in Australia; in some regions, including central NSW, there is only a single manufacturer for milk.
Supermarket dominance ensures little opportunity for milk manufacturers to equitably negotiate.
The flow down effect to farmers is simply devastating; NSW and Queensland farmers were paid 13c/L a litre for milk last year; a price uniquely low over 30 years.
Farmer co-operative negotiating groups need to be a strengthened through legislation to provide equality of position.
Internally consumed milk must not cost less than the international traded price
It is inequitable to sell milk on the international market for more than the local markets.
Farmers need a price that can ensure constant milk supply during drought and flood, and sufficient price for profitability without a need for truly elite performance.
Currently, even farmers performing at elite levels are not viable, if carrying modest debt.
The impact is evident in the lack of milk supply in Western Australia and Queensland.
These States are no longer meeting local supply and Victoria is even more likely to lose farms.
Supply shortages in WA have impacts on sustainable practice, as milk is now shipped across deserts.
Provide longer term milk contracts
The impact of biological cycles in agriculture is not well recognised.
Most people recognise climate fluctuation, but few would recall that if a positive economic signal is received, it takes three years to naturally increase herd numbers.
During this time, costs of growing extra cattle erode cash flow.
If the economic climate has deteriorated by the time cattle reach maturity, the potential losses are high.
In the last 3 years, milk prices have gone from near record highs to record lows.
The lack of a clear market signal means that farmers can be caught with excessive inventory when the market collapses, or are incapable of a timely response to positive price signals.
Microeconomic reform and avoidance of cross subsidy.
Reforms to labour markets, reduced costs of compliance and avoidance of subsidies to manufacturing industries will assist farmers to compete.
These reforms need to come from government policy.
Farmers are asked to meet societal goals of sustainability.
A pre-requisite for sustainability is viability of pricing that allows farmers to meet the needs to apply good stewardship to animals, land and family.
At current prices, farmers just can’t meet those demands. It is disingenuous to suggest that the current prices obtained for milk meet these needs.
The implications of current prices are negative for rural human health, animal health and the environment.
Urgent reforms, such as those suggested above, are needed to retain an Australian dairy industry.
* Dr Ian Lean is a leading authority in the medicine, nutrition and management of dairy cattle and managing director of SBScibus.