Will our dairy farmers be celebrating Australia Day

While Australian meat producers have a lot to celebrate on Australia Day the nation’s dairy farmers see it in a different light

Australia Day 2011 marks the launch of the Milk Price Wars in this country.

Poor old Australia Day too often in the news for all the wrong reasons. Its fascinating that a corporate  founded by a farmer group would pick Australia Day to launch the Milk Price Wars.

Today I will be talking to the experts for a 2016 reflection on this dark day for Australian dairy cows – the day Coles undervalued their true worth to the health of the nation

To get the ball rolling here is a report on the state of play for dairy farmers in NSW in 2014/15 gleaned through the NSW Dairy Farm Monitor project

There is no denying the first few years where tough and there were a number of exits from the industry

Our dairy farmers are a tough bunch and they love what they do and there are some good news stories as this report shows

You can read the full report here 

Key points:

• In 2014/15 milk price reached an average of $7.46/kg MS (54 c/l), on the back of strong competition for milk to meet the demands of the NSW and southern Queensland liquid milk market. This is the highest milk price received in the four years of the project.
• Favourable seasonal conditions and above average rainfall meant that farms consumed more home grown feed and increased their fodder reserves during the year.
• Farm profitability significantly improved this year compared to 2013/14. The average earnings before interest and tax (EBIT) was $1.32/kg MS (10 c/l), which was a 48% improvement on the previous year.
• This year there was a marked difference in profit between the farmers in the two groups.

North:

• Across the North, most farms experienced dry conditions in spring, with wet conditions in autumn resulting in above average rainfall for the year. Milk prices rose by 6% to $7.62 /kg MS (55 c/l).
• The average cost of production was very similar to the year before, at $7.79 / kg MS for the North, leading to better overall profit than the previous year.
• Farms fed a little more purchased feed per cow but paid less for it, with concentrates reaching $434 per tonne of dry matter (t DM) on average for 2014/15.
• Average whole farm earnings before interest and tax (EBIT) were $120,427 per farm compared to $67,137 in 2013/14. Average return on assets also rose from 0.8% in 2013/14 to 1.9% in 2014/15.

South

• Most of the South region experienced reasonably good seasonal conditions throughout 2014/15, with close to or above average rainfall throughout the year.
• Milk prices increased by around 2% over the previous year to $7.28/kg MS. Cost of production decreased in 2014/15, to $6.11/kg MS, with lower prices for purchased feed.
• Average EBIT per farm was $434,843 per farm this year, up 50% on the previous year. Average return on assets increased to 5.3%, from 4.8% in 2013/14.

Farmer confidence

Following better than average profits in 2014/15, intentions for increasing milk production next year were strongly positive across both regions.

Labour issues including succession planning, along with seasonal conditions and input costs were the top three issues identified by farmers over the next 12 months. Over the longer term the key issues for farmers are competing land uses including urban encroachment, mining and gas explorations, access to affordable land for expansion; and upgrading aging farm infrastructure.

And what was happening in Victoria – mmh we certainly dont have a one size fits all   See full report here

2014/15 Victorian Dairy Farm Monitor Project

Key points

Almost all farms (97%) recorded positive results in 2014/15.

• Whole farm earnings before interest and tax (EBIT) was positive on average, but 34% lower than last year.

• Return on assets under management decreased to 5.3% from 8.5% last year. The 2013/14 year was exceptional on many levels and this needs to be kept in mind when looking at this year’s results.

• The decrease in milk price was the primary driver behind the reduction in profitability this year.

• The milk price fell 11% from $6.77/kg milk solids in 2013/14 to $6.04/kg milk solids this year.

• The impact of lower milk price combined with challenging seasonal conditions was reduced due to higher milk solids sold per hectare and per cow and slightly lower variable and overhead costs.

• Variable weather conditions across the state provided between 71% and 95% of average long term rainfall.

• Farmer expectations were variable but a large proportion believed operating conditions would  be stable or deteriorate for the 2015/16 season.

• The greatest challenges are still managing climatic variability, sourcing labour and managing the uncertainty of milk price.

Author: Lynne Strong

I am a 6th generation farmer who loves surrounding myself with optimistic, courageous people who believe in inclusion, diversity and equality and embrace the power of collaboration. I am the founder of Picture You in Agriculture. Our team design and deliver programs that inspire pride in Australian agriculture and support young people to thrive in business and life View all posts by Lynne Strong