Hi everyone,
Couldn't let this opportunity pass without having my say about the future of
the dairy industry.
While the issue of the weather and a lack of rain is a factor in our
profitability it is by no means the only factor and lets face it we have no
control over the weather so therefore must deal with it in the best way we
can.
But back to the dairy industry. Both David & Vikki have both been some what
pessimistic about the future of the industry. I have to say that I agree
with them. In the past 3 years, in my area alone I have seen at least a
dozen young people exit the dairy industry. When I say young, I mean in
their late 30's early 40's. Many of these farmers I have had relief milked
for in the past so I had some inside knowledge as to the type of farms they
were on and more importantly how good at farming they where. In most cases
they were excellent farmers, having completed farm apprenticeships and done
various farm management courses. They were the type of people the dairy
industry desperately needs and in the age bracket where they should have
been at the peak of there farming careers.
Most didn't want to leave the industry and several times I saw the wives in
tears as their dairy cattle were sold at the local dairy sale. When asked
why they left the industry the response is always the same. "WE"VE HAD
ENOUGH. We were working our butts off 7 days a week and were getting no
where financially".
All these young farmers had one thing in common, they were either share
farming, leasing or trying to purchase there own dairy farm. The only young
dairy farmers I know (if you can call 40+ young) that are surviving are
those who took over the family farm with very favourable terms and
conditions.
To get an understanding of the state of the dairy industry, one only needs
to take a drive around a dairy farming region. Last year my wife and I took
a drive through the "prime" irrigation areas around Shepparton. We were both
disappointed with what we saw. Most of the farm houses were old and run down
and the milking sheds were no better and there was old junk and machinery
everywhere. All sure signs of an industry in desperate need of a major
injection of capital.
In the past the dairy industry has continued to increase milk production
even though the price we receive for our milk has not kept pace with other
costs. This has been achieved through better per cow production, better
understanding of pasture and improvements in technology. Will this continue?
I don't think so. Not because we have reached the limits of what is possible
on our farms. I believe most farmers could almost double their current
production, but to do so they would need two things. A BIG injection of
capital, in the way of vastly improved milk prices and also a massive
increase in skilled labour.
Right now most farmers are trying to milk as many cows as possible and doing
so as a family unit, because they can't afford to employ people to help, and
they're tired, very tired. Those who do take the next step and milk even
more cows and then employ someone to help, usually struggle to justify the
cost of employing that labour. It amazes me how often you hear the stories
of these large dairy herds making a financial loss year after year. That's
not to say that all large dairy herds make a loss, but my accountant shakes
his head in disbelief each year when many of his clients who milk 400+ cows
continually loose money each year.
We've had a reprieve in the exodus for this season with slightly better milk
prices, but it's only a reprieve. If the milk factories announce a drop in
price for the coming season and/or we have a bad weather conditions then
watch the exodus continue. The milk companies must be wondering where their
milk is going to come from in future, if not, then they should be.
Dairy Australia is telling us not to talk down the industry and to encourage
the young to enter the industry, but how can we possibly do that on past
history. One of the well known dairy companies has recently been promoting
how dairy farmers can become millionaires in assets, but not cash. I guess
that could be accurate if you are prepared to work 7 days a week for 40
years and have all your spare cash go into paying off they farm. Not much of
an incentive to become a dairy farmer if you ask me.
Anyway enough of a whinge from me. Vikki said "WHY STAY", I say WHY START.
Excellent rain here at Drouin South. 30mm so far and more falling right now.
Trevor Mills
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