A farmer’s trust broken at the abattoir and why it’s taken me so long to write about it.

riverside

Footage obtained by animal activists at Riverside Meats via the ABC

It left an indelible mark on me as a child watching Dad wiping away tears the afternoon his favourite cow, Queen Bessie, left the farm. She was getting old and arthritic, the last cow to reach the dairy. He couldn’t bear to see her fail or to pull the trigger himself.

And so it is for me these days. I hate watching trucks roll out the farm gate with any of our cows on board. A dairy farmer is in fact a shepherd, watching over our cows and willing each a long, healthy life in the herd.

We see off every threat imaginable, from making sure she gets enough colostrum at birth to making sure she has the right diet before and after giving birth herself.

It matters to me that cows sent to market have a gentle ride on the truck, so I choose a driver I know takes care. But once at the yards, all I have left for these cows we have raised is faith in the system. That we have done everything we can to give them a good life that ends without fear or pain.

So you can imagine how it felt to read of horrific cruelty at Echuca abattoir, Riverside Meats. Worse still, Riverside is a repeat offender. How could this happen?

I rang Agriculture Minister Jaala Pulford’s office and asked if I could send in some questions. Her advisor was keen. Ten days later, my questions remain unanswered despite assurances.

In an online statement, Riverside Meats says it will “support the installation of 24-hour CCTV surveillance of its Echuca meat processing facility, with independent monitoring” and that four workers “have been moved to other roles”.

Now that Riverside has rolled over and the media has moved on, I guess there are higher priorities than answering questions about abattoirs and animal cruelty. But this farmer certainly has not forgotten and the thought of sending another cow to market leaves me with a sick feeling in the pit of my stomach.

I do hope the minister’s office provides answers so I can post them for you here. In the meantime, here’s the list, which I will now also send to our local MP. Will you do the same for your cows, too?

  • What are the laws surrounding animal cruelty and what are the penalties for abuse?
  • What can people do when they see animal cruelty?
  • If you are concerned a neighbor is not coping and animals are suffering but do not want to see them get in trouble, what are your options?
  • What is the process for dealing with animal cruelty allegations and who is involved?
  • How can people who trigger animal abuse investigations feel confident their call is being acted on?
  • Are people found guilty of animal abuse allowed to continue working with animals?
  • Riverside has a history of animal abuse allegations. How can repeat offenders be stopped?
  • Why did it take almost a month for the minister to become aware of the Riverside abuse footage? How does Ms Pulford plan to respond?
  • Are animal abuse cases becoming more frequent?
  • How can farmers feel confident our animals are not suffering at abattoirs?
RiversideStatement.gif

See the full statement at www.riversidemeats.com.au

10 Comments

Filed under Animal Health and Welfare, Farm

The MG fallout for Fonterra

msspfonterra

The trump card held by Fonterra milk recruiters has long been a promise to match or better the price offered by Victoria’s biggest processor. What could possibly go wrong?

Indeed, the so-called “Bonlac Milk Supply Agency Agreement” has worked well for a long time. But it all unraveled last season when the biggest processor, Murray Goulburn Co-operative, started to behave at odds with the deteriorating global price.

Aunty MG, which had always worn a demure twin set and behaved with utter decorum, pawned the family silver, took off in a turbo-charged red convertible driven at break-neck speed by the sweet-talking new boy in town while tossing money at admirers like confetti. Fonterra was dragged along, screaming for Aunty to slow the hell down but nonetheless tethered to the rear bumper.

The wreckage of the crash has been messy for all involved. The Bonlac Supply Company chairman, Tony Marwood, writes in the BSC’s annual report that:

“…clearly we cannot have a benchmark mechanism in place against a processor that is under performing and also facing significant headwinds and an uncertain future.”

Ouch!

BSC and Fonterra, he wrote, are working on a new benchmark that it will reveal early next year.

In the meantime, a group of suppliers has written to Fonterra Australia, saying the processor has failed to honour its agreement to match MG’s price. The dispute revolves around the question of whether MG’s closing milk price was $5.53 or just $4.80 per kilogram of milk solids (kgMS).

Confusingly, as you might remember, MG dropped its price last April but then added money back in the form of a “Milk Supply Support Package”. This MSSP, MG stressed, was not a loan to individual suppliers but a “socialised debt” that would come off the milk price. Since then, MG has paused the MSSP in a bid to stem milk losses. In a nutshell, it means that MG announced an official closing milk price of $4.80 per kilogram of but actually paid “an average cash price in FY16 of $5.53 per kgms“with the MSSP included.

I asked Fonterra Australia’s Matthew Watt to explain his company’s position.

MMM: Excluding any loans or the $2.50 offset paid this financial year for milk supplied last financial year, what was Fonterra’s closing price?
MW: Fonterra’s average milk price for the 2016 financial year was ultimately $5.13 per kgMS, which was 33 cents higher than the benchmark price set by MG.

MMM: What was paid to Murray Goulburn suppliers last financial year?
MW: Murray Goulburn has clearly stated in its public announcements and 2016 Annual Report that its final farmgate milk price for the 2016 financial year is $4.80kgMS. The advance to suppliers under Murray Goulburn’s Milk Supply Support Package does not form part of the benchmark price, and neither does any Murray Goulburn dividend payment.

MMM: How is the term “bundled return” in section 10.1 of the Fonterra Australia Milk Supply Handbook defined?
MW: The Bundled return (following the payment of BSC shares out in 2014) is defined as the average farmgate price paid by the largest processor in Victoria

MMM: MG has suspended the repayment of the MSSP. If MG does not require suppliers to repay the MSSP, doesn’t that mean last year’s price was effectively the “cash price” of $5.53 and how will Fonterra respond if the MSSP is not recouped?
MW: Fonterra has an obligation under the BSC contract to match MG’s benchmark milk price. MG has clearly stated that its final farm gate milk price for FY2016 was $4.80. Based on MG’s announcements, the MSSP operates independently from the FY2016 milk price.  We are not in a position to speculate what MG may do in the future with regards to its MSSP repayment schedule.

Thank you very much, Matt, for answering Milk Maid Marian’s questions!

5 Comments

Filed under Farm, Fonterra, milk price, Murray Goulburn

Could this have been the wake-up call Aussie dairy needed?

bulllores

When the two biggest processors of Australia’s milk, Murray Goulburn and Fonterra, squandered the goodwill of farmers earlier this year, there was a sense they could do as they wished. They made the rules and broke them, too.

One executive told me there was no risk of supply loss following the drastic price cuts, saying, “After all, where would they (farmer suppliers) go?”.

How things have changed. Both the big processors have watched milk supply evaporate and, with the dawning realisation that something had to be done to avoid the death spiral outlined here and detailed by MG’s own advisors, Grant Samuel, both have responded.

After suspending the MSSP while reducing the forecast close by about the same amount a week earlier, MG made amends with a step-up the day before its AGM.

In his AGM address, MG chairman Phil Tracy acknowledged farmers’ pain and offered an apology of sorts.

“While as a Board, we did what we could with the information that we had at the time, we know that the outcomes of that period have been devastating for suppliers and for that we are deeply sorry.” – Phil Tracy, MG Chairman

Like MG, Fonterra Australia has announced it is reviewing the way farmers are paid for milk in order to avoid a repeat of the May debacle. Farmers whose milk production peaked in May and June were initially singled out for a thumping, causing many to sell off cows, only for Fonterra to back-track days later and spread the pain of its price cut more evenly among suppliers.

Despite poaching 200 million litres of milk from MG, Fonterra Australia’s supply remained fragile, due to the tricky season, the low milk price and the damage done in May to autumn-calving regions. Hours after MG announced its step-up, Fonterra came out with its own, much larger (and incredibly welcome), price increase.

The size of the step-up challenged the oft-held belief that Fonterra only pays the price it needs to in order to prevent supply loss to MG. With profitability restored, perhaps Fonterra has indeed extended its co-operative spirit to this side of the Tasman. On the other hand, Fonterra’s announcement provided a hint that perhaps it was essential to fill under-utilised stainless steel:

“The last six months have been challenging for all of you, and we know that spring is critical to optimise production.” – Matt Watt, Fonterra Australia

No matter what the motivation, it’s enormously heartening to see the two biggest processors act and act so positively. Maybe this is the wake-up call Australian dairy had to have. It might even help to rekindle the traditional sense of partnership between farmer and factory that had been on the wane for so long.

What’s certain is that farmers – and their supply of milk – can no longer be taken for granted. Loyalties have been stretched or broken and farmers who have now experienced how easy and rewarding it can be to shift their supply may well be tempted to do so again.

In return, expect processors to lock in a broader range of “desirable” supply with more special deals and contracts. Be careful what you sign. I’m tipping the unfair contract law that came into force quietly this weekend will be more important for dairy farmers than legislators could have imagined.

1 Comment

Filed under Farm, Fonterra, Murray Goulburn

Summer started this week

summer

The farm is cloaked in shades of green, the garden is a mess of dreamy flowers and the golden ash are just breaking into leaf.

I’m late planting trees this year, so they’re going where they’ll be watered by the irrigator. A good thing, too. The earth is firm underfoot and the plug of soil that my pogo-style tree planting tool pulls up is dry enough to crumble.

Yesterday’s weekly paddock walk showed dramatic changes in the pasture. Grass plants on the river flats each grew a new leaf in the last eight days but the slopes only put on half a leaf and the two north-facing slopes didn’t grow at all for the first time since autumn.

We missed out on promising rain from a storm yesterday and, with three hot days in a row on the forecast, I’m calling silage ’16 over.

While this season is so much better than last year’s, it has been tricky to make enough good silage and we’ve finished with less than half our normal total. Thankfully, we sensed it early and instead planted extra summer crops to reduce our reliance on conserved grass.

Aside from a couple of hiccups, the crops are looking good.

huntercroplores

“Hunter” forage brassicas almost ready to eat

And we’re more prepared than ever for the onset of dry weather. The new traveling irrigator we bought last year will use water from our dam together with recycled water and cow poo from the dairy runoff holding ponds.

There’s enough water and effluent to irrigate a small fraction of the farm, so we’re doing it strategically. We’ll keep high-value crops of turnips and millet growing through the first half of summer and leave enough water to get new pastures growing if there’s a false (or missing) autumn break.

dsc_32641

The new irrigator watering millet last summer

I’m always a little bit nervous when spring finishes. Have we made enough silage? Will we get through to next spring without buying hay?

With less silage than expected coupled with a milk price that won’t pay for hay, I’m jittery again but our cropping should make up for the silage shortfall and might even be better!

Whatever the outcome, our resilience to whacky seasons is growing and, along with it, my confidence as a farmer.

2 Comments

Filed under Climate, Farm

Blow the Trumpet: I’m going back to my plough

This boy’s too young to be singing, the blues

So goodbye yellow brick road
Where the dogs of society howl
You can’t plant me in your penthouse
I’m going back to my plough
– Goodbye Yellow Brick Road, Elton John

One of the great things about farm life is that you can simply disappear down the paddock on days like these.

Today was all about the future of the farm. We started building a new fence to protect young trees, mapped out the next stage of our small irrigation project, watched silage being baled, checked our flourishing summer crops and had millet sown in two long paddocks.

I’m not handing over any of my optimism to the Trumpet – no matter how loud and discordant its notes blow – on the other side of the globe. Sorry America but, tonight, I’m going back to my plough.

olddrilllcrop

3 Comments

Filed under Farm

Infectious farm life

gullynudge

I did not choose to become a farmer “for the lifestyle” because it’s harder than you’d think.

It certainly wasn’t for the money. My decision to buy out the farm was something I found hard to explain to my incredulous accountant even though it could not have been clearer to me. Maybe if I’d had The Wind in the Willows handy, I’d have shown him this:

Home! That was what they meant, those caressing appeals, those soft touches wafted through the air, those invisible little hands pulling and tugging, all one way! Why, it must be quite close by him at that moment, his old home that he had hurriedly forsaken and never sought again, that day when he first found the river! And now it was sending out its scouts and its messengers to capture him and bring him in.
The Wind in the Willows, by Kenneth Grahame

My childhood was filled feeding calves, riding ponies, priming pumps, dodging snakes and learning how to drive. That stuff, the snuffling of grazing cows and the wildness of the farm through its changing seasons got under my skin.

Today, my own children play with the calves. I do everything I can to tend their love for all things living and build their capability with all things mechanical.

mechaniclores

And they’re thriving. Not that every day is like a scene from the lid of a chocolate box. Farm life is great for kids in so many ways despite – or because of – the challenges it brings. Resilience, independence, self esteem and a work ethic flow from long days dealing with setbacks and simply doing what has to be done. No need for tough love to learn life’s lessons.

Even so, there’s a part of me that questions whether we’re doing the right thing, infecting our kids with farm life. Opportunities for young people are undoubtedly richer in well-resourced regional cities.

And what will life on the land be like for my grown-up little people in 20 years’ time if they, like Mole did, feel the tug of home’s invisible little hands? I don’t know for sure but I soothe my mother guilt by remembering that at least they have the chance to grow up slowly.

8 Comments

Filed under Family and parenting, Farm

Do we care whether Australia makes less milk?

Could Australia be running out of milk? Dairy identity Darryl Cardona told the senate inquiry that we could be importing milk in two years. according to media reports. Wondering if this really could be possible and what difference it would make, I turned to Rabobank senior dairy analyst, Michael Harvey, for insight and am really grateful for his guest post below. Thanks Michael!

HARVEY_Michael_41961R

Michael Harvey, Rabobank

The Australian dairy industry is staring down the barrel of one of its largest annual falls in milk production and would follow a 2% decline last season. This season has begun with three consecutive months of double-digit falls and is forecast by commentators (including Rabobank) to finish the season down between 7-10%. One of the country’s worst droughts in history was the catalyst for a contraction in supply of 8% back in 2002/03 – a clear indication of how difficult it is right now.

The collapse in milk production is not surprising given the challenges being endured on-farm. Some producers are exiting the industry and the producers who remain are making strategic decision to quickly bring down their breakeven levels through reducing herds and cutting costs. Just to make matters worse, seasonal conditions present challenges for the second consecutive season (but for complete opposite reasons). Some dairying regions are faring better with seasonal conditions and less global market impact on milk prices – the steepest declines in production are from across the southern export regions.

Losing supply is risky for processors
So, what are the implications for the industry beyond the farmgate when facing a collapse in milk supply? For processors, losing a large volume of milk supply is risky business.

A loss of milk can have a material impact on profitability. This is through reduced efficiencies and higher overhead costs associated with running processing plants at less-than-optimal rates. The financial impact will depending on how much milk is lost, where from, and what the manufacturing footprint is to be able to spread the impact.

As has been well publicised, there is active recruiting of milk supply across southern Australia leaving Murray Goulburn the most exposed processor. For a processor the size of Murray Goulburn, a short-term loss of milk supply can be managed. However, losing a large quantity of milk in a rising price environment is not ideal. Furthermore, a more permanent loss of milk supply may require a review and resize of its manufacturing footprint (existing and planned) to meet the new supply realities.

Will Australia remain self-sufficient for milk?
Looking more widely, given the scope of the reduction this season, concerns are being raised at the ability of Australia to remain self-sufficient in milk and dairy. Entering this season, Australia was a net exporter of dairy and sold around 3.5 billion litres of milk (in liquid milk equivalents) into the global market.

But Australia is actively engaged in global trade and is an open economy. In the same year, Australia imported over 1 billion litres (in liquid milk equivalent) of dairy products and ingredients. A large portion of this was either cheese or butter for a use across retail, industrial and foodservice. Australia also imports ingredients that are in short supply locally. Examples include whey, casein and lactose for production of nutritional powders.

For most dairy processors, a drop in supply will mean an immediate reduction in exports because the domestic market delivers higher and more stable returns and supply is tied to contracts.  If Australia’s milk supply falls 10% this season that would equate to a loss of over 1 billion litres in just two seasons – a worrying trend for the entire industry.

Long-term a continued fall would trigger a spike in imports of more cheese, butter and ingredients to meet shortfalls and cover the loss of milk as processors focus on utilising local milk in the most profitable streams. But Australia would need to lose a lot more milk before needing to import liquid milk from New Zealand to meet the local consumer market for fresh dairy products.

What the future holds
So what can we expect moving forward? Firstly, better seasonal conditions over the remainder of the season would help to stem the loss of milk. Secondly, there are positive signs in global markets which have seen some improvement in farm-gate returns. Rabobank is confident of a sustained price recovery which will flow back to the farm gate. While it might be too late to have a more material impact of farmer margins this season, 2017/18 is shaping up well and should see a return to profitability on-farm. This would go a long way in stopping further bleeding of milk supply.

There is a risk for the whole of industry that Australia’s milk pool will remain stagnant or shrink further. Collectively the industry needs to re-ignite profitable milk supply growth. Australia needs at least 1% growth in milk production each year just to meet growing, albeit modestly, domestic market requirements.

Incentivising milk supply long-term to maximise help existing and planned processing capacity is more demanding. Restoring confidence and appetite for investment at the farm gate, which history shows for Australia, is an element difficult to attain and will require a sustained period of farmer profitability.

Without more milk supply, Australia will become less export focused, reducing its commitment to fast-growing global dairy markets, and potentially importing more ‘milk’.

9 Comments

Filed under Farm, milk price