How falling milk prices affect my dairy cows

When milk prices fall, the first ones to suffer are the members of dairy farming families – Alex, Zoe, Wayne and me. The second ones are the people who make an income from supplying dairy farmers: feed merchants, vets, milking machine mechanics, fertiliser suppliers, the local newsagent and so on – our friends and neighbours. The next ones to suffer are cows.

With the price we are paid for our milk falling below the cost of production this year, I have some tough decisions to make and they come down to this: sell milkers, sell young cows, try to produce even more to meet our fixed costs (like the mortgage) or feed the cows less. Feeding the cows equates to about 40% of our income, so that’s a pretty obvious target and so is selling young stock.

It costs a lot (say $1500) to feed a young cow for two years until she’s ready to calve but, at about 12 months, I can sell her for about $1000. That’s very handy money when milk alone won’t pay the bills. Yes, it equates to selling the silverware but at least we live to fight another day.

Here’s the catch: if I sell her locally, she’ll probably be slaughtered at a value of, say, $500. If I sell her to a Chinese dairy farmer, I get the $1000. I’m assured that, as precious breeding stock, she’ll have a wonderful trip on the air-conditioned boat and she’ll join a herd of up to 30,000 other cows, with feed that arrives on a conveyor belt at their noses and whose manure is carried away by another conveyor belt at their tails. A very different life to the free range pasture based one she’d have here in Australia.

What should I do?


31 thoughts on “How falling milk prices affect my dairy cows

  1. Yes Marian I feel your pain. We have had to make those tough decisions at times too. Our cows were going to Mexico and we weighed up the pros and cons and we decided not to let them go. I so hope it doesn’t come to that again. What should you do? Bloody hell if I know

  2. I like the “adopt a heifer” campaign. There’s a dispersal sale every week here in the States. The same problem. Is there any hope to raise the milk prices. I don’t really understand the process but feeling like we all need to plan to refuse to supply milk sometime in the future until they raise the price of milk. The shipping to China or Mexico or Turkey Is just too horrible.

    • Twitter offers a peek into the lives of dairy farmers right around the world, doesn’t it, Bethany? I’ve been amazed to see that although we farm very differently around the globe, many of the challenges are shared.

  3. I love the blog.
    I guess I could be described as an everyday consumer living in Melbourne (with a little farming background).
    I would love to know from a consumer point of view, what could be shared with others to educate them on what is happening and how they can help farmers. homebrand vs name brand for instance.
    I would love to try and make a difference amongst my peer group and family.
    Is there anyway we can contact MMM to ask questions.

    • That’s great, thank you, Brodie. It’s heartening to hear that “everday consumers” are interested in what goes on beyond the supermarket when I know how busy we all are. By all means, post questions in any of the comment sections and I’ll do my best to answer them.

  4. Marian I have just been to a Dairy Crisis Summit in London today. Around 2,500 farmers came to the city on trains and buses from all over the UK to vent their anger at recent milk price cuts. It is the greatest show o funity I have ever seen dispayed by farmers. Many are now looking at a milk price some 4 or 5 pence below the cost of production, exacerbated by rising feed costs and terrible summer weather. Some ma de it clear that hey cannot wait for a review of milk contracts or a supermarket ombudsman to restore some kind of balance of power in the supply chain. An alliance led by the National Farmers Union are calling for the milk price cuts to be reversed by August 1st and have promised action if they are not. Whilst protest has got us a lot of attention on TV and other media, we have still got to build consumer support by explaining how we produce milk for our citizens. After all, it is they who can drive demand for milk form our farms and insist that farmers get a fair reward fo rtheir efforts. It is really interesting to see the parallels that exist in Australia and other parts of the world.

    • There is a global supply issue with Dairy products and that market is falling due to USa and European production. They say that India is expanding thier dairy herds very quickly and sometimes will be an importer and other times an exporter. Fonterra here in Nz Commodoties sale prices are falling too and there is a threat to revise the current dairy seasons price from July 1st downwards. That will cause contraction in the Rural Centres who service these Farmers. Dairy Commodoties are notorious for being up and down over the years.

  5. I’d love to know if the two big supermarkets selling milk for a dollar a litre impacts on your bottom line. I feel it might but Id lovevto know, to what extent.
    What can consumers do to help producers?

  6. Well done Marian, as you are telling it as it is. We too in New Zealand have the same issues and now Foriegners are buying up our dairy land. They have very deep pockets and the locals simly cannot compete on prices paid per hectare for Land. STICK TO YOUR GUNS LADY.

  7. Marian ive thought about the “adopt a dairy calf”.. photos, post cards, gifts etc from Snapfish at a low cost to the person “adopting”, plus updates on the calf, as shes gets older..
    My main concern was what happens when she dies? Or has an accident in calving – the unfortunately gory side of cadairy farming. If we can educate, but somewhat protect adopters from that side of things it would work!

    Imagine little kids getting a personalised card from their heifer with a keyring ? 😛
    Im keen to try it marian?

    • Marian is a very innovative, and sensible lady, dedicated to her passion for the Dairy Industry which is an excellent industry and undervlued by the Urban folk. Raising a dairy calf is a very rewarding event and the variuos research available plus the food types to rear them is enormous.

  8. Hello, i’m french dairy farmer, milking 80 dairy cows in north of Paris.Our situation is not like your, and well we have subsidies to help us, but, but subsidies goes down and down every year and to get this bloody subsidies, some inspectors from Eu can come at any time check everything.well very different from your situation i think . but, but since two months our milk price decrease and goes down and down .Many dairy farmer stop to milk cows: too busy work, and prefer use their field to grow crop like wheat !!!! well, anyway hope it will be better in few months.All the best from France. 🙂

    • Great to hear from you, Vincent! Will you write and tell us more about what it’s like to be a French dairy-farmer, please? I find the similarities and differences around the world fascinating.

    • Hello Vincent, Here in New Zealand we have not had any subsidies paid by the Government since 1984. That applies to meat as well. The New Zealand farmers have survived and doing well in Asia particularly China who cannot get enough Nz dairy products to satisfy thier demands particularly for infant formula. Value adding is the answer and FONTERRA are very good at that.

      • Oooh, yes, Ray. You’ve hit on a sore point there. Australian dairy farmers are behind the eight-ball in respect to China. While the Kiwis have a FTA with China, Australian dairy products are slapped with tarriffs, making us 15% less competitive.

          • The Australian Rural people need to keep the pressure on the Federal Govt and also see what the Federal Opposition would be doing about a CHINA FTA. NZ also has the advantage of a lower valued currency of course which is of help here of course. That doesnt help the locals on imports of course. Fertiliser is highly priced etc. Stock feed supplements also.

  9. Hello, well first hello to every dairy farmer in the world ! 🙂
    Ray, i know a little bit the situation in New Zealand!! in 1999, i have worked for a 6 months in new Zealand dairy farmer: in Canterburry !! and then a couple of weeks in Australia (victoria, close to warnaambool) .
    At my home, and in europ our situation is very, very very different from your situation.First we have quota , we have subsides (35/40 %) of my incomes!! i really understand that you think “it’s unfair”……but, but.believe me our governement is behind us for everything: we have to fill many papers, people from governement (inspector) can come at any time on your farm…, and everything we have to pay is more expensive than you: medecine, bull semen, workers…..and law is very very strict !!!!

    At my home, we have 200 ha, 75 ha of grass, 28 ha for silage maize and around 100 ha for wheat , canola (rape) and barley. then we are alowed to milk 80 cows (our shed is suitable for 80 cows: during winter we can’t graze like you: very cold sometimes with snow and ice…

    I feed my cows with grazing during spring, summer and falls (november) with silage maize and 1 t of protein meal per cow and per year.We are calving all year round, because our milk company doesn’t want pick production like you!! My milk company is “lactalis”, private company, one of the leader in France and in Europ.
    In 2009, at my farm i got 286 euros for 1000 liters, in 2010 , 330 euros for 1000 liters and in 2011, 357 euros..but my margin decrease because evrything we buy goes up and up….(fertiliser, meals, corn…..) since 2 months our milk price goes down and down: we should lose around 15 euros for 1000 liter in 2012 and the end of the year will be very difficult: on expect 30 euros less !!!

    Many, many french dairy farmer stop milk cows, (4% per year), and becomes arable farmers if land is suitable…….actually we make more money with wheat than milk……..but total production is still high.because when a dairy farmer stop his activity.the quota is given to other dairy farmer.. My Dad start with 320000 liters of quota and this year we have 600000 liters …dairy farmer who stayed in business milk more cows…..average size farm is around 45/50 cows…… and now some dairy farmer milk 200, 300 a,nd a neighbour is planning to milk 1000 dairy cows, with a huge shed (cows always stay indoor) with very intensive management

    well what can i tell you more?? i don’t know!!! ask me if you have some questions !!!
    Oh you talk about China….in February, i visited a friend, he is dairy farmer in Taiwan! !! I meet him on facebook !!! it was fantastic to meet him !!! well if one of your is on facebook tell me : my name is” vincent delargilliere”. Good luck…….Last thing: it’s drought in USA, and in France we have too much rain: it’s very wet: we can’t harvest our hay, can’t harvest the barley, cows make a lot’s of damage in the pen……so crazzy !!!

  10. Pingback: Do you have the stomach to adopt a heifer? | The Milk Maid Marian

  11. This makes me sad and I feel like our government (current and past), along with the supermarkets have a lot to answer for. I wonder what their solution is when it’s no longer viable to run a dairy farm? Sounds like a scenario that’s not far away, or may well already be here.

    As a consumer I have no idea what I would do faced with your predicament. I’m glad I don’t have to make decisions like that. My only decision is branded or supermarket branded, and that’s a no brainer.

  12. Fascinating! I hadn’t heard any of the claims about raw milk being tolatly safe and killing pathogens. I do drink raw milk, and did through both of my pregnancies (not at all criticizing your choice, though). I know exactly where it came from- I’ve met the farmer, seen his equipment, seen the routine. I think the bottom line here for consumers is that yes, there are risks in consuming raw milk just as there are risks in anything we consume. And that you should definitely know where your food is coming from!

  13. Pingback: Australian Dairy Industry in Crisis | Clover Hill Dairies Diary

Leave a Reply to ray clarke auckland nz Cancel reply