The new golden child in Australian dairy: corporate farming

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Australian dairy farmers have long been compared to our Kiwi big sisters.

You might imagine the comparisons would highlight the resilience of Aussie farmers who cope with much tougher climates (three weeks with scant rainfall is considered a drought in NZ) and less bountiful soils. But, sadly, no, it’s generally been along the lines of a disappointed parent.

“If only Australian dairy farmers were more like the Kiwis”.

But, as the cost of producing a litre of milk in the naturally blessed New Zealand has risen close to that of Australia, big sister has lost some of her charm. The new golden child is Big Brother: the corporate farmer.

The corporate farm is very attractive to everyone who describes themselves as “in agribusiness”. It borrows big, spends big, supplies big and is built on the promise of rivers of white gold that can be tapped by anyone with a spare dollar (whether or not they have an aversion to muddy boots). Freed from the constraints of traditional farming, they push the system hard for maximum shareholder return.

And, if it crashes, well, what the heck? It was worth a crack. The carcass is licked clean, everyone dusts themselves off and goes back to what they were doing before, digging up iron ore or whatever it takes to fund a spin on the roulette wheel.

Should we be concerned? Honestly, I’m not sure. If large dairy farms are held by patient investors, they can tick all the right boxes, since cow care, environmental responsibility and the welfare of workers all make business sense in the long term.

I just hope those lured by all the hype remember that dairy farming is a complex, volatile business and the returns may be neither instant or constant for, if it’s all about turning a quick buck, things can turn ugly very quickly indeed.

7 thoughts on “The new golden child in Australian dairy: corporate farming

  1. I am forever fearful when too much emphasis is given to agri-business. We have to say it again and again it’s agri-culture and culture for very sound reasons. The wilful nature of business and finance often fail to awaken to the wider implications of their actions.

    This is no more so evidenced than with this launch at the MIT Media Lab (see link) which seems to think those on the land have no clue what is needed.

    https://medium.com/@medialab/launching-the-openag-initiative-at-the-mit-media-lab-7547f0d994a6

  2. Pingback: The new golden child in Australian dairy: corporate farming | The Global Dairy

  3. Some observations. All agriculture is a business. Sadly the term “agribusiness” is a label placed on the corporate and not the whole supply chain. Agriculture is a business and we need professional agriculturalists driving the agribusinesses. We need to look at models for change as well. The past is littered with successful and unsuccessful agricultural investments of a family and corporate nature. Both can be equally as successful or not as the case may be. I’ve had both experiences in both ends of the family and corporate investment scenarios. Dairy is not unique, grapes/wine, beef, grain, horticulture have faced the same. It’s all about learning from the failures as well as the successes. As players in the ag space the biggest challenges are when the cowboys run amok and the investor sheep follow. Timber and tropical fruit springs to mind. Picking up the pieces shows that invariably it’s when the “bean counters” get involved and the peddling of “tax incentives” rears it’s head that things go to hell in a hand basket. My motto is when the herd is running in one direction quietly walk in the other. If you can’t do that, then quietly follow behind at a safe distance and pick up the pieces from those who fall by the wayside. Ag is as harsh as nature.

    • Suspect I am going to get picked up for commenting on this article…but Andrew sums it up nicely.

  4. Hello Marian,
    A while since I have checked in.
    Against a background of dairy sales that continue to fall not just in Australia but across the western world, efforts to mechanise even more will most certainly be the trend. Maximising profits and cutting costs is essentially the same thing and animal welfare worsens to the degree that farms become more like factories than farms. The streamlining and mechanisation of farms puts pressure on the traditional family farm creating an economy of scale that small or family concerns increasingly cannot compete with. Getting “squeezed out” is the phrase that comes to mind.

    And as things get harder for the little player things will get harder for the meat in the sandwich, the dairy cow. The welfare of the cows will never become the primary driver in how things are done on the land and the corporatisation of the milking process will help to guarantee this as
    shareholders who have never donned rubber boots demand higher dividends.

    The “Pitt Street farmer” was bad enough but speculating money counters will make life as a cow even more miserable as feeding in open pastures become a thing of the past.
    As a vegan I long to see dairy farms that are by their nature in fertile, high rainfall areas, diversify into crops and eventually convert completely just as an area like Robertson in NSW has exclusively crop farms alongside dairy farms.

    The substitution of plant based products in place of dairy for health or animal welfare reasons will continue apace and this may inadvertently increase the misery of the cows thrice daily milkings and the pain of losing their newborns as cost cutting by more mechanisation and corporatisation is used to minimise losses. Selling milk to China may be a short term gain for some players but countries that traditionally did not have dairy in their diet may not provide any long term guarantees as health awareness increases and the sale of substitutes grow.

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