Which dairy farmers will survive?

Damocles

The Sword of Damocles. Pic credit: Moritz Aust

I was digging a post hole today when my phone binged a message in my pocket. And binged again and again and again and again.

I paused to check the messages, still with the post hole digger under my shoulder and stared in shock at the Murray Goulburn announcement.

As the biggest milk processor, MG tends to set the benchmark price and, in the new financial year, it will be $4.31 per kilogram of milk solids or about 33 cents per litre. After you take off the compulsory fees the processor charges for milk collection, it’s around 30 cents. Even less again for the many Gippsland farmers whose cows calve in Spring in line with Mother Nature.

It costs a farmer like me about:

  • 40 cents to produce a litre of milk when the season is good and nothing goes bust and the bank is happy with interest-only; or
  • 42 cents to make milk and maintain the farm; or
  • 45 cents to breathe and grow.

On top of the drought we’ve just endured, this fresh set of bad news will finish many farmers off. Not just the inefficient producers, either. Far from it.

Those coasting along with little debt will emerge at the end of the year with the fewest scars. In fact, it will be the youngest, most ambitious farmers who heeded the calls for growth from Murray Goulburn, Fonterra and the banks just 18 months earlier and invested accordingly who are the most vulnerable.

We stand to lose the innovators, the future leaders of our industry. They are also those who were in line to buy the properties of retiring farmers.

I am not a Murray Goulburn supplier but the opening price announcement left me reeling. The phone rang. In a daze I answered it but found I simply could not speak.

Words fail me and with Fonterra yet to announce the price it will pay us for our own milk, the sword of Damocles hangs low. Fonterra’s behaviour over the last few weeks has been inconceivable. Will it be able to rebuild any trust tomorrow?

16 thoughts on “Which dairy farmers will survive?

  1. I’m just so sorry for the way our dairy farmers are being treated. It is just despicable and the public should be totally up in arms over it. All the best to you and your family

  2. It beggars belief that a co-operative formed to give farmers some power over pricing has failed us so badly.
    $4.31. Doesn’t matter how many times you say it or how much you try to manipulate your forecasts, the end result is the same. Non-viable enterprise.
    What some of us need now is assistance to exit dairying. It’s a minefield and the last thing a struggling farmer needs is to give what little they have away by making errors during their exit from the industry.

  3. The unconsciencionable conduct by MG followed closely by the opportunistic actions of Fonterra have decimated the dairy industry. The silence is deafening from the leaders of farming organisations and Dairy Australia. Who do these organisations represent and fight for? Certainly not the dairy farmer. When are MG suppliers going to take some action and demand that the company institute an independent financial analysis immediately. Without an independent audit nothing has changed.How can suppliers trust any thing they are being told? Surely there must be areas where the company can make cost savings which could be passed on to suppliers.

  4. I hope farmers vote for One Nation on Saturday. The survival of this nation depends on how you support the people who will support you. Diane Teasdale – Independent Candidate for Murray.

  5. Thank you for your post.
    I am a dairy farmer in Gippsland and am still in shock at the opening milk price for FY17. I will be thinking of you tomorrow and hope you have some emotional support. The photograph of The Sword of Damocles is dramatic and perhaps disturbing for some but is a poignant picture representing where many farmers are at this year.
    Once again thanks for your posts, they have helped me.
    Kind Regards
    Lisa

  6. What can be done to support farmers so they can make a decent living? Farmers are a vital part of every nation, and they should be supported accordingly.

  7. In the recent referendum in the UK the privileged voted to remain in the EU, and the dispossessed voted to leave. Any co-operative that does not adopt a collaborative and mutually respectful approach to listening to the concerns and meeting the needs of its members will ultimately fail. There are other ways to gain justice for farmers!

    • Trouble is that most farmers can’t stop supply. Nearly all are up to their necks in debt/mortgages and the banks will not look kindly upon that, and their produce is perishable, it can’t be stored for a better time.

    • You are almost on the right track Ian, United. But not in dumping miik, unite the processors (own and control them) instead of playing them off against each other. It may feel like a choice, and power, but ultimatly it undermines the whole process. Look at the Dutch and Kiwi’s, they compete with the worlds milk, not each others. While farmers continue to pitch one processor against another, only looking across the fence and not around the world, you are in a race to the bottom and will be picked off one (processor) at a time. Having the choice may feel good temporarily, but it isn’t the solution.

  8. Where do people think we’ll get milk from in the future? It will all either need to be imported or supplied by farms owned by foreign corporations using imported workers paid slave wages. I can’t understand how any company can expect it’s suppliers to survive when it won’t pay costs, let alone profit so the farmer can actually eat! My mind is reeling…..

  9. Pingback: Which dairy farmers will survive? | The Milk Maid Marian – WORLD ORGANIC NEWS

  10. Nothing to do with milk. You were the unlucky ones to come up against a massive drive to restructure Australia’s agriculture. Corporations mostly o/s are looking for the next bonanza. It was resources, now that is going. Family farmers holding co-ops are in the way and will be removed. Jack up the interest payments at the same time as crashing the delivery price. The small farmer is going to go broke, milk, beef, market farm have to be swallowed up and turned into massive corporatized conglomerates to suit the Wall street investors. It happened in Americas mid west and it is happening here. Thanks to globalisation.

    • As someone who believes we should move away from animal-based agriculture, I can only hope that Vince Moore’s comments don’t reflect a likely future. At least family farms such as Marian’s are less harmful to animals than “massive corporatised conglomerates”. If the only choices were family run farms or large-scale intensive operations I know which side I’m on. While there are lots of words of support, I wonder if the consumer really makes a difference or they just follow the cheapest price? Unfortunately I can’t help – I buy plant-based “milks”.

  11. I can’t believe either milk processing company believe they will have an industry to work in if they keep treating our dairy farmers like this. How are the families supposed to survive at all?
    My thoughts, best wishes & a couple of donations are with you. Just wish I could give & do more. 💕

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