One in every five dairy farmers is planning to quit. Not just wanting – but actually planning – to quit.
According to research from Dairy Australia’s Situation and Outlook report released today:
“The proportion of farmers making plans to leave the industry has increased steadily since 2014. At that stage, 10% said they were making plans to leave and this has now doubled to 20% in 2018.”
– Dairy Australia, June 2018, Situation & Outlook Report
“Is it good to have a clean out of the bottom 20%?”
That’s a comment I’ve heard from some rather comfortable industry types but the truth is that those planning to leave simply aren’t all bad farmers.
There’s been an 18-year shakeout of Australia’s dairy farmers since deregulation. Even if you’re in the “bottom” 20 per cent now, you’re not doing too badly.
In my short lifetime, I’ve seen farming become a real science.
Jeepers, I’m in a course right now learning about the metabolism of different kinds of lipids and its impact on cow nutrition! Samples of river water are at the lab being analysed for everything from iron levels to coliforms. And I know the reference ranges for potassium, phosphorous and pH in our soils off by heart.
FIGJAM? No, I’m not remarkable. I’m just surviving.
I suspect the “bottom” 20 per cent right now is more accurately described as the most vulnerable 20 per cent. Almost every farmer is at the bottom sometimes. Even the best starting out with big debts; growing and taking on new debts; or hit with drought, divorce or death are vulnerable.
Yep, a lot of them are the future of our industry. We need them.
Besides, as Mary Alexander put it on Twitter this morning, it’s not just going to be those in the toughest positions who leave – it’ll also be those at the top of their game who can.
Why are 20% of Aussie dairy farmers planning to quit?
Well, let’s be frank. This is the third year in a row where more than a third of dairy farmers haven’t made a profit. Nationally, just 55% of farmers are positive
about their own businesses.
Worse still, farmers lack confidence in the future of Australian dairy farming. According to the S&O report:
“Farmer confidence in the dairy industry’s future stands at 47% in 2018 and this represents the third consecutive year of steady decline in sentiment. Over the past four years, confidence has dropped from 75% to 47%.”
– p. 5, Dairy Australia, June 2018, Situation & Outlook Report
Tellingly, farmers are again considering switching processors at rates that would have been inconceivable before 2016.
Everything changes, everything stays the same
The most demoralising thing about our industry today is that despite all the upheaval, dysfunction, noise and pain, very little has changed.
The processors continue to play opening price games, with the biggest of them, Saputo, only declaring what it will pay from July 1 onwards yesterday and number two, Fonterra, still yet to open as I type.
There has been no commitment – not even a timeframe for decision-making – from our peak dairy advocacy body or the government to implement the ACCC’s recommendations.
And farmers are painfully aware that MG’s transgressions earned it little more than a slap on the wrist while Fonterra has escaped any penalty other than the ravaging of its reputation.
Killing the goose that laid the golden egg
We’ve seen how profitable dairy processing can be and the massive investments processors are making in new capacity. But the goose must be fed. And, this time, I don’t think a couple of good milk prices will do the trick.