Category Archives: Farm

What it will take to get this farmer growing

Confidence.jpg

The last two years – a drought and the infamous dairy debacle – have taken their toll and not just on my hip pocket. Unless there’s change, my cheque book is likely to grow cobwebs for up to a decade. Sounds melodramatic? Not really.

My reasoning is this: first, we need to recover the equity lost over the last two years.

Second, we need to catch up on the maintenance we couldn’t afford to do over the last two years.

Third, I want at least another $100,000 in equity as extra protection. Interest rates won’t always be this low and, when they rise, another shock of this magnitude could be devastating rather than debilitating.

It all adds up to roughly $300,000 in profit to make up before I have an appetite to invest in any project that takes more than a year to break even. And that will take me years and years to accomplish.

If other farmers have the same attitude, we will continue to see Australian milk production stagnate.

The problem with this is that the processors have been investing in hundreds of millions of dollars worth of new stainless steel that requires enough milk flow to make it efficient. Time and time again, they have said growth is the only way to return the maximum price to farmers.

Do we have the start of a vicious circle? I hope not to hear the processors blaming a low farm gate price on inadequate utilisation of bloated stainless steel created by a low farm gate milk price.

Making me even more risk averse is the lack of definitive action to prevent this happening all over again.

Both the big processors, MG and Fonterra, have pledged to be more transparent and that’s a good first shuffle. I say “first shuffle” because to call it a good first step would be overstating its importance. We need a game-changer.

MG has commissioned a price review that will consider farm gate price models from around the world. At the same time, the Bonlac Supply Company, which represents farmers supplying Fonterra, also announced it would present alternatives early this year. Will these be the game changers we need?

I suspect not. The game changer we need is one where risk is shared along the supply chain rather than simply shifted onto farmers.

After all, while the current system is a legacy of an industry dominated by strong co-operatives, it’s also a marvellous “magic pudding” business model for corporate processors.

Consider this recent ACCC submission by Warrnambool Cheese & Butter‘s new owners, Saputo:

In February, Saputo announced a quarterly profit of C$197.4 million. I’m not sure why it feels it is appropriate to make Australian farmers responsible for its inability to negotiate a better energy contract. But it does because it can.

It serves as a timely reminder that the push for farmer prosperity has to come from farmers.

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Filed under Farm, Fonterra, milk price, Murray Goulburn, Warrnambool Cheese and Butter

Calves teach farmer a lesson in stakeholder engagement

movingthecalves

Every milk maid has to be part kelpie. We spend so much of our time herding cows from place to place every day, it’s almost instinctive. Without thinking, I move just far enough into the cow’s field of vision to urge her left or right without worry or fuss (most of the time!).

But, when it comes to moving young calves, it all goes out the window.

A new group was ready to graduate from the hay-shed paddock out into the rising one-year-old area. It’s about a 500 metre walk past half-a-dozen paddocks. My first challenge: to get them out of the paddock.

Walking around behind the poddies, I try the conventional arm waving to get them moving towards the wide-open gates. Nope. Find myself surrounded with curious muzzles at every quarter.

Next attempt is to whistle a merry tune and hope they’ll follow the Pied Piper. A handful do. The rest, meh. Apparently not that curious.

I have a brainwave. The calfeteria is undergoing repairs at the moment but what about the trailer? Hook it up, partially fill with calf bait (aka pellets) and arrive full of fresh hope. A handful follow. The rest, meh. Apparently not that hungry.

The phone rings. I slump on the Bobcat seat and leave the little blighters to their own devices. One tip-toes out the gates with all the quivering daintiness of Bambi. Oblivious to the talk about whitepapers and indices, out struts another with the confidence of a young and innocent Simba.

While I struggle to comprehend the basics of futures and options, out come Mowgli, Nutsy and Cottontail. Before I know it, the whole cast is wandering off up the laneway.

True, Alex and I later have to rescue some who strayed a little too far. But maybe this was the way it should have been all along. Stakeholder engagement on the farm is often something that has to happen strictly on someone else’s terms.

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Filed under Calves, Farm

Dairy Australia directors need to roll up their sleeves

daemail

It’s sad to say but, clearly, Dairy Australia is scared of farmers.

I returned from a few hours in the paddocks to find screens and screens full of comments on Twitter from fellow farmers on the leaked DA email above.

It’s been explosive because DA is accused of protecting its own turf first rather than being transparent with and accountable to the farmers it serves and who pay compulsory levies to fund its operation.

Contrary to Barnaby Joyce’s wishful pronouncements, farmers are still in a world of pain and the DA levies amount to tens of thousands of dollars per year for many of us. It’s no surprise then, that the way DA spends farmer funds is highly scrutinised.

I’m a believer in the work DA does. The knowledge I’ve gained from DA programs has made an enormous difference to our farm and we’d be a lot worse off without it. But not everyone agrees.

Some farmers are even pushing hard for a halt to the DA levy, irate that the opportunity for a routine poll on whether the levy should be maintained, changed or scrapped altogether was passed up by a committee.

That committee had farmer members and the DA board has farmer members, too. You might think that something run by farmers for farmers would be great at communicating with farmers, but it’s not.

I’m embarrassed to say that, until I Googled them, I couldn’t even recall the names of DA’s long-standing farmer directors. And there are only one or two visible DA HQ staffers on Twitter. While DA maintains its silence, it’s hard to understand how it can accuse upset farmers of spreading misinformation.

It’s time DA’s farmer directors rolled up their shirt sleeves and had frank conversations right from the start. There was a time we had a director on Twitter who knew how to take the sting out of almost any issue by being ready to chat, quick to crack a joke and unfailingly real.

DA can never control the message but, if it wants farmer respect and understanding, it must first join the conversation.

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Filed under Community, Farm

Dairy love and why it’s lacking on St Valentine’s

“Imagine you decided to stay and defend your home from a bushfire, while your neighbour flees.”

“You save your home but the mental scars are deep.”

“Your neighbour’s place is burnt to the ground and sympathy floods in for the family and, in time, they move into a beautiful new home.”

This was the scenario clinical psychologist Rob Gordon put to me explaining why rifts often open in any community after a disaster. He pointed out that because everyone’s experience of a disaster is different, misunderstanding and resentment brew under the pressure of recovery.

I’ve seen it in dairy social media forums. While thousands of farmers are finding ways to support each other on forums like the Show Some Dairy Love Facebook page, there are some cranksters out there who need to kick heads.

I’ve felt the heat of that anger first-hand, ironically from a non-farmer, who says I was one of those with a secretive “special deal” shielded from the infamous claw-back, accusing me of having no morals.

The truth is that, in May 2015, I had chosen to sign up for one of Fonterra’s “risk management products” available to all suppliers. It meant the price for 70 per cent of our milk during the 15/16 financial year bobbed about in a range with upper and lower limits.

Sure, we would have missed out badly if prices did get to MG’s much-vaunted $6.05kgMS forecast close but it felt like good insurance.

When Fonterra cut its price in May 2016, the price for 70 per cent of our milk dropped to its floor. The remaining 30 per cent tumbled the whole way down.

Lots of people were much worse off than we were. Others were much better off.

That’s the thing. Just like a bushfire, the milk crisis has affected everyone differently. So many factors come into play, like:

  • the size of your farm,
  • the time of year your cows calve,
  • which processor your farm supplies,
  • whether you have/had a contract, and
  • which stage your business is at.

On top of all this, there is loyalty and trust.

Hundreds of farmers swapped processors for the first time in years or decades. For many, it was a matter of survival. Others have not been able to switch and some consider leaving the last big co-op nothing short of treacherous desertion.

Add to all this that farmers have now been battling to pay bills for 10 months (actually, a lot longer if you were in one of the drought-affected regions) and it’s not surprising that people are feeling rather cranky, to say the least.

To make matters worse, change for the better seems an aeon away. The senate, ACCC and ASIC inquiries have revealed little to date, other than that the unrepentant Helou had not been interrogated.

I’m spending St Valentine’s Day at the Gippsland ACCC farmers’ forum. I hope that out of this comes a bit of the dairy love we all need.

 

 

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Filed under Community, Farm, milk price

Time to wisen up on water

When it comes to survival here on the farm, the three things with the potential to make or break are:

  1. Our health
  2. Mother Nature
  3. The milk price

I only truly understood the health thing and the worst possible price scenario last year but Mother Nature has been playing me like a marionette since the day I took the reins. Just take a look at this mess:

Pasture growth rate (tDM/day)

Pasture growth rate (kgDM/day)

If it looks too technical, don’t worry, it’s just a graph showing how fast the grass can grow by mapping its production over the last 14 years.

As you can see, from May to August the growth rate is consistently low, irrespective of what falls from the sky. I guess the days are just too short to grow a lot.

Come September, the grass begins to take off. After that, it’s anyone’s guess what will happen but that’s when – if there’s enough soil moisture – we harvest the grass we need to feed the cows over summer and winter.

Make or break hinges on reliable water during 12 critical weeks of the year from October to December.

So, while this is the time we need it to rain the most, it’s also the time where the whole thing can shut down. Like it did in 2015.

pfs2015

Right when we should have been turning waves of excess grass into silage, we began feeding the cows to make up for bare pasture. It was a financial and emotional disaster. I found myself suffering panic attacks as I stood in the browning paddocks.

The models show that, in an average year, we can grow 13,432 kilograms of feed per hectare, while in a good year like 2011, we can grow 19,068. In 2015, we could manage just 6,279kg/ha. That’s less than half the average or a mere third of a good year’s growth.

On a 200-hectare farm, that’s a loss of 1430 tonnes of feed valued at, let’s say, $280 per tonne to replace. It adds up to a $400,000 feed deficit. Enough to send me scurrying off to the bank for a new mortgage.

pfstdm

Desperation is the mother of innovation
Thanks to the unquenchable thirst of the resources sector and some rather curious water policies, we are locked out of tapping into the vast aquifer under the farm.

Nonetheless, we do have some water in a farm dam and the dairy effluent ponds. Last summer, we installed a small irrigation system to get that precious water onto the paddocks.

It’s enough to properly water a fraction of the farm during those 12 weeks, so we’re keen to maximise its value, watering only the most water efficient crops.

What we’re learning fast is that, unlike rye grass, which shuts down in the heat, millet luuuurves a heatwave, so long as it has enough moisture. Our experience has been supported by new Australian research, which shows that millet is almost three times more water efficient than rye grass.

There are other benefits, too. Unlike brassicas, which invite repeated attacks by every bug under the sun from mites to moths, millet is pretty much indestructible. And, unlike sorghum, which can be toxic if fed too early, it’s safe for everything from calves to milkers.

Contrary to the traditional wisdom that you can’t milk off millet, you can, so long as you graze it when it’s short. Just like any grass, it gets too fibrous when it’s long and loses quality. Because it can grow visibly in 24 hours under the right conditions, that means you need to graze it often. Not a bad problem to have in my book!

Expect to see more millet planted here to make the best use of every drop of water we can offer, especially as climate change makes the seasons less and less reliable. Now, if only we could get access to that aquifer…

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Filed under Farm

Helou tells the Senate he’s a hero

While he might not have used the word “hero” exactly, former Murray Goulburn managing director Gary Helou was in complete denial when he fronted the Senate inquiry today.

Helou told senators he had the right plan, a plan that had delivered for two-and-a-half years. “The strategy was working and we were getting the right results,” he railed. Only one “unforeseeable” thing had derailed MG’s plans. That thing?

Not the global dairy commodity prices that had been falling steadily for month after month or the inattention of the board to the reportedly growing alarm of senior management. It was a Chinese regulatory change regarding cross-border trade via e-commerce. I gather this is code for selling milk powder and UHT milk on the equivalent of eBay into China.

As Gary explained it, he and the board were aware of the falling global commodity prices but selling these dairy foods – which he described as “our biggest sellers” – had been mitigating those losses.

The Chinese seemed to be tightening up on that, err, “cross-border e-commerce” and MG made two ASX announcements in response to media reports, the first on April 12, followed by this update on April 18.

mgcasxapril18

Both announcements concluded that the regulation did “not have a material impact on MG’s business”. Totally in contradiction to everything Gary Helou said today.

Just four days later, MG entered a trading halt. When it emerged from that trading halt on April 27, here’s what the announcement said about those big sellers:

asxmgcapril27

MG was still saying the Chinese announcement had no material impact on MG’s business. So, where does the truth lie?

With MG facing at least one class action, the Senate inquiry and under investigation by both the ACCC and ASIC, farmers have been hopeful of finding answers to the debacle that cost some their livelihoods.

But asked twice by senators whether he had been questioned by authorities investigating if MG had misled investors, Gary Helou said “no”. Both times he paused for several seconds before answering that one very simple question and, incredibly, each time it was an unequivocal “no”.

This is one witness to the Senate Inquiry who raised more questions than were answered.

United Dairy Farmers of Victoria president, Adam Jenkins summed up the sense of disbelief that followed perfectly. If it was possible, the ACCC farmer consultation forums that roll into town over the next couple of weeks just got that bit more important to attend.

adamjenkinsheloutweet

 

 

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Filed under Farm, Murray Goulburn

Little man’s milestone a Milk Maid’s journey, too

schoolmorningdriveway

Today is Little Man’s first day of school and, inside an incredibly still house, my mind spins.

The little boy who leapt onto the school bus without looking back this morning was born while Milk Maid Marian was in its infancy.

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The blog has tracked Alex’s life on the farm, from supervising operations through to being a hands-on member of the team with his own favourite jobs. He’s seen flood, fire, drought and snow in his five years. What adventures will the next five bring?

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Filed under Family and parenting, Farm