Farm

Milk Maid in WCB wonderland as Saputo offers $8

/ dairymilkmaid / 8 Comments

Well, I wonder what MG will do now? And where will it end? Judging by the email I just got from MG, the co-op’s going to sit on its hands and hope the FIRB undermines Saputo’s bid.

“Murray Goulburn (MG) notes the revised conditional offer by Saputo for Warrnambool Cheese and Butter (WCB) announced today.”

“MG notes that Saputo’s offer continues to be subject to substantial conditionality. MG believes that resolution of the future ownership of WCB will be a long process and that WCB shareholders should not act prematurely in relation to giving up control of their shareholdings.

“MG remains committed to acquiring WCB and to satisfying all conditions associated with its offer as quickly as possible. MG presently owns 17.7% of WCB.

“MG believes it to be reasonable and in the national interest that Saputo’s Foreign Investment Review Board (FIRB) application to acquire WCB is not resolved until the public benefits of MG’s proposed acquisition of WCB have been given full consideration – pursuant to MG’s application for authorisation to the Australian Competition Tribunal to acquire WCB.

“MG considers its offer will bring many benefits for WCB shareholders, WCB suppliers, the Warrnambool community and the Australian dairy industry.”

But if push comes to shove, will MG go higher than $8?

I do understand the reasoning behind the co-op’s drive to acquire WCB for all the reasons outlined by Gary Helou when interviewed by the Australian Financial Review the other day (the video is very, very interesting). The WCB bid is important because it allows MG to grow quickly and achieve efficiencies similar to that of its giant Kiwi rival, Fonterra. Those efficiencies should mean better margins, which the coop would pass back to farmers.

On the other hand, it does make me feel like Alice in Wonderland just a little. When MG last launched a takeover bid for WCB in 2010, the price was $4.35 and WCB hasn’t suddenly hit the jackpot – its profits have fallen.

On the farm, we are in recovery mode from a year when the average Gippsland dairy farmer lost a lot of money. As the Dairy Industry Farm Monitor results 2012-13 showed:

“In what was a difficult year for many Gippsland farmers, average return on assets fell to -0.2% with average whole farm earnings before interest and tax down 82% to $37,609.  The average return on equity for Gippsland farms was -6.2% with average net farm income across the region reported at -$58,784. This performance impacts on the decision making ability of farmers in 2013-14.” 

The difference, says Helou, is that demand for milk is growing by 6 per cent while supply is growing at 2 per cent. If this is more than just a blip and a long-term trend, why wasn’t this foreseen three years ago? Curiouser and curiouser. Please forgive me for being a little confused.

MG makes its move

/ dairymilkmaid / 7 Comments

I used to think of our co-op as a bit like the ABC: your favourite aunty. Comfortable, dowdy, trustworthy and a little quirky.

But Aunty MG has undergone a transformation.

Since it acquired a new CEO, Gary Helou, in October 2011, Murray Goulburn has embarked on lancing $100 million of costs, opened up in Dubai, restructured the way farmers are paid for milk, revamped its retail trading store network, developed assistance packages for the next generation of farmers and forged the spectacular Coles fresh milk deal. At least, these are the “headline acts” that come to mind.

Now, MG is making a $420 million bid for its rival, Warrnambool Cheese & Butter, gazumping Bega Cheese and Canadian dairy giant, Saputo.

According to MG, (if the bid is successful) the new Murray Goulburn Warrnambool:

“Creates a new 100% Australian farmer-controlled dairy food company with over 3,000 supplier shareholders delivering more than 4 billion litres of milk to nine processing sites annually. The business will be positioned for strong growth in both domestic and international dairy markets with forecast revenues in financial year 2014 of $3.2 billion including export sales of $1.4 billion to over 60 countries.”

This, Gary Helou wrote in a letter to MG’s farmer shareholders yesterday, would bring the coop, “…the necessary scale, market reach and competitive strength to capture the benefits of the historic growth opportunity resulting from the consumer affluence of developing Asian economies.”

MG’s triple-jump

The bid is in, it’s the most lucrative on offer and it’s Australian, yes, but there are three serious hurdles for MG:

1. A bidding war

What will Saputo and Bega do next? WCB traded higher yesterday, closing at $7.89, a sign that markets believe MG’s $7.50 isn’t enough to win the bidding war.

2. Shareholder seduction

WCB rejected a takeover offer from MG in 2010. At the time, there was quite a bit of anti-MG sentiment. It’ll be interesting to see if the reinvention of Aunty and a bigger bucket of cash will make a difference.

The Sydney Morning Herald reported Mr Helou said yesterday that farmers supplying WCB needed to consider the future of the Australian dairy industry when deciding on the take-over bid.

“For farmers generally, they are at a fork in the road today.”

“If they sell out to a private company, that they have no control over … they will be spectators.”

“What we are putting on the table is an offer for them to take a stake in every step in the value chain.”

“It’s a fundamental, philosophical different point of view.”

3. The competition watchdog

Back in 2010, the ACCC was loathe to allow MG to acquire WCB. As reported in the SMH at the time:

THE competition regulator says its preliminary view is to oppose Murray Goulburn’s proposed acquisition of Warrnambool Cheese & Butter on the grounds it would cut competition in some markets for raw milk.

The Australian Competition and Consumer Commission said yesterday it was concerned the proposed deal “would substantially lessen competition for the acquisition of raw milk from farmers in the relevant markets within South Australia and Victoria”.

“The potential effects in the relevant markets include a significant reduction in farm-gate prices paid to farmers for raw milk; and reduced competition in the offer of non-price terms such as finance, field advice services and discounted hardware and grain supplies.”

The irony of the ACCC’s 2010 statement is that Murray Goulburn’s mission, as a 100% farmer-owned co-operative, is precisely to return the maximum price to farmers — something to which the listed Bega Cheese nor the privately owned Canadian giant Saputo cannot lay claim.

I hope it takes a broader perspective this time. A serious exporter battling subsidies and tariffs around the world, MG needs scale so that its processing can be as efficient as its farmers. The Australian government does not afford our dairy farmers the protections enjoyed by most of our competitors. The least it can do is allow us to grow.

UPDATE: See this article and extended AFR interview with MG CEO Gary Helou: http://www.afr.com/p/national/the_battle_for_warrnambool_kxxm78XXLgfsAJ6y7ARaVJ

Lovers behind the shelter shed

/ dairymilkmaid / 3 Comments
Lovers

Lovers

I was out shifting fences yesterday when, through the trees along the gully, I heard the tell-tale staccato of furtive lovers nearby. And there they were, in a hidden pocket of the paddock, him licking her flank, she still undecided.

I crept closer to take a snap and uh, oh, I’d been spotted. Like guilty teens behind the shelter shed, the pair straightened up, stared belligerently (if a little gawkily) and wanted to know what I was looking at.

What else should I expect? It is springtime, after all. Isn’t a cow entitled to a little privacy?

What the cold, cold heart of Coles reveals

/ dairymilkmaid / 8 Comments

The man who directs the face and voice of Coles must have become a little overconfident. In a breathtaking display of arrogance, Coles’ general manager of corporate affairs, Robert Hadler, addressed an audience of spin doctors with this presentation: http://www.documentcloud.org/documents/800088-reputation-coles.html#document/p5

Plenty of people have discussed why this presentation was in such bad taste. Callous, even.

But the part that really caught my attention was the role of our co-op, Murray Goulburn, in Hadler’s “case study”. The gloating Hadler describes the deal with Murray Goulburn as “The game changer”.

Hadler’s right about this but not in the way he means, I suspect. The Hadler case study goes to show just one thing: no matter how Coles tried to spin $1 milk, Australians knew it stank and none of their ads, infographics or appearances by Curtis Stone could fix it. Until, finally, Coles actually did something to address the damage caused by the milk war: an unprecedented 10-year deal that was too good for the co-op to refuse.

Now that’s not a case study in spin, Mr Hadler, that’s a case study in people power.

PS: If you would like to keep up the pressure for Coles to do the right thing, add your voice to this petition by Queensland ag teacher, Lisa Claessen, who was compelled act after her students became casualties of the ColesWorths milk war.
 

One woman’s kindness is another’s cruelty

/ dairymilkmaid / 9 Comments

Animal welfare is one of those things that often falls into the realm of sex, politics and religion. It’s an emotionally-charged topic at the best of times and when standards need to be set, conflict is inevitable. Consider this:

“Rear the calf in safety away from the herd so it can lead a healthy life”
vs
“Take the calf from its mother so farmers can steal the milk”

Both statements put the calf first, yes, but advocate diametrically-opposed practices. Vets say science supports the hand-rearing of calves, animal rights bodies say that’s immoral. So, what’s a farmer to do? At the moment, farmers have a lot of freedom to do whatever we think is right, so long as the calf’s healthy.

But animal welfare is increasingly becoming a political hot potato as vocal lobby groups demand more of a say in, and greater scrutiny of, farming practices. We farmers can’t stick our heads in the sand and hope this will all go away.

And, to be frank, many of the farmers I’ve discussed the issue with would like to see our representatives raise the bar to match the standards almost all of us meet every day. Few choose farming as a career just for the money (that concept never fails to raise a chuckle) – most do it because we love being outdoors with the animals. Why should we let a few rotten apples bring us all down?

But who decides what those standards should be? The dairy community? Well, no, we can’t do it by ourselves because external input is important to progress. The attitudes of the wider community have to be part of the decision-making process.

The thorny question really is: who represents the views of the wider community? Neilson research presented by Courtney Sullivan at the Australian Dairy Conference a couple of years ago showed that most Australians have little knowledge of where their food comes from, that they are aware of their ignorance and that, to put it bluntly, ignorance is bliss. Price was the main driver. Quality was taken for granted.

Ironically, this is a view that is eschewed by farmers and animal welfare bodies alike. It probably comes about because we farmers are trusted to do the right thing – a perception that some animal welfare activists would like to change.

Farmers have the opportunity to be proactive and show the good faith of the community is deserved. Why on earth not?

PS: If you want to know more about how we rear our calves and why, the answers are here on the Milk Maid Marian blog.

A shocking day

/ dairymilkmaid / 12 Comments

Yesterday was a shocker.

After getting Zoe off to school, it was time to do the annual “spring clean” of the fences. The event is triggered by the influx of youngsters into the herd. Every bit as adventurous and bullet-proof as your teenage son, these first-time calvers are new to the dairy side of the farm and love to explore far beyond the allocated paddock of the day.

The result: chaos. Sure, it only lasts a few weeks but, in that time, I could face divorce from a frustrated hubby sick and tired of chasing newbies around the farm. With all that in mind, I head off with the tester to gird the fences against the onslaught.

First stop is the all-important fence around the effluent pond. Nothing. “Not another #@$% battery.” Much muttering.

I’ve broken the farm’s electric fence system up into cells using a cadre of solar-powered energisers so that a single fault cannot bring the whole place to its knees and what I’ve discovered is that the batteries only last a season or two.

I wriggle the connections and ZAP! Well, at least I know it’s working. Test the blasted thing: 9 point bloody 6. No wonder I didn’t enjoy it. Pick up the clamp to attach it to the fence.

ZAP!

“AAAARGH”

“Need…new…clamp”

“What doing, Mama?” asks the little fellow in the Bobcat. “Never mind, Little Man”.

After a bit more spring cleaning, I discover a major fault down by the gully. Investigations reveal a blessed wombat has dug a perfectly good post right out of the ground, collapsing the fence and quite literally earthing it. A steel picket does the job nicely. And we’re up!

Job done, I roar the Bobcat through the gates, leap off and in a few paces find myself shrieking and dancing over a writhing red-bellied black snake.

Fellow dairy farmer, Nick Renyard (@farmer_nick_au) later described this snake as “pretty” but with ashen face, thumping heart and jellied limbs, that was not what sprang to mind a few moments later when the silence was again broken by Little Man.

“What doing, Mama?”

Back on the job and with a paddock selected, it’s time to bring the heavily pregnant youngsters across the road. We crossed that road a total of eight times (four return trips) over the course of an hour before conceding defeat. Young stock like to be driven by pedestrians rather than UTVs but I was tethered close to the machine by Little Man who understandably wanted to be part of the action.

We decided to take a breather (did I mention that low-stress stock handling techniques do not involve inter-spousal shouting sequences?) and let them settle for a couple of hours while we had a think.

In the end, it was Wayne’s brain-wave that saved the day: “Why not just let them run up the road?”.

A cunning plan indeed. Refusing to take the orthodox route along the track past the dairy, the rotters duly ran straight up the road and “escaped” through the road gate into the house paddock. Not there yet but across the road, yesssss!

There was much running, shouting and frantic arm-waving to get the mob of 50 trainees to run under the hot wire into their new home. All done wearing heavy rubber boots through deep mud. This morning, with aching hammies, I think of Cliff Young and marvel at not just the stamina but the ingenuity of the Legend.

A very unpopular dairy blog post

/ dairymilkmaid / 12 Comments

I suspect I am about to make a lot of enemies because there is an elephant in the room and few are in a position to point it out.

Here are the facts:

  • the last season has been dreadful
  • dairy farmers have free access to lots of information about we can keep cows healthy during fodder shortages
  • many dairy farmers who couldn’t afford skyrocketing feed costs have sold a lot of cows at ridiculously low prices so they can feed the remainder of their cows properly
  • farmers have gone broke but kept their cows healthy
  • cows do not starve overnight and watching them weaken over weeks or months would be more than I could bear yet reports of them dying in their hundreds have hit the national news

I was stunned. Perhaps people who would normally sell their cows off long, long before they reached the point of starvation couldn’t for some reason? Maybe they were hoping for a miracle? Maybe they were in denial?

It just doesn’t ring true, at least not for hundreds of cows as media reports suggest.

And it’s come out today that some published pictures of “starving cattle” were actually the carcasses of cows that had died of other causes. In fact, the vet whose leaked email urging MPs to act sparked the media stories, Dr Mike Hamblin, has since told Warrnambool newspaper The Standard that there is no animal welfare problem in SW Victoria:

“Warrnambool veterinarian Mike Hamblin said there was no animal welfare crisis in the region and that he believed farmers were looking after their livestock well in a difficult financial situation. Dr Hamblin said that while some stock were thinner than normal, he had not seen any starving.”

Yes, people need help. Yes, it is wonderful that the media stories have finally got the Victorian government to reach agreement with the Commonwealth on low-interest loans.

But do we really need to paint already suffering farmers as cruel by presenting pictures of dead cows to our political leaders before action is taken? The reality is that most farmers skip their own dinners to feed our animals. These dirty tactics may have won concessional loans for a few farmers but they have blown a lot of trust and, at the end of the day, we will all be the losers.

There has to be a better way to avert what is a genuine human crisis than fabricating an animal welfare one.

Help for our dairy farmers and their cows

/ dairymilkmaid / 7 Comments

There certainly is light at the end of the financial tunnel for dairy farmers but many are still finding the going incredibly difficult.

I’m a tough old stick but there have been times in the last few months where things unravelled a bit before I could piece myself together again, so I know how it feels first-hand. For me, the saving grace has been to get help from our expert farm consultant, Neil, and build an action plan to insulate the cows from the fodder shortage.

It’s gone beyond that for some farmers who are in desperate positions. I asked Dairy Australia’s issues manager, Julie Iommi, what the dairy farming representative bodies are doing to help.

1. Anyone wishing to donate fodder or funds to buy fodder – please contact the UDV/VFF on 1300 882 833. Want to help but have no hay of your own? Farmer mental health dynamo, Alison Fairleigh, has linked her handy blog to “Buy a Bale“, an initiative of Aussie Helpers, where anyone can donate time or money for fodder to go to people who are in dire straits.

2. VFF, supported by ADF, is pushing the state government to immediately review the resourcing to the Rural Financial Counselling network to ensure they have the capacity to deal with current demand.

3. VFF, supported by ADF, has asked the state and federal governments to introduce the low interest loan support program immediately.

4. The state and federal governments have also been requested to review other forms of emergency support immediately.

5. VFF and ADF are also pushing the state and federal agriculture Ministers to meet the bank sector to encourage them to continue to take the long-term view when assessing their support of farm businesses.

Dairy Australia is promoting the Taking Stock program, which can help dairy farmers review their individual situations and create their own action plans – Julie says there are still around 50 spots available.

DA also has good info on its site about coping with fodder shortages.

Last of all, if you know someone who might be battling to stay afloat, why not drop them a line, phone or do the good old-fashioned thing and turn up with a cake? It might be just the lifeline they need without you ever knowing it.

Let them eat cake

/ dairymilkmaid / 6 Comments

Good quality hay is like bread. Dairy cows love it for its balance of fibre, energy and protein. This winter, you cannot buy good quality hay for less than a king’s ransom, if you can buy it at all. So, with none to be had, we’ve been forced to get creative, introducing three different delicacies for the cows.

Almond hulls
At first, I wondered if the cows would ever eat this stuff. The smell is nice but almond hulls look like a mix of sawdust and fine wood chips.

Delicacy of the day: almond hulls

Delicacy of the day: almond hulls

Each cow gets an average of 5kg of the hulls each day but, judging by the way they wolf it down, I reckon they want more!

The 5 o'clock swill

The 3 o’clock swill

Trying to push the cows past a heap of almond hulls is like trying to push back the tide. Run one side of the ring and they’re already attacking the side you just left. Not because they’re starving, either. The cows are getting lashings and lashings of energy and nutrient-rich food – they just love the stuff!

Mmmmm, delicious

Mmmmm, delicious

Straw for scratch fibre
Although the almond hulls are fibrous, the cows need long fibre to wake-up their complex digestive systems, so they’re getting a couple of bales of straw as well (though they like to use it as a luxurious mattress, it seems).

Goo for the good bugs
Also new to our cows is a special brew delivered in fancy red tubs. A mixture of molasses, non-animal protein and minerals, the goo is not really for the cows. It’s for the bugs that digest their food in one of those four stomach chambers called the rumen. The idea is that the “goo for good bugs” turns them into super-bugs that can release the maximum value from everything the cow eats.

It’s a sweet-and-sour mix designed to stop the cows gorging themselves on the goo but they still seem to enjoy a generous swig on the way in and out of the dairy!

RedTrough

Grain for breakfast and dinner
The cows continue to enjoy two sittings of corn, barley, wheat and minerals each day during milking.

Most important of all – juicy, juicy grass
Despite all the other stuff on the menu this winter, nothing is more important to our cows than grass.

WintryPasture

Are they missing their hay? I think not.

The silver lining to the big dry

/ dairymilkmaid / Leave a comment

FloodJune14Std

I thought we’d “only” had 93mm but it was actually more like 144mm (that’s more than 5 and half inches) in three days. Normally, that would have been a massive disaster. Instead, it’s moderate flooding and, so long as the weather gods hold their tempers for a while, we’ll have dodged a bullet.

Such a relief.

I put our narrow escape down to the lingering effects of the exceptionally dry summer and autumn of 2012/13. While the pastures were green last week, you only had to dig down a few inches before the soil became very dry. The catchment sopped up most of this rain like a giant jade sponge before it got to the waterways.

The weather bureau is forecasting a warmer and wetter than average winter and although it has very little confidence in that seasonal rainfall outlook, the forecasters are actually very good at predicting temperatures. A warm winter would be welcome indeed. Fingers crossed!