Following the money – where your DA dollars go

da-levies

The fabulous UDV infographic in the last post got me thinking about how the biggest chunk of farmer levy funds are spent – with Dairy Australia.

Just how much does an average farm pay for DA? I did some sums based on figures from the 2016 Australian Dairy In Focus report and, for the average Australian dairy farm producing 1,563,258 litres of milk, the annual DA levy came to $5,523.

Are we getting good value? I asked Dairy Australia some basic questions about what it does and where our money goes. After discussing it amongst themselves for a few weeks, the DA staff were most forthcoming. This is one of the longest posts ever likely to appear on Milk Maid Marian but it’s very useful. Thank you, DA!

1. What are the sources of DA’s funding?

For 2016/17:

Payments from levy payers:                                                               $32.0 million
Matching Federal Government funding for R&D projects:      $20.4 million
Other (Interest on reserves, royalties on IP)                                  $0.7 million

Total                                                                                                   $53.1 million

DA project expenditure is also able to leverage additional State & Federal Government funding by investing jointly in projects, this adds approximately $10 million a year.

2. What percentages of DA’s budget are accounted for by admin, R&D, extension, promotion, and reputation protection? (I’m imagining a pie chart here)

da-funding-sources

3. How does DA set its priorities?

DA follows a process each year to refresh its strategic priorities as part of its rolling three-year plan.

Each year, the starting point is to review the performance of existing/current projects and whether they are achieving what they set out to do. An environmental scan of the operating environment helps to identify any new risks or challenges the industry will need to address.

Once these two steps have been completed, then comes the key measure to the whole process – extensive consultation with representative bodies, Regional Development Programs (RDPs) and farmers. This provides a focus of effort and expenditure on those matters that are not only seen as important, but necessary for a profitable and sustainable sector. Out of this DA is able to clearly define its key investment priorities.

From here, budgets are set and project expenditures are revised to help complete the new plan. Once finalised the plan is presented to industry and Federal Government for ratification.

The underlying, big industry challenge is to profitably grow farm production to fully take advantage of regional potential over the next decade. The current plan retains its focus on building the foundations to support resilience and growth.

Our core priorities are clear and concise: making farm businesses more profitable and competitive; growing people skills and capability; and protecting and promoting our industry.

4. Can you offer a list of the main projects delivered over the last 3 years and those slated for 2017 in R&D, extension, promotion and reputation protection?

The main projects delivered over the last three years are as follows – many of which are ongoing:

  • Regional Development Programs – extension activities to fill the gap left by state governments, discussion groups (now 107 groups up from 80, nationally) and focus farms (a total of 12 nationally).
  • Herd Improvement – Good Bulls Guide, ABV’s, Breeding Indices
  • Dairy Bioscience, Forages – DairyBio (formerly Dairy Futures CRC), hybrid breeding, endophytes
  • Dairy Bioscience, Animal Improvement – DairyBio, tracking genetic progress, Feeding the genes
  • Integrated Feedbase R,D&E – Feeding Pastures for Profit
  • Animal Nutrition & Feed Systems – Feed planning and budgeting, cow nutrition manual, purchasing grain resources, feed additives resources
  • Forage Improvement – Fert$mart, perennial ryegrass management, TopFodder silage management, quality pasture silage booklet
  • Industry Education – NCDE, Young Dairy Network, Picasso Cows, Discover Dairy, Cows Create Careers
  • Attracting & Retaining People – the People in Dairy website and resources like the Employee Starter Kits (ESKi), Stepping Stones, Stepping Up/Stepping Back, Farm Safety Starter Kit
  • Marketing – Foods that Do Good (promoting dairy alongside fruit and vegetables to health professionals), Australian Grand Dairy Awards, Legendairy Capital

Projects underway for this financial year, some of which are ongoing from last year, include:

On-farm

  • Animal health and fertility – Raising awareness and adoption of new Cattle welfare standards (Animal Health & Welfare), improving herd fertility and supporting farmers to phase out calving induction (InCalf), improving mastitis management through new Milk Quality adviser training and better practices at drying off (Countdown), publishing a new edition of the calf rearing manual (Rearing Healthy Calves), improving dairy hygiene to reduce milk price penalties due to bacterial counts (Better Hygiene Better Milk)
  • Genetics and herd improvement – Data Gene (including a centralised data repository), DairyBio
  • Feedbase and animal nutrition – Forage Value Index, DairyBio
  • Farm business management – Dairy Base training, Taking Stock, Standard Chart of Accounts
  • Farm systems and modelling – Precision dairy, virtual fencing
  • Land, water and carbon – Fert$mart, More Profit from Nitrogen (cross sector), Waste to Revenue (cross sector), Phosphorous efficient pastures (cross sector), Stocktake of the Nutrient Loss to Water Risk for the Australian Dairy Industry, feed additives to reduce methane emissions (led by Canadian research institutions), Sustainable Pasture Systems under climate extremes, Profitable Dairying in a Carbon Constrained Future program (Australian Government funded), Cool Cows heat alert service and Cool Cows workshops, Smarter Irrigation for Profit (cross sector) and technical support for industry contributions to the design and implementation of the Murray Darling Basin Plan

Post-farmgate

  • International market support – China, Japan and South East Asia scholarship programs and in market programs across China, Japan, South East Asia and the Middle East
  • Manufacturing innovation and sustainability – Technology Transfer Scheme, Transfer Dairy Fund, Small Dairy Network, Dairy Manufacturers Sustainability Council, Dairy Industry Sustainability Framework
  • Marketing – Legendairy Capital, Foods That Do Good (for health professionals)

5. DA has explained that some programs have been trimmed or cut to meet the expected downturn in income this financial year. What are they?

 Internally, DA has reduced its workforce by about 10% and reduced overhead costs by ~15%. Efforts have been made to preserve core internal programs (RD&E) but most programs have experienced some cuts.

The larger changes have been:

  • Post-farm-gate R&D and educational initiative expenditure has been cut by $3 million per annum.
  • Mass market advertising (TV based advertising) has been cut by $2.5 million per annum.

6. How much has DA spent on post-farmgate R&D over the last three years? Why are farmers’ funds on post-farmgate R&D? How will this change?

Post Farm Gate R&D – Manufacturing Budget

2014/15 – $3,157,500 (DIAL)

2015/16 – $1,293,800 (DIAL)

2016/17 – $414,000 (Supporting Manufacturing Innovation & Sustainability)

Up until the past year, our main investment in post farmgate R&D was core funding for DIAL to produce cultures for cheese companies and also undertake post farm pre-competitive R&D to help companies move up the value chain and improve the return for farmers via milk price.

DIAL was established in 2008 and since that time we were contributing about $3 million/year and most of the processors (MG, Bega, Lion, Parmalat, WCB) were contributing proportional amounts, as were commercial investors so that DIAL had an annual budget of about $7-10m/ year. DIAL also undertook a number of projects to help companies improve operating efficiencies in their factories.

Over the past 2-3 years DA has been scaling back its investment due to a number of factors. 1) with the reduction of co-ops over time, being able to demonstrate to farmers the value of levy dollars into DIAL became more difficult 2) a number of the processing companies had developed strategic alliances and partnerships with overseas R and D organisations or global dairy companies who had very large R and D capability. So the value proposition for DIAL came into question.

After a thorough review it was decided to wind up DIAL. The cultures business was sold to a commercial company already producing cultures and all the remaining IP from DIAL has now been shifted to DA and we will continue to assist processing companies adopt the existing IP.

Following the decision to wind-up DIAL, the strategic direction of the investment as well as the level of investment has changed dramatically. DA’s strategy in this area is now a more targeted post farm gate investment approach focused on technologies ready for adoption rather than idea inception.

We are looking to take commercially mature technologies or practices and see them through to implementation in an Australian context so that our processors and farmers see the value sooner rather than later.

Ultimately it will aim to increase the profitability of the Australian dairy industry by ensuring that our supply chain is keeping pace with global developments in dairy production innovation.

Key focus points of the current Supporting Manufacturing Innovation & Sustainability program:

·         Accelerating technology uptake into the Australian dairy processing sector by supporting commercially-relevant technology assessment and assisting processors to access larger buckets of available government funding sources

·         Enhancing the sustainability of the dairy processing sector by supporting the processors to both track and make progress against industry targets to reduce GHG emissions intensity, consumptive water intensity and waste to landfill. Each of these environmental targets are coupled with clear commercial drivers in that energy, water and waste disposal costs are increasing at a rate which requires rapid industry respond in order to maintain any sort of international advantage in terms of cost of production.

·         Ensuring that the value of current and previous DA research is realized for the benefit of Australian dairy farmers

As part of this new program, Dairy Australia has already completed three pilot-scale technology transfer projects that investigate the economic feasibility of innovative technologies designed to:

a) provide a non-thermal, low energy process to extend the shelf-life of dairy products as well as improve pathways for value addition to whey;

b) enhance the recovery of clean-in-place chemicals and reduce environmental discharge; and

c) optimise spray dryer control and reduce energy use.

Post Farm Gate R&D – Health and Nutrition Research and Science Budget

The Budget has progressively been rolled back in the last few years but is now dominated by the Fractures Trial Commitments.  This funding will continue to contract over the forward estimates as the fractures trial comes to completion.

2014/15 – $584,000

2015/16 – $430,000

2016/17 – $495,000

DA invests in Human Health and Nutrition Research to ensure that dairy nutrition science is strong enough to support industry communication activities designed to improve consumers’, key influencers’ and policy makers’ confidence in dairy foods while highlighting evidence of the benefits of dairy. 

This research has been vital in helping industry to counter the anti-dairy sentiment and fad diets (eg: Paleo) using the most up to date science.  This research also provides real opportunities to enhance the health and nutrition benefits of dairy in the diet with a view to increasing consumer demand for dairy (eg: Fractures Trial working to provide strong scientific evidence that dairy foods help to reduce the risk of fractures in adults).

7. What are the alternatives for farmers to provide DA with feedback?

Aside from contacting DA by phone and email, many of our staff, board directors and RDP extension people are often out in the regions on farm or at various industry events and forums so there are plenty of informal opportunities to approach us face to face.

Farmers are able to provide us with feedback via our stakeholder tracking survey which contacts about 600 farmers twice a year. Farmers are asked directly about their satisfaction with levy investment, what’s working and not working and ideas/advice on how to meet the needs and expectations of farmers.

Also, every three to five years, the Federal Government requires an independent performance review of DA. This process collects feedback from stakeholders about DA’s effectiveness, efficiency, and achieved value for money and return on investment to the industry. Workshops are held in all dairy regions for all levy payers to attend or farmers can email a submission to the agency conducting the review.

Farmers can contact their RDP directly or attend organised events, workshops and local discussion groups. Farmers are also encouraged to join local or industry boards and committees (such as their local RDP).

Or there is also the Australian Dairy Farmers (ADF) and the state dairy farmer organisations which farmers can contact or join to provide feedback which will then be given to DA.

***Agri-political activities or lobbying on behalf of dairy farmers is led by the state dairy farmer organisations – UDV, TFGA, SADA, Dairy Connect, NSW Farmers, QDO and WA Farmers, who are members of the national body, the ADF.

Skeletons in the dairy case

CowsDairyTrack

We know we are not perfect, we realise we must do better and we are proud of how far we have come.

Our cows live better lives than they did when I was a girl. Careful breeding has reduced the incidence of mastitis and lameness, while a new understanding of bovine nutrition has reduced the risk of calving trouble and helped us insulate the cows from the impact of both drought and flood. Our first generation of naturally polled (hornless) calves has just been born.

Even so, dairy farmers will one day earn a prime-time feature for all the wrong reasons. It could be someone doing the right thing that looks like the wrong thing: Continue reading

Suck it up, princess and a farmer’s election year wishlist

There’s been a bit of biffo on Twitter and on dairy farming forums of late. Some people are clearly very angry with our leaders. Others are polite but rather bluntly say “suck it up, princess”.

I’m in between.

I want to be among the top 10 per cent of Australia’s dairy farmers. Not because I am a nutty type A personality but because only the top 10 per cent make a good living. So, tonight I’m up late wrangling spreadsheets, casting a sharp eye over our budgets and trying to benchmark our performance.

That doesn’t stop me from wanting better from our politicians so that Victorian dairy farmers get a fair go. We’re not subsidised like our US or European competitors and we don’t have a free trade agreement with China like the world’s best dairy farmers across the Tasman, so we need to be lean, efficient and smart to survive.

To do that, we need:

  • relief from the carbon tax that puts us at an instant disadvantage
  • a more level playing field. Forget subsidising cars and get on with the China FTA.
  • to deal with the duopoly
  • most of all, to invest in ag R&D.

Being smart has historically been our strength, but no longer. Sue Neales of The Australian reports that:

“Australia’s spending on agricultural R&D has also dropped internationally from 9th to 16th place, according to a global study presented at the same conference.”

“Treasury last year predicted the value of agriculture to the nation could grow from its current size equivalent to 2.5 per cent of national gross domestic product, to 5 per cent by 2050, surpassing the manufacturing sector.”

If we are destined to become agricultural dunces, dairy farmers battling to survive on a tilted playing field will never manage the growth needed to make Australia Asia’s food bowl.

Because diesel is the new asbestos

Diesel Bobcat without windscreen

Breezy is beautiful

Diesel fumes have always left me feeling sick and it turns out my queasiness is justified. A report in the West Australian explains:

“Researchers from the WA Institute for Medical Research and the Telethon Institute for Child Health Research found that children with fathers who were exposed to diesel exhaust fumes at work about the time of conception were 62 per cent more likely to have brain tumours.”

“The results, published in the International Journal of Cancer, also showed that children of women exposed to diesel fumes at work before the birth had twice the risk of brain tumours.”

Scary stuff? Yes. According to the WHO, diesel is the new asbestos.

“Experts at the World Health Organisation (WHO) say diesel engine exhaust fumes can cause cancer in humans. They say they belong in the same potentially deadly category as asbestos, arsenic and mustard gas.”

We are lucky to live far from city pollution but we do have a diesel car, diesel tractor and diesel UTV that gets me and the kids around the farm. That new UTV came with a roof and windscreen – a combination that, ironically, may have threatened our children’s health. Unfortunately, it seems the windscreen created negative pressure and built up a vacuum that sucks air from behind and around the UTV back over the cabin. With it came a lot of dust and a strong smell of diesel fumes.

The windscreen is now stacked neatly against a garage wall and we are breathing easy once more.

Farmers just need to…

Complete the sentence: “Farmers just need to…”

A few I’ve heard recently are:

  • “Work smarter”
  • “Be more innovative”
  • “Drive for >5% cost reductions”
  • “Scale up to meet the world’s insatiable need for protein”
  • “Don’t JUST farm. Add a few more feathers to your cap”

Most of these comments have been made quite flippantly, with little or no background knowledge of Australian dairy farming and, to be frank, they give me the irrits.

What makes me really angry, though, is when our leaders parrot the “Scale up to meet the world’s insatiable need for protein” line.

We farmers need to justify investing more money, blood, sweat and tears in growth – both to our families and our bankers. Unless farm gate prices for milk increase substantially, that’s a very difficult proposition. According to official figures, most of the state’s dairy farms have a return on investment of 1 to 3 per cent, forcing a focus on financial survival. Much higher returns can be made elsewhere with less work and far lower risk.

To those whose simplistic response is “work smarter, diversify or value-add”, let me point out some realities. Click the link to see how the average Australian dairy farmer is paid compared to dairy farmers around the world:

https://milkmaidmarian.com/wp-content/uploads/2011/10/figure-8-international-farmgate-milk-prices-us-per-100kg.pdf

What does this mean for a farming family like mine? We want to improve the farm, so Wayne and I are both holding down second jobs (in other words, we are not “just farming”). The plan is that these improvements will make the farm more profitable and sustainable. We are making progress but farm life is currently anything but sustainable from a personal point of view. You just can’t work this many hours forever.

Perhaps we are dullards and are just not efficient enough but I doubt it. The farm I run now bears almost no resemblance to the farm of my childhood 30 years ago. It’s the same 500 acres but we milk 50 per cent more cows and each produces around 55 per cent more milk than her ancestor did in the 1980s: a huge leap in productivity.

Although these numbers are impressive, we are far from exceptional. According to Dairy Australia, Victoria’s raw milk production peaked in 2001-02 at 7.4 billion litres – more than double the 3 billion litres produced in 1980-81. Yield per cow also increased from 3,012 litres in 1979-1980 to 5,864 litres in 2008/09.

Sadly, we are unlikely to continue to make such gains. Our brains trust, the Victoria’s Department of Primary Industries, is being savagely pruned, reducing our ability to innovate and work smart. We don’t enjoy the subsidies that support our US and European counterparts or the free trade agreement with China that advantages our Kiwi neighbours. And now, we face an estimated $7000 carbon tax cost that will nobble us even further.

The playing field is far from level and getting steeper all the time.

Farm meets laboratory

It takes a lot of science to make our dairy farm tick these days. Our place is no factory farm either. With around 250 free-range milking cows, it’s a very typical Australian dairy farm.
Yet, only today, I have been keeping four different labs busy:

Environmental lab: what’s in our water?

Sampling water from the farm dam

Don’t fall in!

We’re considering moving the water supply from the river to the dam but need to be sure the water is up to scratch first. While we don’t irrigate our farm, we need high quality water for the cows to drink and to keep the milking machinery hygienic and sparkling clean. We’re having it tested for minerals and nasty bugs like e-coli.

Animal health testing lab – looking for hand grenades in the grass

GrassClippingsOur farm has volunteered to be a ‘sentinel’ for the spores that cause the life-threatening condition of facial eczema. Collecting samples from a couple of paddocks only takes a few minutes but it could save hundreds of cows untold suffering.

Dairy nutrition lab – feeding the bugs that feed the cows

Yesterday, someone on Twitter asked Dr Karl how cows manage to get fat on grass while humans lose weight on veggies. The secret lies in four-chambered guts filled with life-giving bugs that do a lot of the work for the cows.

Our bovine ladies are athletes – each gives us around 7,000 litres of milk per year – and they and their bugs demand nothing short of perfection from us as chefs! Feed reports allow me to balance the cows’ diets with the right mix of fibre, energy and protein.

Soil nutrient lab – getting the dirt on our soils

Soil data allows me to apply the right fertiliser in the right amounts to the right places – lifting the productivity of our farm, reducing costs and preventing leaching into the river. I test the soils of all our paddocks every year. Some would regard that as wildly extravagant but a $110 test is nothing compared to the cost of a tonne of excess fertiliser.

Dairy farming is still the earthy, honest lifestyle it always has been but, these days, it pays to be a touch tech-savvy as well.

EDIT: Oh my goodness! Mike Russell (@mikerussell_) just pointed out that I forgot the bleeding obvious: the testing of our milk! It’s tested to an inch of its life – fat and protein content, sugars and cell counts are all tracked daily. Thanks Mike!