Why 1 in 5 dairy farmers plans to quit

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.

 

 

 

Questions for Aus Dairy Farmers president, Chris Griffin

Australian dairy farmers are represented by the aptly named Australian Dairy Farmers Limited and I am very pleased that its president, Chris Griffin, was happy to be my guest on Milk Maid Marian. It is the first of a series of guest posts that I have planned featuring dairy leaders. If you would like to suggest more guests for MMM, please drop me a note!

Chris Griffin

Australian Dairy Farmers Limited president, Chris Griffin.

MMM: Why are you a dairy farmer?
CG: Growing up on a dairy farm I have always wanted to be a dairy farmer. I have always been interested in issues beyond my front gate that affect our industry and especially now as President of Australian Dairy Farmers (ADF) I want to ensure that our industry is given the recognition it deserves for all of the hard work that we do on a daily basis.

MMM: What are the hot topics discussed by dairy farmers?
CG: There are many topics that we farmers are concerned about, in particular Water, Carbon, Animal Health & Welfare and the retail supermarket milk price – not only what farmers receive but also the retail price that milk is being sold at in our supermarkets.

MMM: What is not being discussed that should be?
CG: Genetic Modification (GM) – there is potential coming out of the Cooperative Research Centre (CRC) on genomics and better pasture species. This is an exciting development and has the potential to have increased productivity gains for the industry. I also believe that we need to focus on the future of our industry and Australia’s need to produce high quality products. Our export ability will also continue to generate wealth for Australia.

MMM: What are the biggest challenges and opportunities for the dairy community?
CG: One challenge for farmers is returning our production to those of the pre-drought levels. As an industry, we also need to ensure that we continue to provide career paths for our younger generations. We also need to ensure that there are people continuing to contribute to our industry and understand the value and need for advocacy and representation at local, state and national levels.

MMM: If you had a magic wand…
CG: I would want to eliminate the urban/rural divide that has impacted our industry for some time. Farmers must be recognised for the value that they contribute in caring for their land, caring for their livestock and continually providing high quality products and nutritious food.

Chris Griffin

Chris on the farm