The new golden child in Australian dairy: corporate farming


Australian dairy farmers have long been compared to our Kiwi big sisters.

You might imagine the comparisons would highlight the resilience of Aussie farmers who cope with much tougher climates (three weeks with scant rainfall is considered a drought in NZ) and less bountiful soils. But, sadly, no, it’s generally been along the lines of a disappointed parent.

“If only Australian dairy farmers were more like the Kiwis”.

But, as the cost of producing a litre of milk in the naturally blessed New Zealand has risen close to that of Australia, big sister has lost some of her charm. The new golden child is Big Brother: the corporate farmer.

The corporate farm is very attractive to everyone who describes themselves as “in agribusiness”. It borrows big, spends big, supplies big and is built on the promise of rivers of white gold that can be tapped by anyone with a spare dollar (whether or not they have an aversion to muddy boots). Freed from the constraints of traditional farming, they push the system hard for maximum shareholder return.

And, if it crashes, well, what the heck? It was worth a crack. The carcass is licked clean, everyone dusts themselves off and goes back to what they were doing before, digging up iron ore or whatever it takes to fund a spin on the roulette wheel.

Should we be concerned? Honestly, I’m not sure. If large dairy farms are held by patient investors, they can tick all the right boxes, since cow care, environmental responsibility and the welfare of workers all make business sense in the long term.

I just hope those lured by all the hype remember that dairy farming is a complex, volatile business and the returns may be neither instant or constant for, if it’s all about turning a quick buck, things can turn ugly very quickly indeed.

The great Aussie family dairy farm vs the corporate 10 bagger

With all the gorgeous artworks blu-tacked in pride of place and treats devoured, the kids and I spent much of Mother’s Day together in the great outdoors maintaining fences. They rode their bikes through the puddles while I launched an all-out attack on the tangles of blackberry canes shorting out the hot wires.

Not that any of that is unusual: right across Australia, there would have been kids helping to get in the cows, feed the poddies or hose the yard. In fact, 98% of Australian dairy farms are family affairs and everyone gets their hands dirty.

The other 2% of farms are corporate-owned and this group seems to be growing fast. Everyone from Gina to the Chinese see dairy as the new white gold and investment dollars are flowing in fast.

Investors want control and they only want to invest their big wads of cash in big operations, not in average farms like mine. They boast that consolidating farms, achieving economies of scale and enhanced bargaining power with the processors will turn dairy farms into lucrative “ten baggers“.

On the other hand, large corporate farms are not always appealing to their prospective neighbours. They have large footprints in small communities fearful of increasing numbers of trucks growling up and down quiet country roads, massive effluent ponds and, perhaps most controversially, large sheds housing large herds.

The new Chinese owners at Kernot in Gippsland, for example, must be wondering whether their investment really is welcome. Opposition to the proposed largely housed dairy operation from Kernot locals has been furious.

The concerns of Kernot residents has been amplified by the Australian Food Sovereignty Alliance, which says “dairy intensification is not the way to a fair food future” and took a stand against the farm on April 17 in commemoration of:

“April 17th, the International Day of Peasant and Family Farmer Struggle is an occasion to recognise the negative impacts of the industrialised food system on small-scale agriculture, and to remember those who have died fighting for their right to food and the freedom to produce it.”

“Died fighting”? Should I rage against intensification and, emulating French farmers, demand some form of protection so that I may remain a peasant?

Source: Daily Mail

That’s not really the style of Aussie farmers. We get cranky at local discussion groups and carry on milking. Why? I think it’s partly because there is no real solution. We can’t have tariffs because we rely on free trade for a fair go in international markets, we don’t have cheap labour or the lax laws of many competitors (and would rightly rail against that anyhow) and even a superpower co-operative cannot offer enough protection for exposed farmers when bitterly cold trade winds blow.

The difficulty is that we produce a commodity that is traded on now dizzyingly volatile international markets. Surviving and thriving on the rollercoaster demands the ability to keep costs low in tough times. Ironically, that hits corporates particularly hard, who must keep paying wages no matter what and whose investors tend to have less patience to ride out the bumps.

Unless the big corporates have access to especially favourable and stable markets, like the A2 Milk phenomenon that underpins the huge sheds of cows owned by the Perich empire, there are interesting times ahead for all of us – big and small.