dairy farmers

Skeletons in the dairy case

/ dairymilkmaid / 15 Comments

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 →

The blueprint for NSW dairy

/ dairymilkmaid / Leave a comment

A week or two ago on Twitter, CEO of NSW dairy body Dairy Connect Mike Logan made an intriguing reference to a “blueprint for NSW dairy”. There’s only a limited amount you can learn from the 140 characters of a tweet, so I invited Mike to elaborate on Milk Maid Marian and here’s what he had to say:

Mike Logan, Dairy Connect CEO

Mike Logan, Dairy Connect CEO

In the NSW dairy industry the issue is that the value chain is not adding value at the farm gate. Since deregulation the farmers have descended from being strategic partners in the value chain, to an input that must be minimised.

Perhaps this is similar around the rest of Australia – I am not qualified to say. However, it is easy to assume that the dairy model in NSW is flawed as we watch our cousins across the ditch (dutch) grow their businesses, convert sheepmeat farms to dairy and build new kitchens. (The ‘New Kitchen Meter’ is a reasonable measure of success in agriculture.)

It is also easy for the NSW dairy industry to look at the New Zealand dairy industry and suggest we should emulate their model of ‘one big co-operative’. Without doubt that is the best model in the world at the moment. I call it the United Soviet Socialist Republic of Dairy (USSRD) and Barnaby Joyce says that Fonterra is a Maori word meaning ‘single desk’.

As much as we would like to, we shouldn’t emulate their model.

Firstly, because we can’t. The legislation required would make the current budget look easy. Between Clive Palmer and David Leyonhjelm it would be a nightmare.

Secondly, it is because we need to think about the next model after New Zealand. What is better than the USSRD?

Our current model of the value chain in NSW dairy seems to look a bit like this:
CurrentNSWdairymodel
Sort of messy eh?

The real problem with that value chain is that the farmer is held a long way from the representative of the consumer – otherwise known as the retailer. There are lots of ticket clippers, gatekeepers and a few value adders in the chain. There is not sufficient transparency and doubtful equity. The last person to make any money is the farmer.

So who is making the money?

Well, certainly the retailer. Here in Australia we have two of the three most profitable supermarkets in the world (Woolworths then Walmart then Coles/Wesfarmers).

Also the banks. The four most profitable banks in the Western world are right here. I needn’t name them. There are more profitable banks in China and Russia.

The distribution and transport sector is quite profitable. Linfox is not going out backwards.

Oddly, the processing sector in dairy is not making that much money. They are making more than the farm sector, but not an inordinate amount more. They only have about 25% of the capital invested when compared to the farm sector but they are mostly in control of the milk, its destiny and its value. They are the gatekeepers. The profit of the processors precedes the profit of the farmers.

So, what would a better model look like in NSW?

We suggest a value chain that is circular. We could call it a ‘value cycle’;

ValueCycle
The most important part of the value cycle is that the farmers and the retailers are side by side. The needs and values of the farmers and the supermarkets align. They align because the farmers have a secure supply of a high quality product and the supermarkets need a secure supply of a high quality product. Both want transparency and equity.

The first time I saw the value cycle work in NSW dairy was with the Woolworths Farmers’ Own brand and the group of seven dairy farmers in the Manning. The farmers were told by their processor that they couldn’t get any more money from the supermarkets for their fresh milk. They were told how tough it is dealing with the supermarkets. To their credit, the farmers took the challenge and decided to find out how tough it is to deal with the supermarkets.

The processor was half right. It is tough to deal with the supermarkets, but there was more money available. Both the supermarket and the farmers got what they needed because their values aligned. The system is transparent and equitable.

If that is right here in Australia, is it right in the export market?

Yes it is. Along with Norco and the logistics company Peloris Global Sourcing, the NSW dairy industry facilitated by Dairy Connect has developed contacts in the retail sector in China for the sale of fresh milk. Again, the milk is worth more with a direct deal with the consumers. The model does work.

It is easy to scoff at the volumes for fresh milk to China, I will tell you that they are small but they are invaluable.

If we can deliver albeit small volumes of fresh milk into the fastest growing dairy consumer market in the world at a profit by developing direct relationships with the supermarket sector in China, then what is next?

Can we develop those relationships to deliver other NSW dairy products without having to enter the export commodity circus that is mostly controlled by the USSRD?

Of course we can. The NSW dairy industry is actively seeking investment and partnerships with the Chinese retail sector to access the infant formula market. Again, the processors are right, it is tough. The farmers in the Manning too are right; it will bring value back to the farm gate.

MG capital raising program raises plenty of questions

/ dairymilkmaid / 5 Comments

Farming is all about taking risks. Our businesses rise and fall largely on the backs of increasingly volatile international commodity price cycles, exchange rates and the weather. Plenty of really good farmers have come unstuck through no fault of their own, other than taking a good risk at a bad time.

On the other hand, our co-op, Murray Goulburn, has always been considered a pretty safe bet. It was formed more than 60 years ago by a group of Victorian dairy farmers seeking a better deal for their milk and has grown to become Australia’s third-largest food and beverage company – dwarfed only by Coca Cola Amatil and Lion.

Our managing director, Gary Helou, doesn’t want to stop there. At a supplier meeting this week, he spoke about the need to move at “break-neck speed” with new products to capture new markets within the next three to five years, swallowing competitors along the way.

They’re exciting times for this once risk-averse co-operative. The proposal being put to farmer shareholders is to list a chunk of the co-op on the ASX so that anyone can buy a piece of the action. Farmers with excess shares will be able to sell to non-farmers but these external investors, however, wouldn’t have voting rights.

Am I in favour? Yes, if the new capital structure can:

  • Enshrine farmer control
  • Maximise farmer profitability
  • Treat all farmer shareholders equitably
  • Allow the co-operative to provide great opportunities for new generations of farmers

Those are big “ifs” and there just isn’t enough detail yet to know whether any of them are satisfied. It is incredibly heartening though that the MG Board has listened to member concerns that the initial start date of the program of July 1 was far too soon to consider the complex implications of the proposal.

That’s the beauty of a co-operative: members have a real say in their own futures. And that’s why those of us who cherish it must have no fear of asking questions.

Dairy pawn

/ dairymilkmaid / 9 Comments

Image from http://enos.deviantart.com/art/Cow-Chess-1353853 by enos of Deviant Art

These days, I feel a little like a chess piece; more pawn than queen.

The Australian federal government has rushed into a free trade agreement with Japan that does next-to-nothing to help Aussie dairy break through tariff barriers, even though Japan is hardly known for a growing dairy industry of its own that deserves protection. I don’t know why we were overlooked but a Sydney Morning Herald story quotes Warren Truss as citing “compromises”.

It’s been an interesting few days for dairy. Coincidentally, the ACCC forced supermarket superpower, Coles, to confess that it was lying when it claimed the $1 milk had not hurt dairy farmers.

At the same time, the media is littered with references to milk as “white gold” and so on, while our co-op, Murray Goulburn, contemplates a partial sell-off to raise capital.

And the milk maid? Yes, I’ve almost recovered financially from last year now but not emotionally.

A Kiwi who’s now dairy farming here in Victoria tells me that one of the differences he’s noticed is that there’s just not the “buzz” around our farmers in a good year that you get in NZ.

Why? First, we’re more battle-weary and risk averse after a decade of drought knocked us around. Second, we’re rightly a little more cynical. In NZ, dairying gets a lot of encouragement from a government that understands dairy’s huge economic impact on the entire nation. The sector accounts for about 3% of NZ’s GDP. Have a look at this economic statement:

“Rebounding dairy production drove a 1.4 percent increase in gross domestic product (GDP) for the September 2013 quarter — the biggest quarterly increase since December 2009, Statistics NZ (SNZ) said.”
– The New Zealand Herald, 19 December 2013

Here in Australia, the dairy sector contributes $13 billion to our economy but that’s considered small fry, accounting for less than 1% of our GDP, which totalled $1451.1 billion in 2011–12.

If we are to realise our potential, we need a government that helps dairy grow rather than considering it as a tradeable concession. All eyes are now on the FTA negotiations with China.

What inspires a young man to become a dairy farmer?

/ dairymilkmaid / 15 Comments

We received an unusual phone call the other week. A vet student with no family connections to dairy, Andrew Dallimore rang out of the blue saying he was keen to become a dairy farmer and wondered if he could ask us a few questions.

Well, what a series of questions! What were the challenges we faced becoming dairy farmers, why did we choose it, the ups and downs, where we look for knowledge and what are the pros and cons of raising children on a farm? At least, these are the ones I remember. And he took notes.

It felt like being at confessional, somehow. You have to be totally honest with someone so earnestly and diligently researching his future. Wayne and I were both immensely impressed, then gobsmacked when he offered to do a few hours work on the farm with the payment of just our thoughts and a banana!

Later, I had a look at the extraordinary “project” Andrew undertook last year and was impressed all over again. Andrew is a truly remarkable Australian so I was very pleased when he agreed to write a guest post about what inspires him to become a dairy farmer. Maybe we can learn a little about how to attract other young Aussies to follow in his footsteps. If you’re on Twitter, follow Andrew on @Farmer_vet.

Aspiring dairy farmer, Andrew Dallimore

Aspiring dairy farmer, Andrew Dallimore

I admit, that when Marian asked me if I would like to write a post for her blog that I was flattered, albeit worried. If you’ve read any of the content on here, you’ll realise that she is a bit of a bright spark (not that she’ll admit it). So hopefully I don’t kill too many of your brain cells (with my drivel) that you have spent so much time refining.

As a vet student at the University of Melbourne I have had the privilege to visit many different agricultural enterprises. Yet, dairy farmers and their families standout as some of the most inspiring people in Australia. It’s not their dashing flannelette shirts, crap splattered wellies, or even their everlasting pursuit to race the sun up every morning (and beat it!), but something else extraordinary.

Over the past 3 months I have been on a pilgrimage of sorts. I’ve been hunting down dairy farmers to hear about their pathway to farming. I feel inextricably drawn to dairy, and I’ve found these people are to be tough, dedicated, and generous beyond measure. Without knowing me from a bar of soap, dairy farmers have welcomed me into their homes, sat down and had targeted chinwags with me, and treated me as an equal while their kids watched telly, ate their tea, or just run amok.

Any question I had, as basic as it was, they answered and discussed enthusiastically. Eagerly, I listened to the trials and triumphs they went through to be successful while working, raising a family, settling into a completely different lifestyle, or turning a rundown farm into a thriving business and family home. From inherited farms, to sea-changers, and sharefarmers, they all shared similar traits. The stories were incredible.

For example, on a farm I visited up in northern Victoria I was completely blown away. A family of four milking about 300 cows on an inherited farm, with grins bigger than you can measure were some of the most astounding farmers I had met. It wasn’t the adults (who were the typical intelligent, driven, and happy dairy farmers), but the kids!

At the ripe old age of 14 their son had well over $10K in his bank from selling cow poo by the roadside, a part-time employee who helped him bag up the stuff (one of the kids from school, who unfortunately got the sack after his 3rd warning for not filling up the sacks properly), and a brilliant work ethic. His younger sister, at age 11, was being given orphaned merino lambs to her by farmers (otherwise the poor little buggers usually die in the paddock), was rearing them at home, and then selling them back to the farmers for a good profit.

These kids had impeccable manners, were bright, charismatic, and treated people as respectful equals.

Hearing and reading about people’s pathways to dairy farming has made me realise something incredible. Dairy farming isn’t just a way of life; it is life itself. It is survival by learning, adapting, producing, recycling, cooperating, and teaching on a day-to-day basis.

It is working with spectacular animals to feed the world sustainably, and support Australia. It is about raising a strong, healthy, intelligent, and generous family with humane ethics and values. There are few causes in our country that are greater than these.

Marian asked me what inspired to me start pursuing a life in dairy, and the answer is simple: Dairy farmers.

Marian also asked me what my dream is, and this answer more complex: I want to own and run my own rural veterinary practice; help run a dairy farm; heavily invest in the community I live with; and raise a strong, healthy, intelligent, and generous family on the land.

How I will get there on the other hand, is another question altogether… Hopefully with a large smile, a strong work ethic, good mentors, a little time, and plenty of elbow grease!

Protecting farmers from ourselves

/ dairymilkmaid / 13 Comments

Apparently farmers cannot be trusted with anything. Not even to want the highest farm gate milk price for ourselves.

Bega has just sold its stake in Warrnambool Cheese & Butter to Saputo, putting the Canadian billionaire on the brink of controlling WCB even though a higher price was on offer from Aussie farmer co-op, MG.

This happened because our co-op hasn’t been allowed to bid during the bidding period.

Australian farmers who want to invest in their own futures and who are willing to pay the highest price for WCB have been stymied by a government artifice in the name of protecting…you guessed it…farmers from themselves. Apparently, another processor that thrives on a low farmgate milk price is better for us farmers than having an efficient farmer-owned co-op.

This Aussie dairy farmer will never forgive Joe Hockey for sitting by and watching.

So, where to now? That, my fellow source of low-cost milk, is up to us, for although Saputo can buy WCB’s stainless steel, it cannot buy our future. Only Australia’s dairy farmers decide where our milk flows and our fortunes lie.

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.

The business of dairy farming and what that means for our “stock”

/ dairymilkmaid / 9 Comments

I don’t like to use the word “stock” when it comes to cows. The connotation is that they are simply economic units. Yes, we do rely on their milk for our living but, no, they are not simply the equivalent of black-and-white boxes in a grassy warehouse. We burn the midnight oil, holding down second jobs during tough times so the cows will never know a lean year.

A sick cow is more important than our own dinners.

Nor are male calves “low-value by-products” of dairying. Maybe for some but not for me. Absolutely not. Rather than shooting them (the economically rational path), our family chooses to make a loss rearing the bull calves for the first few days of their lives and then selling them to beef-farming locals.

In the same vein, I am not a “milk producer” but a farmer. Somehow, “producer” conjures up factories and production lines, while nothing could be further from the truth here. We nurture our animals and the land because we understand that nature is bigger than we are. Sounds trite and fluffy? Perhaps, but it’s the reality.

There is no financial reward for such an attitude and in the teeth of the economic crisis most dairy farmers have suffered in recent times, the pressure’s been on to make every conceivable saving but here’s how I look at it: if you’re not able to make a dollar out of farming this year, you should at least be able to feel good about the way you farm.

If farming this way is not viable, I would rather not be a farmer.

Devondale’s new TV ads spread the love, but who to?

/ dairymilkmaid / 18 Comments

Well, you saw it here first. MG’s new ads will air on TV from tonight but they’re already up on its Devondale website.

I can’t help but wonder if this ad is a direct consequence of the much-despised Dev and Dale commercials that presented the co-op’s own farmer-shareholders as bogans. The deeply unpopular ads set MG directors’ phones alight and were pulled early in response.

Watching it reminds me of Dairy Australia’s own embryonic Legendairy campaign and even the Dodge “God Made a Farmer” Super Bowl ad that unashamedly pandered to a despairing target audience in desperate need of some moral support.

What do you think? Will this ad sell more Devondale cheese, milk and butter? Is it just too cynical of me to suggest that perhaps I and my fellow dairy farmers are the real targets? Or maybe it’s not me they have in mind but the NSW suppliers MG needs to woo in order to meet its Sydney Coles contract.

While you’re having a think about it, check out another new Devondale product ad!