How falling milk prices affect my dairy cows

When milk prices fall, the first ones to suffer are the members of dairy farming families – Alex, Zoe, Wayne and me. The second ones are the people who make an income from supplying dairy farmers: feed merchants, vets, milking machine mechanics, fertiliser suppliers, the local newsagent and so on – our friends and neighbours. The next ones to suffer are cows.

With the price we are paid for our milk falling below the cost of production this year, I have some tough decisions to make and they come down to this: sell milkers, sell young cows, try to produce even more to meet our fixed costs (like the mortgage) or feed the cows less. Feeding the cows equates to about 40% of our income, so that’s a pretty obvious target and so is selling young stock.

It costs a lot (say $1500) to feed a young cow for two years until she’s ready to calve but, at about 12 months, I can sell her for about $1000. That’s very handy money when milk alone won’t pay the bills. Yes, it equates to selling the silverware but at least we live to fight another day.

Here’s the catch: if I sell her locally, she’ll probably be slaughtered at a value of, say, $500. If I sell her to a Chinese dairy farmer, I get the $1000. I’m assured that, as precious breeding stock, she’ll have a wonderful trip on the air-conditioned boat and she’ll join a herd of up to 30,000 other cows, with feed that arrives on a conveyor belt at their noses and whose manure is carried away by another conveyor belt at their tails. A very different life to the free range pasture based one she’d have here in Australia.

What should I do?


Dairy Australia Chair Max Roberts answers a Milk Maid’s questions

One of the dairy community’s most prominent leaders is Dairy Australia chairman, Max Roberts. Thank you, Max, for answering the Milk Maid Marian’s questions and a thank you in advance to those of you reading this who can fire some more questions in via the blog!

Dairy Australia chairman, Max Roberts

Max Roberts in his own dairy

MMM: Why are you a dairy farmer?
MR: In 1982 I had what many would call a good government job that said that I had to leave Bega and go to Sydney. Sue and I didn’t like that idea so we bought a dairy farm and have never regretted that decision. It had a few interesting moments with a couple of deep and meaningful conversations with the bank manager. Over time it has worked well for our family. It has given us a lifestyle we now enjoy, educated and given a good start to both the kids and we enjoy it.

MMM: What are the hot topics discussed by dairy farmers?
MR: This depends in what part of Australia you are in and we should never generically assume that one problem fits all. For example it could be water in the Murray Darling Basin, the supermarket pressure on domestic milk prices in the northern parts of our industry, the impact of drought or wet weather in other dairying areas. Milk prices will provide some common ground as will input costs and there may be a combination of the above issues dominating farmer discussion. It’s interesting to look at the last three or four outlook reports and the variation of emphasis placed on the varies topical issues.

MMM: What is not being discussed that should be?
MR: This is an interesting question and one that exercises our minds around the board table because DA needs to be ahead of the issues and not playing catch up. It will be interesting to see what comes back via your blog. One I would suggest is farmer succession but dealing with the issue from the older or grumpier end of the industry.

MMM: How would you describe the mood of dairy farmers at present?
MR: Dairy farmers are generally cautious in terms of sentiment. Our research shows the confidence levels among dairy farmers has remained relatively stable over the past 3-4 years. Confidence levels are currently around 66%. There is still a lot of rebuilding to do after the drought years of the past decade and we should not expect an instantaneous result from the better seasons that we have had.

MMM: What is the role of dairy farmers in the management of DA?
MR: DA is the service body of the dairy industry and therefore farmer involvement in what we do is essential. Farmer access to DA’s forward planning process is available through a number of channels. In no particular order they are via one of the eight RDP’s (Gipps Dairy, Dairy Tas, Sub Tropical Dairy and the five others) the state farmer organisations, the staff and directors of DA, the dairy company’s and the many dairy research facilities.

MMM: What are the biggest challenges and opportunities for the dairy community?
MR: The dairy industry is a producer of food and has a reputation second to none on the delivery of high quality foodstuffs especially as a source of protein. Food security is a growing international issue that creates headlines outside of Australia. There will always be demand for our product which creates the opportunity but the real challenge is at what price will that demand be at. We have to have farming systems and technologies that allows us to produce milk within the demand and price parameters . We also need resource policies that allow us to be profitable farming business’s. To have the right policies we need a strong farmer lobby voice to support the work of DA. So one of the key challenges is to have farmers involved in the future of our industry.

MMM: If you had a magic wand…
MR: My magic wand would iron out the volatility of milk pricing and input costs.

More questions for Max are welcome! Simply leave a comment.

Why not have a whinge when we deserve it, after all?

On Tuesday, I was given the opportunity to have a really good cathartic whinge on Melbourne radio and I almost took it. The announcement of an increase in public transport fares prompted 774ABC radio host Mark Holden to ask for examples of what’s gotten cheaper.

The obvious answer is milk, of course! So I rang in and said consumers were getting a great deal on milk, which is at 1992 prices. He wanted to know whether farmers are doing it tough as a result. Now the answer to that question is complex and I wasn’t going to try to explain it all in five seconds so I said that, yes, one in three dairy farmers had left the land since deregulation but that Australians are among the world’s most efficient dairy farmers and that allowed us to deliver low prices. Now that’s a strange message, isn’t it?

It means that instead of whingeing about low prices, we can be incredibly proud of being able to deliver them. Most importantly, we can be incredibly proud of the shape we’re in: we haven’t succumbed to a factory farming model.

  • 98 per cent of Australian dairy farms are family farms rather than corporations
  • The average herd size is 220 (small enough to know every cow)
  • Our cows enjoy “cowness”, as Tammi Jonas would put it, free to roam the paddocks

In other words, our farming practices have become more and more professional without compromising the ethics that guide all the farming families I know: love of animals, love of land. We have a great story to tell and we should shout it from the rooftops!