Green drought threatening Australian beef, dairy industries

It’s the drought phenomenon that isn’t apparent on the surface, but becomes all too real when you do your grocery shopping.

Shoppers could see higher meat and dairy prices at the checkout, with a lack of rainfall across southern Australia causing what experts have termed a green drought.

Bureau of Meteorology national climate manager Karl Braganza said a green drought occurred when there was enough rainfall to grow grass, but the deep-soil moisture needed for crops was depleted.

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Mr Braganza said the conditions had become extremely noticeable within the agriculture sector, and with long-range forecasts predicting September-November rainfall to be within the average range, the bureau was hopeful areas witnessing this green drought would see some relief.

Unseasonally dry conditions gripping southeast South Australia, western Victoria and along the Murray River, western Tasmania and parts of southwest Western Australia have left farmers struggling to grow crops, feed livestock and stay afloat.

According to the weather bureau, July rainfall in these areas was either below-average or in the lowest 10 per cent of Julys since 1900.

“We’ll be watching those regions over the next few months to see how much rainfall falls and the drier they are leading into summer, obviously, that means that you’ve got an elevated bushfire risk,” Mr Braganza said.

Lamb and beef prices are at risk from the green drought.

Beef and dairy are among the industries affected, and if average to above-average rainfall is not received in spring it may leave other states such as Queensland and New South Wales to carry the load.

Victoria and South Australia are some of the country’s top red meat and dairy producers.

National Farmers’ Federation president David Jochinke said it could get to a point where suppliers were seeing lower supply numbers and price increases to beef, lamb and dairy products on the supermarket shelves.

“There’s a lot of room for this to go sideways, and it is going to come down to the next very short period of time for seasonality,” Mr Jochinke said.

He said if these unfavourable conditions were to continue for the next three months, a tipping point may be reached where farmers are forced to euthanise their stock.

“If it gets to a tipping point where you no longer get any value out of selling that livestock because your yard fees, your cost of selling is too high – that’s where we see people euthanising livestock,” he said.

“Anytime when we have disruption to supply chains, and if significant, the market will have a shock in it.

“So yes, this potentially could affect lamb and beef prices.”

According to recent reports by Meat and Livestock Australia and Dairy Australia, Victoria is the primary state for lamb production and second overall for red meat, as well as being the top producer of milk followed by New South Wales, South Australia and Tasmania.

“As far as intensity goes, this would be some of the most intensive paddock run lifestyle, which is why they’re feeling it as acutely as anyone, the number of herd that they run per acre, per hectare is a lot more higher than other areas, hence why it is being felt more,” Mr Jochinke said.

National Farmers’ Federation president David Jochinke

Looking at the beef industry, Mr Jochinke said if it were to get to the crisis point where large amounts of livestock were euthanised, Queensland and NSW would carry some of the load, but due to the differing breeds, would not see the full financial benefit.

“Because the northern breeds and European breeds are not like-for-like, they wouldn’t see the full benefit in carrying the load,” Mr Jochinke said.

“You’d see your premium cuts become more premium, but your regular cuts still be covered.”

However it would be the dairy industry that could see the most damage where Australia could see a market share loss due to suppliers choosing to import processed dairy.

“With raw milk, there might be an uplift in demand, especially because Victoria milk pushes traditionally north so it could potentially mean that local milk would be in high demand, and that would also command a slightly higher price,” he said.

Concerningly, it could also lead to farmers leaving the industry if herds were not able to recover.

“What we’ve seen sometimes in these scenarios is that as generations, if they’re not able to pass it on and the other farmers aren’t able to get bigger, we actually see a decrease in the milk pool in some areas,” he said.

“We’re not at the crisis point yet... but it’s rock and a hard place for livestock producers, because they want to hold on to those animals to produce the progeny, to be able to sell, to make money, but you’re having to spend so much money to buy the feed in and water to keep them alive.”