Skyrocketing water and feed prices push dairy farmers to the wall and force sale of cows and farms

Victoria faces a dairy drought as farmers walk off the land, hit by crippling water costs. How will consumers be hit if fresh milk supplies start to run dry?

Victoria’s milk supply is at risk of drying up as dairy farmers faced with skyrocketing water and feed costs cull their herds and desperately try to sell their properties.

Farmers have warned it may soon be hard to buy locally-sourced, fresh milk, as production plummets across the State.

Milk production in Victoria’s north has dropped by more than half over the last two decades, from a peak of three billion litres in the 2001-2002 financial year to 1.4 billion litres now.

It dropped nearly 20 per cent in the north over the last financial year alone, and also declined in the State’s other major dairy regions of Gippsland and Western Victoria.

Dairy farmer and president of the Northern Victoria Holstein Association Phillip Daniel, said the time would come when Victorians found it hard to buy Victorian milk.

“And I think most city people would be shocked at how close that time actually is,” he said.

President of the United Dairyfarmers of Victoria, Paul Mumford, warned the State’s dairy crisis was already starting to hit at retail level, with Coles now looking to buy milk directly from farmers.

Dairy famer Steven Dalitz on his farm at Yalca. Picture:Rob Leeson.

“That is showing a clear stress; that the retailers are now concerned about where their product is going to come from, to deliver fresh milk to their customers,” Mr Mumford said.

In February this year Coburg’s Bega Cheese factory said it would close and in May milk processing giant Fonterra announced its Dennington factory, near Warrnambool, would shut its doors in November.

Northern Victorian dairy farmers told the Sunday Herald Sun they were haemorrhaging money and could not afford to keep milking, with irrigation water six times more expensive today than it was just two years ago.

President of the Northern Victoria Holstein Association Phillip Daniel says dairy farmers are being pushed to the wall by rising costs and corporate greed. Picture: Alex Coppel

Most family-owned dairy farms without permanent water in the State’s north are now for sale - officially or unofficially - as farmers go backwards by thousands of dollars every month.

And while the situation is less grim in Gippsland and Western Victoria, the outlook is not bright.

Australian Dairy Farmers said more than 350 Victorian farmers had left the industry over the last two years.

In the State’s north - once considered the jewel in the crown of the country’s dairy industry - family farm exits are at an all-time high.

Read more in the Sunday Herald Sun

Mr Daniel said farmers were being pushed to the wall by rising costs and corporate greed, with depression and suicide a growing problem.

“The industry is going to collapse. I’ve not spoken to anyone who thinks there’s a future,” the 42 year-old, Nathalia farmer and father of two, said. “Commodity prices are killing us and water is basically unobtainable. At the moment it’s $630 a megalitre. We’ve been going backwards every year, for at least five years.”

Teal Point farmer Nathan Ferguson, who needs 1000 megalitres of water over eight months of the year to run his farm near Kerang, said the price he paid per megalitre had risen from $100 in December 2017 to $630 last week.

To survive, he has had to diversify and cart firewood.

Teal Point dairy farmer Nathan Ferguson is battling on but has had to start carting firewood to Melbourne to survive. Picture: Alex Coppel.

Father of four, Andrew Phillips, 46, said he sold the last of his cows in November last year, after 30 years as a farmer.

“I’m the last person on earth to want to stop milking cows but it was a matter of having to walk away. We just couldn’t justify staying and losing any more.”

Yalca farmer Steve Dalitz, who has been open about his battle with depression, is also culling his herd and has his farm on the market.

“Many farmers are being left with nothing but their life insurance policy,” Mr Dalitz said.

Only big corporate farms, with deep pockets, were now able to make a go of it, he said.

In its latest major report Dairy Australia said water prices were “draining the finances and confidence” of farmers.

Farmer Steve Dalitz and his wife Kristi (centre) reluctantly sold their herd at the Shepparton saleyards last week. Picture: Alex Coppel

“Northern Victoria continues to record substantial year on-year declines in milk production,” the Dairy Australia report states. “Many farms have reduced herd numbers in stages as feed availability has declined, and research suggests exits are likely to continue at a steady pace.”

Mr Mumford, said many farmers had “just had enough”, with water costs simply beyond the reach of most.

A dairy farmer in east Gippsland himself, Mr Mumford said farmers in his region were also hurting, due to the recent drought and feed costs.

Hundreds of farmers were now trying to get out of dairying, and “another wave” would follow later in the year if “a clear, positive direction” for water was not sorted by September, he said.

Dairy farmers across the entire State were battling, Mr Mumford said.

“Every dairy farmer has been under duress for more than a year and this is causing extreme mental, family and financial stress. It’s a very tense situation and it means that even the slightest hiccup on a farm can now unwind a business,” Mr Mumford said.

Dairy famer Steven Dalitz on his farm at Yalca. He is selling his dairy herd and farm. Picture:Rob Leeson.

Former Victorian Premier John Brumby, who heads a new national dairy taskforce called the Australian Dairy Plan, did not respond to questions from the Sunday Herald Sun.

But a recent report by the Australian Dairy Plan acknowledges making a profit on farms is now hard.

“Input costs (water, feed, labour and energy) have increased much faster than milk prices and

productivity gains can cover. Farmers have invested heavily in recent years but are questioning their capacity and confidence to continue investing,” it says.

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Victorian Agriculture Minister Jaclyn Symes said the Government knew dairy farmers were facing “very real challenges”, with extremely high water and feed costs.

“We’re providing assistance through drought support programs, as well as exploring all options to make extra water available where possible, and ensuring there are hardship programs available through water corporations to relieve bill pressures,” she said.

The Government had also committed $50 million in targeted support for Victorian farmers and rural communities affected by drought and dry conditions, with an extra $4.4 million just announced to continue the most popular drought support grants through the winter months.

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