Dairy farmers leave industry despite recent high prices

Despite recent high farmgate milk prices, hundreds of Victorian dairy farmers have left the industry so far this season — with some pointing the finger in an unexpected direction.

ONE in four Victorian dairy farmers has left the milking shed since the 2016 milk price clawback ripped through the industry, with farmer numbers plummeting from 4141 four years ago to 3069 today.

But it was not just the clawback that has stripped 1072 farmers out of the most productive dairying state in the nation.

Preliminary Dairy Food Safety Victoria figures show 393 farmers have left dairying since July 1 this year, in what appears to be a major loss of confidence in a sector that many feel fails to deliver profitable returns.

“My take is there’s a series of reasons, not just clawback,” Cohuna dairy farmer Stephen Henty said. “It’s been a combination of prices, climate and input costs.”

Others said age was another major issue, as farmers, who had hung on trying to build enough equity to retire were getting out now, while cattle and property prices were strong.

Former Dairy Australia chair and Tallygaroopna farmer Geoff Akers said “it’s about long-term confidence”, not just among farmers, but even among processors. “We’ve had two fall over in the past six months.”

However, Wonthaggi dairy farmer Daryl Hoey, who left northern Victoria’s Katunga district to set up in Gippsland early last year, said farmers needed to stop blaming milk prices for their woes and take a good hard look inside the farm gate.

Daryl Hoey, who left his Katunga dairy farm last year to grow more grass in Gippsland, says the industry is still very profitable despite a lot of negativity.

“If farmers say they can’t make money after three years of the highest prices ever, it tells me their farming systems are not stacking up,” Mr Hoey, who is also the former chair of the Australian Dairy Farmers Basin Taskforce, said.

“Imagine if grain growers had three years running of getting $300 a tonne off the header, would they be losing money?”

He said some dairy farmers needed to stop chasing production per cow and focus on profit per hectare.

“Dairy farmers also have this inherent negativity … you just have to listen to ABC Country Hour to hear the whingeing,” Mr Hoey said. “I think some of the biggest issues in the dairy industry are above the shoulders.”

Longwarry dairy farmer and former ADF director John Versteden said he was also sick of the negativity, when many farmers were doing well.

“There are farmers in every region of Australia, including Queensland, that are making really good money,” Mr Versteden said. “(But) we don't talk about that we talk about all the negatives.”

Mr Hoey highlighted recent results of the 2019-20 Victorian Dairy Farm Monitor Project, which showed the average level of equity among 250 Victorian operations was 67 per cent.

“Banks would be more than willing to loan money to farmers with (almost) 70 per cent equity. But they’ve (farmers) got into this mind set of saying ‘I don’t want to borrow”.

Another measure of just how well some Victorian dairy farmers are doing can be seen in their level of Farm Management Deposits as of June 30, which at $209 million outstripped beef producers’ holdings.

Mr Hoey said the real problem was farmers who had really good equity, but did not have enough cash flow to service existing debt, due to inefficiencies – such as not calving cows at a time that maximised on-the-ground feed and buying in too much fodder.

But farmers in Northern Victoria and the Riverina have had little choice, given the high temporary water prices last season, with Dairy Farm Monitor results showing they grew just half their herds’ feed, compared to 32 per cent in Gippsland and the South West.

Dairy Australia figures show northern Victoria has lost almost 21 per cent of its farmers since 2016, while the southwest and Gippsland have lost 14 per cent up until June 30.

However DA was unable to give a regional breakdown of the additional 393 farmers who have left dairying so far this season.

Mr Henty said at 68 years of age he understood that with record cattle prices and farms selling for good prices many farmers were taking the opportunity to retire or close just grow feed for others.

As for his own future Mr Henty said he had no succession plan, but had already slashed his reliance on bought in feed from 55 per cent to just 15 per cent and was happy to keep dairy farming, as he enjoyed the lifestyle.

The latest figures has triggered a war of words in Canberra with Victorian Labor senator Raff Ciccone saying Federal Agriculture Minister David Littleproud had been sitting on his hands while the dairy sector declined.

“The Federal Coalition Government should ensure they provide certainty for the industry,” Senator Ciccone said.

“Instead, eight years since the Liberal-National Government won power in Canberra, dairy farmers have not seen meaningful action to support their industry, and as a result, we now see more than one in ten farmers leaving the industry (in Victoria).”

Mr Littleproud hit back: “Senator Ciccone having been tucked away in Melbourne all his life may not of realised that the rest of Victoria has experienced one of the nations worse droughts in living memory over the last couple of years.

“Sadly, the drought has impacted these numbers despite the federal government having committed over $10 billion towards the drought while the Labor Victorian government has committed close to nothing.”

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