Australian Dairy Farmers president says fodder costs squeezing margins

High fodder costs coupled with weak farmgate prices make for a dreadful start to the new season, ADF president Ben Bennett says.

Fodder prices have doubled in the past six months, the president of Australian Dairy Farmers says, just as the sector is hit with weak opening prices.

Ben Bennett told the latest edition of the Australian Ag Podcast that one of the driest autumns in living memory had forced input costs to skyrocket.

The southwest Victorian farmer said a drop in farmgate opening prices of between 10 and 20 per cent translated to dairy suppliers barely covering the cost of production next season.

“(Hay prices are) climbing by the week,” Mr Bennett said.

“It’s very nervous times. It’s not advantageous, particularly when we’re looking at a discount in our milk price too.

“I’m under the impression you could have bought vetch off the baler — which is a high-protein, good dairy feed — in the early summer at $180 off the baler. Now it’s climbing to $400 plus.”

At the end of summer harvest, oaten hay was selling from $280 to $360/tonne. Lucerne hay ranged from $350 to $450/tonne while straw was tracking at $80 to $160/tonne.

Mr Bennett said bone-dry autumnal conditions across much of Australia meant quality fodder of all types was increasingly scarce.

“It’s not just us, it’s WA, South Australia, particularly (Victoria’s) Western District. Poor old WA hasn’t had much since September.

“We definitely need mud to make money. Our pasture-based system is a lucerne-based system for this drier weather but even in dry weather, we need at least a little bit of rain.”

Nearly all of the processors covering southeastern Australia are set to open with prices between $7.80 and $8.30 per kilo milk solids next season, after declaring their hand a fortnight ago.

Dairy Farmers Victoria claim the current pricing matched the cost of production in Victoria, once fodder, electricity, labour and other input costs eroded profitability.

‘Over the Fence’ is sponsored by Ram Trucks Australia. You can listen to the full podcast on Spotify or Apple Podcasts.