Dairy Australia demands more levies but drives up farm costs

Dairy Australia’s focus on genetic gain and high production cows has raised costs and undermined farmers’ profitability.

Australian dairy herds’ pasture intake has slumped as farmers shift to high production cows that need higher-cost concentrates in their diets.

Dairy Australia has led farmers down the path of lower profitability, with international benchmarking data showing local costs of production have soared as cows’ pasture intake has slumped.

Yet the research and development corporation is calling on farmers to chip in another 20 per cent in levies in a March poll, to bring Dairy Australia’s levy income close to $40 million, plus Federal Government matching funding.

Australian Bureau of Agricultural and Resource Economics and Sciences data shows the Australian dairy industry’s total factor productivity index has slumped from 163 in 2012, when the last levy poll was conducted, to 146 in 2020, as a result of declining output and rising input costs.

When asked about the decline a DA spokeswoman said it was “really a question for ABARES” and the R&D body had initiated its own “independent and comprehensive analysis of productivity” due out later this year.

Dairy business analysts David Beca said DA had undermined farmer profitability by aiding the shift to high production cows that needed more concentrate, were harder to get in calf and added to animal health and farm labour costs.

“Australia has gone from 60 to 70 per cent of the energy of a cow’s diet coming from pasture in 2003 to about 50 per cent now,” he said. “Your taking 20 per cent of the pasture out of the diet and replacing it with concentrate that’s three times the price.”

Mr Beca said mainland Australian farmers were now stuck in a high production, high cost system, given the only means of increasing the proportion of pasture energy in a herd’s diet was to wind back numbers, produce less milk and breed cows that needed less concentrate – as is the case in New Zealand and Tasmania.

University of Melbourne School of Agriculture and Food head Bill Malcolm said DA’s faith in genetic gain was in part due to its lack of project peer review by not just scientists, but economists who could pull apart the drivers of farm profitability.

“The (DA) board has focused on genetics,” Professor Malcolm said. “Generally genetic gain is small and slow, while pasture improvement is quick and big.”

But DA’s spokeswoman said Dairy Australia’s investments were in all areas of “pasture utilisation, cow genetics and nutrition.”

Even DA’s investment of farmer levies in pasture genetics is yet to pay off, despite its managing director David Nation promoting genetically modified high-energy ryegrass as “the single most valuable technology we could apply to farms”.

Yet no GM pastures have been released after more than 20 years of research.