Dispersal sales on the rise under labour and land price pressure

Dairy properties are fetching more than $35,000 a hectare in some regions, triggering a wave of herd dispersals as farmers cash in.

Growing labour shortages and skyrocketing land prices are spurring veteran dairy farmers to leave the industry in an unprecedented number of recent dairy dispersals.

Bob Baker from Kendall, on the Mid North Coast of NSW, has run Hilford Holsteins and Honeyford Jerseys for the past 38 years.

Mr Baker dispersed the herd in May and sold off part of the property under mounting pressure to source increasingly scarce labour for the demanding business.

“I can find someone easily enough to do tractor work but you can’t find anyone that wants to milk cows up here,” Mr Baker said.

Over the past four decades Mr Baker worked to expand the family business from an original 40 cows up to 250 cows in what was once a thriving dairy area, but the Bakers’ exit from the industry marks a common theme in the region.

“Up here the dairy industry is just dying,” Mr Baker said. “When we first came here 38 years ago there was about 30 dairy farms in this little valley and we are the last ones to go,” he said.

Strong land prices and labour shortages are behind a recent wave of dairy dispersal sales.

The surrounding farmland has been slowly turned to hobby farming pursuits.

“The real estate is worth a lot of money here now — it’s beautiful country,” said Mr Baker, who is in the process of diversifying into beef farming.

High land prices are providing a positive buffer to what might have been a grim exit from the industry for some.

Bob Baker dispersed his dairy herd in May after four decades of building.

Dairy farmer Jeremy Bayard is currently operating in northern Victoria, having previously run farms in Gippsland and western Victoria.

He said the huge increases in land values had been a big trigger for many to sell.

“Trying to buy a dairy farm in the Gippsland hills for under $15,000 an acre ($37,000 a hectare) is a challenge and if you own 1000 acres (400ha) down there it doesn’t matter what price you’re getting for your heifers or your milk, why would you milk cows?” he said.

While Mr Bayard had no plans to leave the industry he echoed Mr Baker’s concern: “labour is a huge problem”.

“There are fewer than 5000 dairy farmers left in Australia … and every week there’s another dispersal sale,” he said.

“But it’s not grim, there’s a lot of people putting a lot of money in their pocket on the way out and they’re going to retire and for them it’s fantastic.”

Elders Camperdown real estate manager Rob Rickard said labour shortages were the “biggest factor” driving dairy farmers to sell under high milk prices.

“There is that inquiry coming from other agricultural sectors that’s driving the land prices as well,” Mr Rickard said.

“In southwest Victoria I would say there’s no more dairy farms going on to the market but the ones that do sell are definitely not staying as dairy farms as they traditionally have.”

Land prices have not been homogenously sky high across Victoria.

Mr Rickard said agricultural land in southwest Victoria was making anywhere from $7000 to $10,000 an acre ($17,300 to $24,700 a hectare) on average, about 25 per cent below that in Gippsland.

“Farms that we might be selling for around $10,000 an acre ($24,700 a hectare) in southwest Victoria would be making in the vicinity of $15,000 an acre ($37,000 a hectare) in South Gippsland,” Mr Rickard said.

John Cockerell of Warrain Jerseys in northern Victoria said it was “remarkable” how much land values differed across the state.

The Cockerells began the dispersal of their pedigree herd late last year after struggling to source skilled labour.

After milking for more than 40 years, the Cockerells are also selling the portion of the farm that contains the dairy.

“About $4000 an acre ($9880 a hectare) I’d say is the going rate up here, which is about half the rate of land in Gippsland and the Western District,” Mr Cockerell said.

“You’d think that the land would be dearer but it’s not.

“We were hoping to have our son take over our farm and it hasn’t worked out that way but we are so sick of having to get up and milk cows.”