West Australian dairy farmers struggle with farmgate prices

While eastern states enjoy high farmgate prices, West Australian farmers are missing out. See why the state’s dairy sector is struggling.

Mediocre farmgate returns and skyrocketing land prices are dissuading prospective primary producers from entering the West Australian dairy sector.

That’s the view of WA Farmers dairy president Ian Noakes, who says pricing west of the Nullarbor needs to improve to attract the next generation of dairy farmers.

“Dairy farmers in WA are mainly being paid in the region of 70 to 75 cents a litre. It’s okay but it’s not enough to attract younger people into dairy,” Mr Noakes said.

“We’ve had the drift of dairy farmers into the beef sector in recent years. Now with wheat prices performing well, there’s a shift into that as well.

Agricultural property prices in WA’s southwestern corner, where most dairy farms in the state are located, have traditionally been lower than eastern Australia.

But Mr Noakes said WA had not been immune to the property inflationary pressures experienced across rural Australia.

“Two years ago, the average dairy farm in WA sold at $6000 an acre ($14,820 per hectare). “Now it’s more like $10,000 an acre ($24,700 per hectare). That’s a big jump in anyone’s books,” Mr Noakes said.

“Take into account what’s been happening with interest rates and that’s another reason why it’s harder for younger farmers to get a start in dairy.

“The repayments on property purchased in the past year is sky high compared to a farm bought even five or 10 years ago.”

WA dairy farmer Michael Partridge.

WA dairy farmer Michael Partridge said primary producers west of the Nullarbor were in a stronger financial position than the pre-Covid era.

“We’re an isolated milk market here in the West and there was a point a few years ago where we were getting well below the eastern states,” he said.

“That’s changed for the better in recent times. The price at the farmgate is around 68 to 72 cents a litre – some are a little less, some a little more.

“There’s certainly room for improvement. To get that sustainability in the sector, farmgate prices that afford a bit more of a profit margin would be welcome.”

WA has three major processors — Brownes, Harvey Fresh and Lion.

Dairy farmer Dale Hanks detailed his frustration at the isolated market during a keynote speech at the Australian Dairy Conference earlier this year.

Mr Hanks operates a dairy farm at Harvey, 140km south of Perth, and was left financially stranded when his processor refused to pick up his milk in a 2016 stand-off.

“The Australian dairy industry is at a crossroads,” he said.

“There are some great opportunities for young people in dairy but it’s got to be backed up with a sustainable sector overall.”