Numbers show dairy distress

Numbers show dairy distress


Australian Dairyfarmer News
ANALYSIS: Dairy Australia's John Droppert and the author of the June 2019 Situation & Outlook report.

ANALYSIS: Dairy Australia's John Droppert and the author of the June 2019 Situation & Outlook report.

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Depending which way you look at the numbers, confidence among Australian dairy farmers has either turned the corner or is at an all-time low.

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Depending which way you look at the numbers, confidence among Australian dairy farmers has either begun to turn the corner or is at an all-time low.

Dairy Australia's February survey of 800 farmers showed that 34 per cent of farmers felt positive about the future of the dairy industry.

A follow-up survey in April after the autumn rains arrived in most dairy regions revealed confidence in the industry's future increased to 46pc.

Either way, though, the National Dairy Farmer Survey (NDFS) paints a gloomy picture of the perfect storm dairy farmers faced this season.

Just 43pc of Australian dairy farmers expect to make an operating profit in 2018/19, a 24pc drop from last year.

Profitability was battered by a combination of dry seasons, high grain, fodder and feed prices, all while the value of cull cows fell.

In fact, farmers told surveyors elevated input costs was the greatest challenge this year.

The response from farmers has been dramatic.

Even though the average price for culled dairy cows in March was the lowest since 2015 at 309 cents a kilogram, a total of 76,283 cows were culled in the 12 months to March, up 11pc on last year.

Milk production has also fallen and Dairy Australia is sticking with its 2018-19 forecast for a 7-9pc fall below 2017-18 levels to between 8.45 and 8.65 billion litres.

And it does not expect the tide to turn quickly.

"Despite positive developments in recent weeks, a significantly smaller national herd, reduced farmer confidence, and ongoing cost pressures will continue to weigh on production in the short-term," the report said.

"Hence, Dairy Australia's initial forecast for 2019-20 anticipates a further drop of between 3 and 5pc, to a total of 8.1-8.3bn litres."

Australian Dairy Farmers president Terry Richardson said the report confirmed the tough conditions confronting the industry.

"Farmers are making every effort to address cost pressures on their businesses, ensuring they make the most efficient use of their production systems, but there is a limit to what is achievable, and this is only a short-term solution," Mr Richardson said.

He said the Australian Dairy Plan would seek to address unprecedented volatile conditions.

"But if we are to tackle these issues, we must be proactive and contribute to a national roadmap and initiatives that have direct relevance to everyone in dairy," he said.

Don't have time to read the whole thing? See the highlights of Dairy Australia's Situation & Outlook report.

PRODUCTION FALLS

Dairy Australia's 2018-19 forecast for a decrease of between seven and nine per cent relative to 2017-18, is unchanged, implying a total of between 8.45 and 8.65 billion litres.

NEW SEASON FORECAST

Dairy Australia's initial forecast for 2019-20 sees a further drop of between three and five per cent, to a total of 8.1 to 8.3bn litres.

CONFIDENCE LOW

The survey of 800 farmers showed that 34pc of farmers feel positive about the future of the dairy industry. This is the sixth consecutive year of declining sentiment nationally and there are now more negative than positive farmers in all dairying regions, except Tasmania.

RECORD CHURN

In 2015, 10pc of farmers reported changing processor in the prior 12 months. In 2019, 25pc of farmers changed processor, although one-fifth of this was the result of corporate changes.

PROFIT PROBLEM

Just 43pc of dairy farmers expect an operating profit in 2018-19.

FEED CHALLENGE

A record 64pc of farmers said feed shortages and costs were their biggest challenges.

SEASONAL SURGE

Fewer farmers are calving all year round (especially in Victoria and Tasmania), opting for a seasonal calving pattern but more than 90 per cent of farmers in the Subtropical Dairy and Dairy NSW regions still calve all year round.

DOLLARLESS DELIGHT

Private label milk sales fell 1pc during the three months to March but the value of sales over the same period increased 3.8pc.

HERDS UPSIZE

The average herd size has grown 30pc in the past 10 years but a total of 76,283 cows were culled in the 12 months to March, an increase of 11pc on last year.

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