Dairy farmers in Australia's irrigation regions are thinking outside of the box to weather climate extremes and a volatile water market.
As limited rainfall continues to place pressure on water supplies across the country, farmers in Victoria's north and the Riverina region of NSW are being directly impacted.
Water is trading at close to record prices, with prices exceeding $500 a megalitre for temporary water in the Goulburn-Murray Irrigation District, a zero per cent general security allocation in the Murray Irrigation District, and a shortfall of water predicted for the Macalister Irrigation District.
Murray Dairy regional manager Jenny Wilson said Dairy Australia and Murray Dairy were focused on providing up-to-date information and resources that farmers could use in their business planning.
"Dairy farmers are feeling the pressure of increasing volatility in the water market, after a season of record-high prices and dry conditions," she said.
"Coupled with uncertainty around water policy and what next season will bring, farmers are finding it increasingly difficult to plan how they manage their business."
Hundreds of local farmers have taken advantage of Dairy Australia's free Taking Stock sessions to work through their options with experienced advisers, including feed and water budgeting, herd decisions, and water procurement strategies for the short and long-term.
- Soil health focus at Kimber farms
- Potential dairy headwinds but market is generally positive, says analyst
Water in Focus events have also brought together a range of experts with updates on federal, state and local water policy, seasonal water allocations and trading, water procurement strategies and irrigation management.
"These events are giving dairy farmers and service providers the information they need on water policy and outlooks, as well as on management strategies for a range of different business models," Ms Wilson said.
Dairy Australia and Murray Dairy are also investing in research, development and extension to support the changes that farm businesses in the Murray region are making to manage seasonal volatility.
This includes the use of alternate forages and summer and winter crops, optimising fodder conservation and nutrition, understanding the value of infrastructure for feeding and housing cows, and herd improvement.
Managing water portfolio
Dairy farmers Rachelle and Carl Moon, from Numurkah in northern Victoria, manage their water portfolio in 'three thirds' to minimise the impact of water volatility on their business.
"Dairy farming has been a massive roller coaster ride and water prices are having a huge impact on our business," Mrs Moon said.
"We have milked through the wettest winter in history, and now we have drought conditions.
"The climate has kept us on our toes, but we are still very positive about what we are doing and what we are setting out to achieve."
Mrs Moon milks 120 cows on an autumn-calving pattern, across 105 hectares and is heavily focused on home-grown fodder, while using a mixed grain ration and buying in about 90 per cent of her hay.
The Moons currently own 90ML of water, which accounts for one third of their farm's water usage.
They lease one third of their water supply and purchase the remaining amount from the temporary market.
To increase certainty for her business, the Moons locked in an average water price on a three-year lease, which they will continue to review.
They also participated in the Plan2Farm program, funded by the Victorian Government and delivered by the Goulburn Broken and North Central Catchment Management Authorities.
Dairy farming has been a massive roller coaster ride and water prices are having a huge impact on our business.
Through Plan2Farm, a consultant visited the Moons' farm to assist them to clarify their business goals, identify their options and develop a long-term plan.
The plan is something they can refer to as they make decisions about their investments and management of the farm.
Mrs Moon has also taken steps to improve her farming system, by focusing on increasing the organic matter in her soils to boost its water-holding capacity, allowing more rain water to be captured.
Looking to the long-term, Mrs Moon is also exploring the possibility of launching an on-site milk manufacturing business, working directly with consumers and specialised retailers.
"We are focused on sustainability, and we eventually want to be able to produce fresh milk and package it in stainless-steel bottles, which can be washed and returned into circulation," she said.
"This is a plan which will take a lot of investment and a lot of time but to weather challenging seasonal conditions, we have to think outside of the box."
Scott McKillop, a dairy farmer in Victoria's north-east, is feeling the flow-on effects of the volatile water market.
Mr McKillop milks 380 cows with a split-calving pattern to boost pasture growth in the winter on his 485ha farm.
"While we are not directly impacted by water prices and availability, it is something that affects us across the board," Mr McKillop said.
"To compensate for the reduction in home-grown feed across irrigation and drought-affected areas, farmers are buying in more hay and grain, and input costs are being driven increasingly higher in as a result."
Mr McKillop feeds upwards of two tonnes of grain per cow per year, with high grain prices having a major impact on his cost of production.
To offset the impact of climate extremes on his business, Mr McKillop is increasingly focused on changing his farm system to normalise seasonal extremes.
"What we're noticing is the lack of distinction between the seasons," Mr McKillop said.
"While we've had a traditional autumn this year, the seasons blur from one into the other, and earlier seems to become later as summer heat lingers into March and April."
For Mr McKillop, the key to securing his farm's viability is securing longer-term relationships with suppliers for grain and hay, as well as extending agreements for milk pricing with his processors.
"We want to take the peaks and troughs out of what we do to achieve a sustainable average throughout the year," he said.
"We know we can make money on average, so we need to take the instability out of the market for a level of security around our prices and profitability."
To learn more about the impact of water prices on irrigation region farmers, dairy farmers can listen to Dairy Australia's podcast at soundcloud.com/dairy-australia.
This story first appeared on Australian Dairyfarmer
Want to read more stories like this?
Sign up to receive our e-newsletter delivered fresh to your email in-box twice a week. Click here to sign up.