Westpac sees blue skies ahead for most in dairy

Ahead of next Wednesday's Sungold field day brunch, Westpac regional general manager for Victoria and Tasmania Roddy Brown said the bank was focused on the long game.

"We view it really positively," Mr Brown said.

"There's been a few tough years and it's been a long time between drinks for some but we've really invested in the industry with people who are embedded into it.

"We've been getting really good growth the last few years.

"A few years back, we changed a lot of our internal policies to reflect the fact that we saw dairy as an industry we wanted to be part of more."

He said the bank had intensified its dairy focus over a decade and seen customers grow despite volatility.

"Dairy farmers have been squeezed from each end but I think when funding dairy and being a financier to dairy, I think it's really important to have that long-term view," he said.

"We don't get super excited when they have a really good year and we don't get too concerned when they have a bad year.

"It's just taking that nice, steady, long-term approach.

"It's critical to understand the ebbs and flows of the business."

In some locations, Mr Brown said dairy still presented many good business and investment opportunities.

"I think in the southern areas that have proven to be reliable rainfall areas, we're still seeing quite a lot of demand, a lot of investment," he said.

"There has been a bit of alternate land use that's snuck in, unfortunately, with some properties going out of dairy but we've seen a lot of investment, a lot of people expanding, whether they're buying more run offs or they're buying that second farm.

"We're seeing corporate investment come in more, particularly in places like Tasmania.

"What we've noticed is people focusing on the basics, you know, asking where can they get reliable rainfall, where can they really focus on and achieve lower costs of production.

"Where they can farm in an environment where they can control those costs a lot more, tends to be where were seeing more investment going in and properties are in demand."

On the other hand, Mr Brown said dairying in northern Victorian was a "real struggle" as falling water availability forced up costs.

"Without getting into wider issues, I think there is certainly some pressure in that part of the world and what we're noticing is our long-term good operators up there are really having to be quite innovative to keep moving forward and growing," he said.

"So growth, no doubt, has been tough.

"For us, it's about making sure we're having the right conversations where we're focused on that steady-state, long-term view just being supportive until, hopefully, things cool down."

Asked how long Westpac would be patient as dairy businesses struggled to recover, Westpac regional general manager for Victoria and Tasmania Roddy Brown said there was no set time frame.

"It really depends on the individual and what the strategy is," he said.

"A lot of people are at various stages of, for example, farm succession, or they might be in a growth phase, which is often shorter.

"In the current environment, it's just making sure we're consistently communicating and just helping people get through as long as they don't erode too much equity.

"The right thing for people sometimes is to really to make sure they're on the right path and the conversations start changing to alternate land use, how they conserve water."

South-western Victorian production had also dropped but that wasn't all bad, Mr Brown said.

"Obviously, some farms exited but I also think a lot of people really looked at their production costs in the year where we had a low milk price and high feed costs," he said.

"It was really squeezing them so they backed off.

"From a production point of view, I'd be really interested to see what the next 12 months looks like because we're seeing people absolutely focus on efficiency and productivity.

"They are very much aware of ensuring they have a long term, viable operation and have pulled back on production a bit but, in a financial sense, a lot of them are better off."

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