Prosperous New Year

By Brian Tessmann, QDO President

As we move into the New Year many often take the time to review the past year and what has and hasn’t changed. For the Queensland dairy Industry many things change but many also stay the same. The supermarkets $1 milk campaign resulting in the low returns flowing back to dairy farmers supplying the Australian domestic market remain.

Reluctant governments and an ill equipped competition watchdog have ensured we have yet again continued to see more of the same. Over the past year we have seen prices for other protein sources such as beef and pork finally move upwards with beef hitting record high farm gate returns for those less drought affected businesses with cattle to sell. Sadly following a variety of uncontrollable international events the international milk and dairy prices are far from their best and remain well below the highs received by farmers supplying the world market just a couple of years ago.

Still Australian milk production levels appear to have stopped falling with most states recording small increases in production. The exception to this is Queensland, where the states milk production continues to fall and it is interesting what the difficult times in the domestic market have done to farm costs when compared to seasonal supply regions in the south. While production costs have risen in the southern regions the gap in the extra costs in year round supply regions such as Queensland has widened with per litre costs increasing more in the north as farmers struggled to stay in business.

Over the last few years many new and larger farm enterprises have left for financial reasons but smaller farms have more often have exited because of retirement. This is not the result of anyone talking down the industry but a result of many farm businesses that were advised that they had to grow to meet the challenges firstly of deregulation and then the milk price war.

Many have shifted their business into more costly production systems or took on crushing levels of debt. This has resulted in even more milk being trucked long distances from southern states to keep milk on the shelves in Queensland every day of the year. The most critical is in late summer and Autumn when the seasonal milk supply pattern in the south means most Victorian cows are dry and southern milk supply becomes tight and almost all milk has a use crying out for it. What this means is milk processors in this region as they had already done in WA have given some price and supply incentives to increase milk production when it is currently hardest to procure in those late summer and autumn times.

As many did last year each farmer has had to decide again for this year with these more recent payments systems what supply systems suit them. Clearly if you are an irrigated rye grass farmer, then capitalizing on spring growth will be the main aim. On the other hand many systems including TMR and PMR systems and even some tropical pasture feeding systems may be able to improve profits by moving the time of their farms peak milk supply. All farmers should be well aware it is profit per litre and profit per cow that will decide if they have a prosperous New Year not the number of cows they milk.

Let’s look forward now to the New Year and while we cannot always change the weather or what happens further down the supply chain we can do something about moderating those impacts on us and making the most of what we can influence. So on that note I would like to wish you all a safe and prosperous New Year.