Farmers’ fortunes fluctuate with fickle weather

GIPPSLAND dairy farmers are feeling happier than they have for a long time – and more positive than most of their counterparts across the country.

Speak to some local farmers, however, and you find the outlook is not quite so rosy. The flooding rains that drenched northern Victorian paddocks may not have occurred on the same scale in South Gippsland, but still farmers here are saying “enough is enough”.

According to the 2011 National Dairy Farmer Survey (NDFS), in which 1000 farmers across Australia were surveyed on their attitudes and intentions, Gippsland is Victoria’s most positive dairy region. Out of the surveyed dairy farmers, 80 per cent were positive about the future of the national industry – a big jump from 2010 when 65 per cent expressed confidence in the industry and much higher than the 2011 national average of 69 per cent. The last time Gippsland farmers expressed such confidence was in 2008.

The annual survey provides key inputs for the 2011 Dairy Australia Situation and Outlook report.

This newly released report finds the southern industry enjoying arguably the most favourable conditions for a decade “with good export demand growth, competition for suppliers and favourable seasonal conditions”.

Specifically for Gippsland there has been strong competition for milk and demand for heifers which has helped buoy confidence in farmers.

Over the past year, 62 per cent of the region‘s dairy farmers made on farm capital purchases, a similar proportion to the 2010 survey and the national average (63 per cent).

Investment has been primarily in machinery and tracks and laneways. Just over half the respondents (53 per cent) expect to make capital purchases for the farm in the coming year, mainly in the areas of tracks and laneways and fencing.

The survey also revealed feed as a key cost for Gippsland farmers with 96 per cent buying grains, grain mixes and concentrates as required – the most of any region.

As a result of 42 per cent of surveyed farmers increasing milker numbers over the past year compared to 26 per cent decreasing, the average milking herd grew by three per cent for the region, from 259 cows to 267.

WET WEATHER A CHALLENGE

Milk price has been nominated by 39 per cent of Gippsland dairy farmers as the main challenge expected for their enterprise in future. Judging by the response from the dairy farmers The Mirror spoke to, wet weather is a challenge of equal – or greater – importance.

‘There’s money in mud’ goes the old saying and it may be true, but there’s misery, too.

Kevin Jones, for instance, milks 380 cows with his wife, Helen, on a farm between Foster and Toora, where there has been all too little respite from the rain.

When he spoke to The Mirror, he was hosting a Focus Farm Field Day. Much discussion, he said, was centred on measures farmers were taking in the face of the wet conditions.

Mr Jones found the wet spring and summer difficult to manage. Silage crops were late and only average quality. He had been reduced, he said, to feeding his livestock on laneways instead of in the sodden paddocks. If the wet conditions prevail he will have to consider sending some of his cattle away for agistment – at considerable cost.

He responded to the Situation and Outlook claim that farmgate prices had improved strongly in the 2010/11 season by pointing out that there was certainly room for improvement, prices had been so low – to the point of rendering dairy enterprises unsustainable.

“The milk price is going up, but from a relatively low base,” he said. “The industry is at a crossroads. If it continues to stay wet there will be major issues.”

Just a few kilometres further east, on the eastern edge of Toora, at the dairy farm of Bruce and Jan Best, the situation is far more positive.

“The season has been really good here. I feel we’re on the edge of the rainbelt, so it hasn’t been too wet,” said Mr Best.

His assistant manager, Wendy Whelan, agreed.

“We have been able to apply fertiliser when we need to because the conditions have been right. Production is up, because there is plenty of green grass for the cows.”

Mr Best, a Fonterra supplier, was philosophical about dairy farming and its challenges. “It tends to run in cycles. To have a good season with relatively good prices such as we have now, is quite rare. You have to make the most of it when you do and plan for all weather conditions.”

He currently milks 280 cows, but plans to increase that number by 25 or 30 this coming season.

“You need to increase production in line with costs, which are always increasing,” he said.

Down at Yanakie, where he farms on sandy soils all too often in dire need of moisture, Danny Brickle cautiously welcomed the unusually wet conditions – but said he wouldn’t be wanting much more rain.

“We’ve certainly had a wet start to the year. There’s water lying around where I haven’t seen it for years. There are paddocks where I can’t drive, but I work around that problem.”

He said that he was pleased to be out of a drought which saw a big drop in prices and high costs for feed, etc.

“I’m feeling quite positive, because the world demand for milk products is definitely there. Conditions vary even around Yanakie, but I am experiencing the best dairy farming conditions for a decade,” he said.

Mr Brickle is so optimistic he plans to increase the herd of around 300 he currently milks by 15 or so.

Like Mr Jones, he is a Burra Foods supplier. Burra has just announced its fourth step-up for the 2010/11 season.

Chief Executive Officer Grant Crothers announced the 7 c/kg fat and 17 c/kg protein step up in a letter sent to all suppliers.

The increase of 12 c/kg of milk solids takes Burra Foods’ average annual net price to above $5.40 per kg of milk solids.

“While we continue to remain optimistic, we are cautious as we look towards finalising our pricing for this current season, particularly in an environment of such a high exchange rate between the Australian and US dollar,” Mr Crothers said.

He said the factory had been shut down in recent weeks “on a mission to improve efficiencies and further improve capacities in preparation for our peak intake period during Spring 2011”.

The minor capital works currently being undertaken, he explained, will see Burra Foods further increase the milk processing capacity on the Korumburra site.  The company is planning for a total intake of 260M litres for the 2012 season.

According to Mr Crothers, a significant number of South Gippsland suppliers indicated an interest to supply Burra Foods at the start of last season. “The continuous improvement projects currently being undertaken will allow us to respond to the continued interest to supply Burra Foods”, he said.

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